"Real Estate and Investments. Legal Regulation", the journal

Issue 1, 1999

Real Estate Concept and Peculiarities of Real Estate Legal Regime in the Legislature of Russia

Rukas N., Senior professor of the chair of commercial law of Moscow State Commercial University

Political & economic reorganization of the soviet structure put the conception integrates legal (private) person & a property; a proprietor & an object of the property.

The term “real estate & movable property” for the first time appeared in the legislation of Russian Impair in January 112, in times of Peter the Great. The term “real estate & movable property” had been improved before the Revolution. That time land, residences, houses, factories, manufactories, booths, railways were considered real estate. The decision about relating a building to real estate or to the movable property depended on the concrete consequences. Constructions situated on land & under it such as mines, including minerals & other treasures of the soil were considered real estate.

Ships, boats, books, manuscripts, paintings, everything relating to arts & science, agricultural tools, different materials, carriages, horses, wheat, minerals & everything extracted out of land were considered movable property. Money, bills of exchange, mortgage, obligations, rights for golden mines of the state land were also movable property.

In spite of Russian Impair having used Romano-German legislation in pre-Revolutionary times, those judicial traditions regulate property, were not applies in the Soviet Legislation.

For example, the USSR Law “about property in the USSR, March 6, 1990, saved three forms of property: citizens’ property, collective property & state property. The Law didn’t divide property into real estate & movable one. Citizens’ property was divided into consumers’ goods & productivity’s tools.

Division of property into real estate & movable is basic in the Romano-German legislation. As far as “consumer’s goods” concerned it doesn’t have any relations to the term “consumed good” in the Roman legislation. There was no the term “real estate” in the Soviet legislation. However, there were several norms in the Civic legislative book of the USSR, 1964, that gave citizens rights for particular property & for making deals with it (the right for private property in houses, buying-selling agreement of the house or country house).

The USSR legislation ratified by the upper Soviet in May 31, 1991 had already had norms that divide property into real estate & movable one. It was the period of political & economic reforming the Soviet legislation, Soviet structure & the Soviet State.

So, the fourth (article) of the Basic Civic. Legislation in the USSR abolished the classical division of property into real estate & movable one. The strong connection with land was called the main distinction of real estate.

Let’s illustrate borrowing the legislation on the example of particular classical (articles) in the French civic Legislative book ratified in March 21, 1804. Napoleon took part in the discussions on this Legislation.

So, 516 article in the French Civic Legislative Book (FCLB) fixes the differences in property. According to it property is divided into real estate & movable one. The 517-525 Articles of FCLB define realty as something removable & something that belongs to removable. The following things are referred to real estate: land & buildings, harvest, woods, etc., & also machines, instruments, taw materials that are used in an enterprise; agricultural tools & other things. Although they are movable things they are destined for exploitation operation of real estate in their physical meaning. Land duties, lawsuits for getting realty back are also referred to real estate as to something they belong to.

The 527-529 Articles of FCLB define movable property as it is in its mature & as a law stated. The items that can move themselves (f. e. inanimate items) are referred to movable property as it is in its nature.

The following items are referred to movable property as a lawsuits (to pay off debts), or rights for movable, items, stocks & shares in financial, trade, or industrial companies even if they have realty; perpetual & life rents which are paid by the state or private persons.

This historical & legislative excursion will let come to the analysis of legislative mechanism in realty market regulation in Russia.

In “post-perestroika” period the Russian realty market reflected all problems of transitional economy. Low investments’ activities of legal & private persons, poor legislative basis & unequal development of certain market’s orientations characterized it. At the same time the Russian realty market is a perspective sphere to invest capital.

Besides, the role of the terms like “movable items” & “unmovable items” in defining the property of legal & private persons has been increasing in the conditions of development of market’s relations in Russian Federation & rising mutual interdependence in economic relations in the world.

In 1990-1999 the analysis of the Russian Legislation, ratified in times of market relations development, let draw a conclusion that real estate became a product which is being sold & bought in a fixed order.

At the present realty is a special object of the right for property.

It is essential to tell that theoretically & practically the rights for owning, using & managing real estate differ from the rights for owning, using & managing the “movable” property. It has to do with the following: using real estate mostly concerns other legal & private persons than using movable property. Besides, real estate compared with movable property has a higher nominal cost.

The division into real estate & movable property, brought in legislation by the Basic Civic legislation of the USSR in 1991, is included into the Civic Legislation Book of Russia.

So, 130 Article of the Civic Legislation Book of Russia refers land, entrails, waters, woods, buildings & everything that strongly connected with land to real estate.

Other objects of property, in particular, air ships, sea ships, spaceships that are subject to the state registration are also referred to real estate. The law can refer other property to real estate.

According to the Legislation of Russia things that are not referred to real estate including money & securities, are considered a movable property. Registration of the rights for movable items is not required, excluding cases stated in a law.

The Civic Legislation Book of Russia separated realty into independent object of civic rights & defined the distinctions of its legislative regime. Those distinctions got further development in many other legislative acts of Russia, for instance, in the federal laws “about joint-stock companies”, “about limited proprietorships”, “about bankruptcy”, “about partnerships of dwelling’s proprietors”, “about state registration of the rights for real estate & the deals”, etc.

Norms & articles of the Civic Legislation Book of Russia are used in legal regulations of natural using. Thus, natural objects are included into the general category of real estate. That defines the right of private property for natural objects, especially for land, & brings natural objects in a civic turn.

