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Pepeliaev Group advises that, on 11 August 2020 Federal Law No. 269-FZ dated 31 July 2020 “On amending certain items of the legislation of the Russian Federation” came into force. This federal law provides for amending the rules of state cadastral valuation and the procedure for challenging the cadastral value of real estate facilities.
According to the adopted amendments, state cadastral valuation is carried out simultaneously with regard to all land plots and/or buildings, premises, structures, construction-in-progress facilities, and parking lots registered in the Unified State Register of Real Estate (the “Real Estate Register”) in a constituent entity of the Russian Federation.
The first ‘massive’ state cadastral valuation according to the new rules should be carried out in all constituent entities of the Russian Federation with respect to land plots in 2022, and in 2023 with respect to buildings, premises, structures, construction-in-progress facilities, and parking lots.
Subsequently, state cadastral valuation will be carried out each four years. In cities with federal status the frequency of the state cadastral valuation may be reduced up to two years based on the decision of regional authorities. The provisions concerning non-scheduled state cadastral valuation have been excluded from the law.
State cadastral valuation is carried out by a specialised state institution under the constant surveillance of the Federal Service for State Registration, Cadastre and Cartography (known under its Russian acronym ‘Rosreestr’). Heads of the corresponding institutions are personally liable for the quality of the cadastral valuation, up to dismissal.
The procedure for correcting errors made when the cadastral value was determined has been changed. The application to correct errors made may be filed by any (not only interested) legal entities and individuals, but also by state bodies and local authorities within five years from the date when the information regarding the respective cadastral value was entered into the Real Estate Register.
Misrepresentation of information about the real estate facility based on which the cadastral value was determined is also considered an error, including wrong determination of conditions that influence the price of real estate facility and/or the use of incorrect information about its characteristics.
The decision on whether the cadastral value should be recalculated owing to errors made when the cadastral value was determined, may be adopted by the competent authority of the constituent entity of the Russian Federation even without the corresponding application.
An important amendment is that if errors are identified that have been made during cadastral valuation (irrespective of whether they were identified by the institution which carried out the cadastral valuation, by Rosreestr, or by third parties), an audit must be performed in terms of whether such an error can be applied to other real estate facilities, including neighbouring, adjacent facilities, and facilities of the same type. When the corresponding need is identified the cadastral value of such facilities must also be recalculated.
The commissions for the resolution of cadastral value dispute have been abolished.
According to the new terms of the law, the procedure for establishing the cadastral value in the amount of its market value provides for:
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It is not clear from the wording of the new version of the law whether it is permissible to file a claim to set the cadastral value in the amount of the market value directly with the court without this issue being considered by the above institution. No amendments have been adopted yet in the Russian Administrative Procedural Code. It is fairly likely that the legislature again strives to decrease the burden on courts by replacing Rosreestr’s commissions that turned out to be ineffective with experts from valuation institutions. |
The new procedure for setting the cadastral value in the amount of the market value will come into effect from 1 January 2023; regional authorities can pass a decision concerning an earlier commencement date with regard to their territory.
The period of application of the cadastral value is to be specified for the purposes provided for by legislation (first of all, in terms of taxation) as follows:
If there are several cadastral values applied at the same time (and set at the same date), the smallest of such values shall be applied.
The current version of amendments contains a number of unclear provisions. In fact, the period until 2023 will be a transition period during which the system of the state cadastral valuation will be reconfigured, including the regulatory framework. Holders of title to real estate should analyse current amendments and monitor the adoption of regulations and clarifications of the competent bodies.
Pepeliaev Group’s lawyers are ready to provide legal support to companies on issues associated with the application and challenging the cadastral value of real estate facilities, including among other things representing in court, and providing support in determining tax consequences of amending the cadastral value of real estate facilities and reforming the legislation in this area.