Rosreestr has clarified the legal treatment of power grid facilities
Pepeliaev Group advises that the Federal Service of State Registration, the Cadastre and Cartography (in Russian, abbreviated to ‘Rosreestr’) has published a LetterRosreestr’s Letter No. 11-03201/23 “On setting out the position” dated 28 December 2023.
to sort out discrepancies relating to the classification of power grid facilities as either movable or immovable property.
What Rosreestr has noted
Rosreestr addresses the issue of the legal treatment of power grid facilities to increase legal certainty of the provisions of the Russian Civil Code (the ‘Civil Code’) relating to immovable items.
The Letter in particular proposes to take the following into account:
- for property to be treated as immovable, evidence must be presented of it being erected, as required by law and other statutory instruments, on a land plot granted for the construction of immovable property, together with permits being obtained (see, for example, the Supreme Court’s Rulings No. 304-ES15-11476 dated 22 December 2015 and No. 306-ES20-23816 dated 2 February 2021).
Comment
It should be borne in mind whether a construction permit is required by law. For example, according to the Russian Government's Resolution No. 1816 dated 12 November 2020, no permit is required during construction / reconstruction of the power transmission lines of the voltage class of up to 35 kW (inclusive), and also of transformer substations and distribution points related to the above.
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According to the Supreme Court’s Ruling dated 27 June 2022 in case No. A32-16282/2019, “power grids themselves do not have any steady connection with the ground; however, substations and distribution points to which power grids are connected have structural features and components (a foundation) which allow them to be treated as capital construction facilities”;
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the whole range of facilities can be classed as power grid facilities (transmission lines, transformation and other substations, distribution points, non-capital construction facilities, structures and equipment) not all of which meet the criteria of immovable property as defined in the Civil Code;
Comment
Certain power grid facilities can be recognised as an integral part of buildings and structures and be included in them (communications within the buildings which are necessary to operate such buildings; for example, internal power and lighting wiring, together with lighting fixtures). Therefore, they will either constitute part of an immovable property item (a building or a structure) or belong to it.
Therefore, power grid facilities can be both items of immovable and of movable property.
In its Letter, Rosreestr also points to a cadastral surveyor's obligation to refuse to enter into a contractor agreement to conduct a cadastral survey if a relevant power grid facility is not classed as immovable property (the owner generally agrees with the cadastral surveyor the name and description of the immovable property, where a cadastral survey is concerned, before the contractor agreement is concluded).
What to think about and what to do
Please note that the correct classification of power grid facilities as either movable or immovable property may affect:
(a) bookkeeping;
(b) taxation issues;
(c) the procedure of consummating transactions that involve power grid facilities;
(d) the need to formalise ownership title to land plots on which power grid facilities are located.
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Translated by the Translation Department of Pepeliaev Group.