United States: Real Estate. Major Russian Legislation Changes For 2015

Reform of civil legislation

Federal Law No. 42-FZ on Amendments to Part One of the Russian Federation Civil Code of March 8, 2015

The Law entered into force on June 1, 2015 and made sweeping changes to the general part of the law of obligations, enabling the use of new flexible approaches to structuring transactions, including real estate transactions. The Law has enshrined both mechanisms that were already customary for business but had previously been recognized only by court practice, and new institutions borrowed (either entirely or partially) mainly from English law and whose adoption at the legislative level was timely and long-awaited.

In particular, new types of contracts (the framework agreement, the agreement for the option to conclude an agreement, the option agreement, the subscription (service) agreement) have been introduced; new provisions concerning so-called legal interest (interest on a monetary obligation) have been introduced; the provisions on securing obligations have been changed (in particular, the concept of the independent guarantee has been introduced, and the security deposit has been enshrined as a separate way of securing the performance of obligations); the concept of representations has been introduced and a party to a contract can now be held liable for making false representations to the other party; there is now liability for bad-faith negotiating, etc.

In order to clarify a number provisions of the Law and statutes previously adopted as part of the civil law reform, the Plenum of the RF Supreme Court issued Resolution No. 25 on the Application by the Courts of Certain Provisions of Section I of Part One of the Russian Federation Civil Code of June 23, 2015 and Resolution No. 43 on Certain Issues Related to the Application of Rules of the Russian Federation Civil Code Concerning the Limitation Period of September 29, 2015.

The amendments made to the RF Civil Code are primarily intended to make Russian law more attractive as the governing law for major investment transactions, and the new developments are worthy of a positive assessment because they are aimed at increasing the liability of parties (in particular, pre-contractual liability), bringing Russian contract law closer to international standards and further developing the principles of good faith and freedom of contract. At the same time, given the current absence of court practice of applying these norms, some of which have already raised questions in interpreting them (one vivid example is the concept of legal interest), the use of new mechanisms of the RF Civil Code does not always make it possible to reduce the parties' risks.

Combination of the Unified State Register of Rights (EGRP) and the State Real Estate Cadaster  (GKN) into the Unified State Register of Immovable Property

Federal Law No. 218-FZ on the State Registration of Immovable Property of July 13, 2015

The Law creates a unified system of inventory and registration, combining cadastral registration of immovable property and state registration of rights to immovable property, and provides for combining the EGRP and the GKN into the Unified State Register of Immovable Property (EGRN).

The Law sets forth cases where properties can undergo cadastral registration and the state registration of rights simultaneously and separately, procedural rules for performing cadastral registration and state registration of rights to immovable property, clarifies the timeframe for cadastral registration (five business days), the timeframe for simultaneous cadastral registration and state registration of rights (10 business days), the timeframe for state registration of rights (seven business days), and abolishes the issuance of the certificate of state registration of title (according to the new rules, cadastral registration and state registration of rights will be confirmed only by an extract from the EGRN). At the same time, the Law also expands the list of grounds for suspending cadastral registration and state registration, and also sets forth rules for entering information in the EGRN through interagency information exchange, i.e., without the title holder's participation.

The law has enshrined the stance of Rosreestr (the Federal Service for State Registration, Cadastre and Cartography) on the pressing practical issue of registering lease agreements for a part of a thing and has said that it is impossible to register a lease absent cadastral registration of the leased part of a thing. We note that this approach is at odds with the case law developed by the RF Supreme Commercial (Arbitrazh) Court. Based on the new rules, the state cadastral registration of a part of premises will occur simultaneously with the registration of the lease of part of the premises.

The Law enters into force on January 1, 2017, with the exception of certain provisions.

Innovations in regulation of the status of unauthorized construction

Federal Law No. 258-FZ on Amendments to Article 222 of Part One of the Russian Federation Civil Code and the Federal Law on the Enactment of Part One of the Russian Federation Civil Code of July 13, 2015

The Law has made considerable changes to Article 222 of the RF Civil Code regulating the status of unauthorized construction.