The main distinction of legislative regime in realty is the special order of appearing, changing & abolishing the right for property & other rights for realty; & also special requirements to realty’s deals.

The list of realty’s objects is not full, because a paragraph of the first article in the Civic Legislative Book of Russia refers “other property” to real estate.

The 132 Article in the Civic Legislative Book of Russia shows a company (as against the forth Article in the USSR Law “about enterprises & entrepreneurs’ activities”) as a properties complex used for entrepreneurs’ activities. The company as propertied complex includes all kinds of property for its activities including land, buildings, equipment, inventory, raw materials, production, rights for demand, debts, rights for symbols which identificate a company, its production & services (a name, trade mark, service mark), and other exclusive rights.

A law or an agreement should prescribe taking any property object listed above from a propertied complex.

“Condominium” is a special kind of an integral realty complex. The term was defined in the federal law ¹72-73 “about partnerships of dwelling’s proprietors”. June 15, 1996 the first article of this federal law says that “condominium” is an integral realty complex that includes land within fixed boards & dwelling on it, other property. Certain parts of the complex (used for dwelling or as premises) are in property of citizens, legal persons, Russia regions of Russia house owners, that is in private, State, regional property, etc. And entire parts (public property) are in public share property. Premise is considered a part of swelling or another realty connected with swelling. It is supposed to use for different purposes and to be in property of legal persons, citizens, Russia, regions of Russia, etc.

Parts of the realty complex that are used for serving the premises & are close to their destination, are referred to public property. Public property is a share property of house owners.

The 5th Articles of the federal law “about partnerships of swelling’s proprietors” says that condominium can include the following objects:

  • a building or a part of it; or several buildings, where the premises belong to different house owners (no less than two), with land within fixed boarders, passages & highways, waterpools, greens, etc. On the their territory;
  • several buildings situated close to each other;(one-family houses, country houses with land or without it; garages & other objects connected with land & elements of infrastructure).

“Condominium” as an integral realty complex can consist of the separate part of building with the size of no more than a block-section that has air entrance separated from other building’s parts and a lift & stairs between apartments. A certain part of a building cab be separated in a certain “condominium” if overbuilding’s, reconstructing, rebuilding or demolishing the block-section do not ruin the integrity of their building’s parts that are not in the “Condominium”.

The 14th Article of the federal law “about partnerships of dwelling’s proprietors” stated requirements to the state registration & to the certificate of house owning.

“Condominium” as an integral realty complex & the rights for real estate in Condominium, & seals with it are supposed to be registered according to the current legislation & at presenting the certificate of house owning.

As far as property of apartment’s owners is concerned, there is a list of public property in apartments’ building in the first paragraph of the 290th Article in the civic Legislation book of Russia. The article says that apartment’s owner doesn’t have a right to expropriate his or her share in public property of the swelling, & to do other activities to delegate this share separately from the right for owning his or her apartment. Consequently’ an apartment, owner at the same time expropriates his share in public property of his or her apartment building.

The Civic Legislation book of Russia divided the property into real estate & movable one & at the same time appointed the institute of the state realty registration.

The 131st Article of the Civic Legislation Book of Russia says it is essential to have required integral state system for registering the rights for real estate & for making deals with it. At the present the registration of the rights for real estate is carries on by establishments of justice throughout Russia in the Integral State schedule of the rights for realty according to the federal law ¹122-F3 “about the state registration of the rights for real estate & for making seals with it”, June 21, 1997. The federal law has been acted all over Russia since January 31, 1998. It doesn’t have a reverse power & it is applied only to the cases appeared after ratifying the law. Actually, it means that the rights for real estate appeared before ratifying the federal law according to the existed order are considered valid & do not require the additional state registration. However, the state registration can be carried out if the possessor of the rights wishes.

The Federal Law fixes special rules for cases when after the Law’s ratifying deals were make related to the property even if the rights for it appeared before January 31, 1998. In such cases a deal is subject to the state registration just after the state registration of the right for making the deal.

According to the 2nd Article of the Federal Law “about the state registration of the rights for real estate & for making seals with it” the state registration is the only provident of registered right’s existence.

Registered right for realty can be argued just in the court. The main goal of the state registration of the rights for the real estate & for making deals with it is to exclude abuse, to strengthen the state control over the legality of deals that are being made in the interests of the society, & parties of an agreement.

The Civic Legislation Book of Russia & The Federal law “about the state registration of the rights for real estate & for making deals with it fixes that tights’ delegation & break of the deals with real estate are also subject to the state registration.

Consequently, the rights’ delegation is required to be twice registered, because fist the deal should be registered as a legal delegation of the rights for real estate & then the delegation of the rights for items to their buyer should be registered. In spite of their simplicity, the problems of “double registration” are not being solved one by one in the legislation of Russia.

There is special legislation in most foreign countries that regulate realty. The state registration of real estate is the most important issue there. There are more strict rules for making & carrying out the real estate deals. They are explained by the attention to land & to other natural resources as to the objects of realty; & also by the necessity of setting the certain limits (ecological, nature’s protective, sanitary, etc.) on using those objects.

As a conclusion, let’s show the main distinction of the legal regulating the realty’s regime that’s fixed by the new Russian Legislation: it is the special order of appearing, changing & breaking off the rights for property; & it is also the special requirements to the realty’s deals.