On tentative cancellation of real estate transactions registration

In particular, the new provision implies, that "in cases, specified by the law, the rights of any individuals for the objects of property, limitations of such rights and impairment of property (property rights) are subject to state registration. The state registration of property rights is performed by a legally authorized body on the basis of verified grounds for registration, transparency and reliability of the state register. The state register shall include the data enabling to establish the object of right, the rightholder, the subject matter and grounds for the right origin...". In Addition: "if property right arises, gets amended or terminated as a result of circumstances specified in the law (rather than in transaction provisions), an entry on the property right arising, amendment or termination shall be made in the state register upon application of the entity, who benefits from such legal act. The law also provides for the rights of other entities to apply for making relevant entry in the state register..."

Which rights and in what cases shall be subject to registration? They are the rights securing the property right for an object of civil right of a specified entity, as well as limitation of such rights and impairment of property. Herewith, it is necessary for registration that such rights should be subject to registration as a result of the Code requirements or one of the federal laws. Wh ere such requirement is inapplicable, the state registration is impossible.

The above rules on termination of real estate transactions state registration come into effect from March 1, 2013 and do not require other federal laws. To avoid law enforcement problem¹, the legislator explicitly designates, that the rules of the state registration of real estate transactions, specified in Articles 558 (contract of residential premises sale), 560 (agreement on business sale), 574 (deed of gift of real estate), 584 (rent contract, contract of alienation of immovable property for rent payment), 609 (lease of real estate), 651 (lease of a building or structure for the term of one year), 658 (business lease contract) of the Civil Code shall not be applicable to contracts entered into after March 1, 2013.

Thus, the problem of recognition the contracts for real estate as invalid will be partially resolved. Therefore, for example, to confirm validity of real estate lease agreement, signed by the parties after March 1, 2013, the state registration of the transaction is needless.

However, the issue of registration of real estate lease agreement remains unresolved, since under the Civil Code provisions, the lease agreement for real estate as an impairment has to be registered.

In accordance with Art. 131 of the RF Civil Code in the new edition: "the right to property, the right for business management, the right for operational management, the right for lifetime inheritable ownership, the right for permanent use, mortgages, easements, and other rights are subject to registration in the cases provided by the Code and other laws".

Pursuant Part 1, Section 1, Art. 26 of the Federal Law No.122-FZ of 21.07.1997 "On state registration of rights to real estate and transactions therewith": "The state registration of real estate lease agreement is performed by the state registration of the property lease agreement". With the adoption of the Law 302-FZ, no changes were made to the Law122-FZ, and the requirement of the Law on State Registration of rented property as impairment is unchanged. Therefore, the right to lease (for possession and usage) of the space and its impairment shall be registered only if the registration of the lease agreement is enclosed.

If the lessor needs to register impairment of the property (the lessee's right for temporary possession and usage of premises), the parties will have to register the lease agreement (for the term over one year). It is not clear, how it can be implemented with the abolition of the mandatory registration of transactions. Indeed, as mentioned above, in case of signing the lease agreement after March 1, 2013, the state registration of the agreement as a transaction is not required (regardless of the agreement validity term), as opposed to registration of impairment.

Thus, in all probability, after March 1, 2013 legal framework for the state registration of impairment of real estate in the form of lease agreement, signed by the parties in writing for a period of one year will remain in force.

I.V. Tolmacheva, Leading legal advisor

¹ See Item 8, Art. 2 of the Federal Law No. 302-FZ of December 30, 2012.