The following major changes are worthy of note:

  • The Law has eliminated the criterion of materiality of violations of town-planning rules and regulations that previously had to be met in order to declare construction unauthorized. Construction is considered unauthorized if it meets the following criteria: it is erected (i) on a land plot not granted according to the established procedure; or (ii) on a land plot whose permitted use does not allow the construction of that property on the land plot (this ground was not previously stipulated in the RF Civil Code); or (iii) without getting the necessary permits; or (iv) in violation of town-planning and construction rules and regulations.
  • The limiting conditions in which a court may recognize that the holder of title to the land plot on which the unauthorized construction has been erected holds title to the unauthorized construction have been expanded to include: (i) the person who performed the construction or has rights to the land plot allowing for construction of that property on the land plot, (ii) the construction corresponds to the parameters set forth in the site planning documentation, land use and development rules and other mandatory requirements to the parameters of the structure. Together with those conditions, a previously existing parameter continues in effect: that preserving the structure does not infringe the rights and legitimate interests of other parties and is not a danger to human life or health. All three of these conditions must be met at the same time in order for the holder of title to the land plot to be recognized as the owner of the unauthorized construction.
  • The Law has enshrined at the level of the RF Civil Code new powers of local government authorities of municipal districts to decide whether to demolish and later demolish unauthorized construction without a court decision if the structure was erected on a land plot that was not granted for construction according to the established procedure and that is in a zone with special conditions of use (other than cultural landmark preservation zones), common areas, or that is within a utility line buffer zone. The new version of the RF Civil Code sets forth a procedure for sending the person who performed the construction a copy of the decision to demolish the structure stating the time period for independently demolishing the structure; the time period cannot exceed 12 months. If no such person is identified, the RF Civil Code provides for a procedure of officially publishing a notice of demolition on the Internet and in an official publication and the possibility of the structure being subsequently demolished two months after the publication of the online notice.

The Law entered into force on September 1, 2015.

Changes in the town-planning regulation of cultural landmarks

Federal Law No. 459-FZ on Amendments to the Federal Law on Cultural Heritage Sites (Historical and Cultural Landmarks) of Peoples of the Russian Federation and Certain Legislative Acts of the Russian Federation of December 30, 2015

This Law, which entered into force on December 30, 2015, introduces amendments to the regulation of town-planning activity in historical settlements, creating additional requirements for developers in doing so.

In accordance with the Law, the cultural landmark protection agencies are now responsible for establishing requirements to town-planning regulations within federal and regional historical settlements.1 The Law also stipulates that town-planning regulations outside of a historical settlement must be developed to determine points (sectors) of existing panoramic views of the historical settlement.

As of January 1, 2017, the Law makes it necessary for the cultural landmark protection agency to issue a report on whether a permanent structure or the external appearance of private construction is part of the protected historical settlement, and the requirements to the architecture of permanent structures set forth by the town-planning regulation for the zone located within the historical settlement. Before such a town-planning regulation can be approved it is necessary to obtain the report on whether or not the permanent structure or external appearance of the private construction is part of the protected historical settlement. An unfavorable report is a basis to refuse to issue a construction permit.

The Law also introduces new elements of administrative offenses in the protection of cultural heritage sites in addition to the above.

RF Government Resolution No. 972 on Approval of the Regulation on the Preservation Zones of Cultural Heritage Sites (Historical and Cultural Landmarks) of Peoples of the Russian Federation and on Repeal of Certain Provisions of Legal Regulatory Acts of the Russian Federation Government of September 12, 2015

The Resolution approves a new procedure for developing, seeking approval for and confirming the project for a preservation zone of cultural heritage sites of the peoples of Russia, the project for a combined preservation zone for cultural heritage sites, requirements to land use rules and general principles for establishing requirements to town-planning regulations within such zones.

The Resolution has made the requirements to land use rules within preservation zones that were previously in effect much stricter:

  • The Resolution introduced a prohibition on variances from the established land use rules and town-planning regulations;2
  • Objects located within preservation zones that do not comply with land use rules or town-planning regulations established within those zones must be used in accordance with those land use rules or town-planning regulations as of the effective date of the act of the state agency approving the preservation zones of cultural heritage sites that sets up such land use rules and town-planning regulations.3 

The Resolution entered into force on September 25, 2015.

Regulation of the institution of public-private partnership at the federal level

Federal Law No. 224-FZ on Public-Private Partnership, Municipal-Private Partnership in the Russian Federation and Amendments to Certain Legislative Acts of the Russian Federation of July 13, 2015

The Law, which entered into force on January 1, 2016, is the result of many years of work by legislators and the business community in which numerous successive federal draft laws in the area of public-private partnership were actively discussed. The need for more in-depth legislative regulation of PPP projects to set forth the various forms of implementing PPP projects made the Law one of the most awaited new developments of 2015.

The very fact that the Law, which legalized non-concession forms of PPPs in Russia, along with a number of the Law's provisions, such as: definition of the PPP concept; a procedure for private project initiatives; definition of the status of financing parties and the ability to conclude direct agreements with them; the ability to pursue joint project implementation with the participation of multiple governmental units; the ability to pledge the subject matter of the agreement and substitute the private partner; and many others is worthy of high praise. The Law also defines who can be a private or public partner, the forms in which PPPs can be implemented, and provides an exhaustive list of PPP facilities. An important provision treats a PPP agreement as a civil-law contract and sets forth the mandatory elements of a PPP agreement. However, upon greater familiarization with the Law, many experts have come to the conclusion that it fails to address fully the aforementioned concerns—ignoring some completely—while others have potentially been exposed to additional problems.4

The Law envisions the adoption of many legal acts dealing with various procedures in the course of executing and performing a PPP agreement. A lot of work was done on drafting those acts in the fourth quarter of 2015 and finally they were adopted.5

Changes in legislation on concession agreements

Federal Law No. 265-FZ on Amendments to the Federal Law on Concession Agreements and Certain Legislative Acts of the Russian Federation of July 21, 2014 (in the version of December 29, 2014)

May 1, 2015 saw the entry into force of amendments to the procedure for executing concession agreements in accordance with which it will be possible without a tender to execute a concession agreement with a person who has proposed the initiative to execute the concession agreement.

If it is decided that it is possible to execute a concession agreement on the conditions proposed by the initiator, the agency authorized to review the concession agreement proposal publishes the concession agreement proposal on the torgi.gov.ru website and, if within 45 days no third-party bids have been received for the concession agreement proposal, it executes the concession agreement without a tender.

Federal Law No. 391-FZ on Amendments to Certain Legislative Acts of the Russian Federation of December 29, 2015 and Federal Law No. 460-FZ on Amendments to Certain Legislative Acts of the Russian Federation of December 30, 2015

These laws have added to the lists of concession agreement and PPP agreement facilities that include agricultural sites on a list approved by the RF Government. It is now permitted to put under concession buildings, structures and constructions for warehousing, storing and repairing assets of the Russian Federation Armed Forces and production and engineering infrastructure facilities of such buildings, structures and constructions.

Changes to the legislation on bankruptcy, notaries and appraisal activities

Federal Law No. 391-FZ on Amendments to Certain Legislative Acts of the Russian Federation of December 29, 2015

The Law introduced amendments to various regulatory acts in the area of bankruptcy, notaries, appraisal activities and concession agreements. We will touch on the changes most important for the real estate market:

  • The Law expands the list of transactions that are subject to mandatory notarization: as of January 15, 2016 transactions for the sale of an interest in joint ownership title, including to real estate (and to an interest in land) are subject to notarization. It is important for companies managing their real estate assets through closed-and investment funds to consider that according to the new rules, all transactions related to the disposal of real estate on trust management terms are subject to notarization.
  • It is already clear today that these new provisions will make it take longer to gain approval for transactions, and will also cause additional expenses for the parties to the transaction,6 which, in turn, may negatively impact commerce, especially on the closed-and investment fund market.
  • The Law introduces amendments to the effective Insolvency Law governing the specifics of invalidating a developer's transactions, the specifics of settling a developer's obligations to construction participants and introducing rules for using a special bank account to finance construction, from which funds should be used only to build properties and achieve the purposes for which the investors' funds were raised; funds cannot be debited to discharge other obligations of the developer.
  • The Law also introduces amendments to the regulatory acts on appraisal activities: as of July 1, 2016, the person who orders an appraisal shall, in the statutorily determined cases, enter in the Unified Federal Register of Information about the Activities of Legal Entities information received as a result of the appraisal (including about the value of the subject property). Appraisal of property contributed to the charter capital of an LLC or JSC is among such cases.

The Law entered into force on December 29, 2015, with the exception of certain provisions.

Changes in the procedure for challenging the cadastral value of real estate

The Russian Federation Code of Administrative Procedure No. 21-FZ of March 8, 2015

The Russian Federation Code of Administrative Procedure entered into force on September 15, 2015. One of its chapters covers procedure in cases challenging the results of cadastral valuation. Thus, disputes over the cadastral value of real estate will now be considered in accordance with the new rules of administrative procedure.

Just as before, claims challenging cadastral value will be considered in the first instance by the courts of general jurisdiction at the level of a Russian Federation constituent entity. It will be possible to file an administrative statement of claim challenging the results of cadastral valuation within five years of the date the cadastral value is entered in the GKN (there are exceptions in which it is impossible to file a claim, in particular, if the results of a new cadastral valuation are entered in the GKN at the time of the court filing), and when claims are brought it is necessary to follow the new rules of the RF Administrative Procedure Code as to the form and content of the administrative statement of claim and the documents attached thereto. There is still a requirement that legal entities must first attempt to resolve disputes out of court in the Commission for consideration of disputes over cadastral valuation at the regional Rosreestr department. In accordance with the RF Administrative Procedure Code, the operative part of the court decision must contain a reference to the newly set cadastral value of the property.

Resolution No. 28 of the Plenum of the RF Supreme Court on Certain Issues Arising in the Consideration by the Courts of Cases Challenging the Results of Cadastral Valuation of Real Estate of June 30, 2015

The RF Supreme Court Plenum Resolution, which was delivered before the RF Administrative Procedure Code entered into force but already took its provisions into account, eliminated a number of disputed issues in the challenging of cadastral valuation, in particular, it established the concept of challenging the results of cadastral valuation, having declared the filing of a claim challenging a decision of the Commission for the consideration of disputes over cadastral valuation a way of disputing the cadastral value, clarified the rules for allocating the court fees in cases challenging cadastral value and determined the lists of parties and conditions in which they can file claims challenging cadastral value.

So, with respect to tenants challenging cadastral value7 the Plenum Resolution clarifies that tenants of state-or municipally owned real estate are granted such a right in cases where the rent is calculated based on the cadastral value of the real estate. If the cadastral value of a leased real estate property that is privately owned is challenged, the tenant will need to get the owner's written consent to such review. The Plenum Resolution also explicitly provides for the possibility of the former owner of real estate filing a claim to challenge cadastral value if the results of the cadastral valuation affect its interests as a taxpayer during the tax period in which the application is filed.

Stiffer penalties for improper use and unauthorized occupation of land plots

Federal Law No. 46-FZ on Amendments to the Russian Federation Code on Administrative Offenses of March 8, 2015

March 19, 2015 saw the entry into force of amendments to the procedure for calculating administrative fines for breaching a number of land legislation rules: now administrative fines for unauthorized occupation of land and using land plots contrary to their designated purpose are calculated as a percentage of the cadastral value of the plots.

So, according to the new rules, the use of a plot contrary to its designated purpose in accordance with its belonging to one or another category of land and/or permitted use (other than agricultural land or plots intended for housing or other construction, gardening or market gardening, if there is an obligation to use the plot within a certain period of time set by federal law) is punishable by a fine on legal entities of between 1.5 and 2 percent of the cadastral value of the plot, but not less than RUB 100,000. However, if the cadastral value of the plot has not been specified, the fine is between RUB 100,000 and RUB 200,000. Furthermore, the fine on legal entities for failing to use plots intended for housing or other construction, gardening or market gardening, if there is an obligation to use the plot within a certain period of time set by federal law is between 3 and 5 percent of the cadastral value of the plot, but not less than RUB 400,000.

State support for the development of industry

Federal Law No. 488-FZ on Industrial Policy in the Russian Federation of December 31, 2014

As stated in the Concept for the Long-Term Socio-Economic Development of the Russian Federation Until 2020,8 development of fundamental sectors of industry is one of the measures for increasing national competitiveness. However, until the Law entered into force on June 30, 2015, there was no regulatory act comprehensively governing relations for the implementation of Russia's industrial policy.

The Law is general in nature, contains provisions about developing industrial policy and is intended to become a starting point to systematize measures for supporting Russian industry. It should be noted that the Law does not apply to the production of alcohol-containing food products, alcohol production or the production of tobacco products.

The Law defines Russian industrial policy as a set of legal, economic, organizational and other measures aimed at developing the industrial potential of the Russian Federation and ensuring the production of competitive products.

The Law contains a non-exhaustive list of measures for supporting the development of industry, and also basic descriptions of those measures: measures of financial, information and consulting support; support in the field of science, technology and innovation; support in the field of foreign trade, granting state and municipal preferences and other measures of support that can be set up by federal, regional and local legislation.

The Law enshrines a new form of investment agreement as one of the measures for promoting the development of activity in industry: a special investment contract under which the investor undertakes to create, modernize and/or master the manufacturing of industrial products, while the Russian Federation, RF constituent entity or municipality commits itself to implement incentives and support that investor.

The Law makes it possible to grandfather into such contracts a clause that the tax burden and other public liabilities of the investor, if they are increased by a statute, will remain unchanged for the investor. Incentives granted by a contract may also apply to other parties the investor may involve in implementing the project (for example, contractors). If the contract is terminated due to the investor's fault, the investor is obligated to pay the public entity all taxes and other mandatory payments that were not paid when the incentives were applied.

The Law also sets forth special provisions about measures for promoting industry in industrial parks and industrial clusters.

A number of RF Government Resolutions were adopted in 2015 in performance of certain provisions of the Law. These include resolutions establishing rules for entering into special investment contracts and the model special investment contract9 for certain areas of industry; requirements to industrial parks and management companies of industrial parks in order for the industrial activity incentive measures to apply to them;10 requirements to industrial clusters and specialized organizations of industrial clusters for the industrial activity incentive measures to apply to them,11 etc.

State standards (GOST) and Construction rules and regulations (SNiP)

RF Government Resolution No. 1521 on Approving the List of National Standards and Codes (Parts of Such Standards and Codes) Whose Application Results in Mandatory Compliance with the Requirements of the Federal Law 'Technical Regulation on the Safety of Buildings and Structures' (in the version of RF Government Resolution No. 1033 of September 29, 2015) of December 26, 2014 and Rosstandart Order No. 365 on Approving the List of Standardization Documents Whose Application Results in Voluntary Compliance with the Requirements of the Federal Law 'Technical Regulation on the Safety of Buildings and Structures' of March 30, 2015

For the purposes of ensuring implementation of the provisions of Federal Law No. 384-FZ Technical Regulation on the Safety of Buildings and Structures of December 30, 2009, the RF Government and Rosstandart have approved lists of national standards and codes subject to mandatory and voluntary application. Please note that these documents have been updated and substantive changes to the SNiP (construction rules and regulations) and GOST previously in force have been made. Design documentation must comply with the updated mandatory requirements in cases where it is submitted for expert review after July 1, 2015. In particular, non-residential premises for temporary accommodation must now comply with the requirements of SP 54.13330.2011 Residential Apartment Buildings. Thus, hotels must abide by the requirements imposed on residential buildings in terms of solar exposure, parking facilities, landscaping, etc.

The Resolution supplements the mandatory list with SNiP that had been applied previously on a voluntary basis, such as: SNiP 3.03.01-87 "Load-Bearing and Enclosures." A number of SNiP and GOST have been struck from mandatory application, such as: SNiP 3.01.03-84 "Geodesic Work in Construction."

Both acts entered into force on July 1, 2015.


1 We remind you that in 2012 historical settlements were divided into federal and regional settlements, yet to date neither Moscow nor St. Petersburg, nor parts of the corresponding territories have been classified as federal historical settlements; however, it is still possible that parts of their territories can be classified as historical settlements of federal or regional significance.

2 Previously it was possible to get a permit for a variance from the maximum parameters of permitted construction by agreement with the RF Ministry of Culture.

3 Previously, following the logic of the town-planning legislation, it was contemplated that generally such properties could be used without setting a time limit for bringing them into compliance with those land-use provisions or town-planning regulations.

4 For more detail see the analysis of the relevant provisions of the Law in Dentons' overview "Russia's PPP Law: expectations vs. reality" for August 2015. We would be happy to provide you with the overview at your request.

5 RF Government Resolutions No. 1309 of December 3, 2015, which is devoted to negotiations to assess a project's effectiveness and determine its comparative advantage; No. 1322 of December 4, 2015 on the rules for preliminary selection of bidders; No. 1366 of December 12, 2015 regulating the transfer of certain rights and obligations of a public partner to the competent authorities or to legal entities; No. 1386, No. 1387 and No. 1388 of December 19, 2015 on the form of the offer to implement a PPP project and the rules for reviewing it, on the procedure for sending the public partner a statement of intent to participate in a tender for the right to enter into a PPP agreement; No. 1490 of December 30, 2015 on the rules for the public partner to monitor performance of the PPP agreement; No. 1514 of December 30, 2015 on the procedure for the competent authority to assess the effectiveness of a PPP project and to determine their comparative advantage; Order No. 894 of the Ministry of Economic Development of Russia of November 30, 2015 on approving the methods for evaluating the effectiveness of a PPP project and determining their comparative advantage; No. 888 of November 27, 2015 on approving the procedure for monitoring the implementation of PPP agreements; No. 863 of November 20, 2015 on approving the procedure for holding negotiations related to review of a PPP project proposal between a public partner and project initiator; No. 864 of November 20, 2015 on approving the procedure for holding preliminary negotiations related to developing a proposal to implement a PPP project between a public partner and a project initiator.

6 According to Article 22 of the Fundamentals of Legislation on Notaries, when a notary engaging in private practice notarizes transactions, the notarial fee is payable in the amount corresponding to the state duty. The Federal Notarial Chamber in its Letter No. 43/03-16-3 on the Notarial Fee when Certifying Transactions Related to the Disposition of Real Estate of January 13, 2016 clarified that according to subclause 5, clause 1 of Article 333.24 of the RF Tax Code, the state duty for certifying such contracts is 0.5 percent of the amount of the contract, but not less than RUB 300 and not more than RUB 20,000.

7 We remind you that until 2014 the practice assumed that tenants were not entitled to file such claims. The approach of the courts subsequently changed following the stance of the RF Supreme Commercial Court and the RF Supreme Court.

8 Approved by RF Government Order No. 1662-r of November 17, 2008.

9 For the mechanical engineering, machine tool, metallurgical, chemical, pharmaceutical, biotechnology, medical, light, forestry, pulp and paper and woodworking, electronics, aviation and shipbuilding industries, the communications industry and radio-electronic industry.

10 RF Government Resolution No. 794 of August 4, 2015.

11 RF Government Resolution No. 779 of July 31, 2015.

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Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.