LEGIST Law Firm

Fundamental Issues of Land Relations Regulation in RF

      The principal legislative act regulating fundamentals of land relations in Russia is the Constitution of RF.

      Art. 9 of the Constitution establishes that "land and other natural resources are used and protected in RF as the basis of life or activities of the people living in a respective territory.

      Land and other natural resources may be in the private, public, municipal, and other forms of property."

      The Russian Constitution also establishes that "individuals and their associations are entitled to have the land as a private property.

      Possession, use, and disposal of the land and other natural resources are exercised by their owners freely, unless this inflicts damage to the environment or infringes the rights and lawful interests of other persons.

      The conditions and procedure of land use are defined pursuant to a federal law." (Art. 36 of the Constitution of RF).

      The issues of land possession, use, and disposal are referred by the Constitution of RF to the joint jurisdiction of RF and the subjects of the Russian Federation (Art. 72 of the Constitution of RF).

      The federal law setting forth the terms and conditions, and the procedure of land use is the Land Code of the Russian Federation (dated 25 October 2001, No. 136-FZ) detailing basic provisions fixed in the Constitution of RF.

      Alongside with enactment of the Code, Cap. 17 of the Civil Code of RF was enacted, which regulates certain issues of property right and other rights in rem to the land.

      The issues regulated by the Civil Code are partly reflected in the Land Code, as well.

      Thus, the general issues of land lot possession and use by the right of heritable estate for life are considered both in the Civil Code and in the Land Code of RF.

      However, if Art. 267 of the Civil Code of RF vested the owner of such land lot with the right to lease it or transfer it to other persons for a fixed-term free use, para 2, Art. 21 of the Land Code has established that "disposal of the land lot being the heritable estate for life is inadmissible, except by inheritance".

      The issues of easement - the right of restricted use of someone's else land lot - are addressed in the Civil Code and Land Code of RF.

      In addition, public easement is detailed in the Land Code, and as regards the private easement, the Land Code gives a reference to civil law (para 1, Art.23, para 1, Art.48 of the Code).

      The easement provisions in the Civil Code of RF are contained in Articles 274-276.

      Unlike the Civil Code, the Land Code regulates a wide range of land use issues.

      The Code has determined the composition of lands in Russia depending on their designated use, executive authorities responsible for classification of land into respective categories and transfer of land from one category to another, as well as the powers of the Russian Federation and local authorities in the sphere of land relations.

      The Land Code has defined the following types of property right to the land: ownership of individuals and legal entities, including foreign citizens, stateless persons and foreign legal entities; public ownership subdivided into the ownership of the Russian Federation (federal property) and ownership of the subjects of the Russian Federation; and municipalities' ownership (municipal property).

      Apart from the land ownership, the Code establishes that the land lots can be:

in permanent (perpetual) use of public and municipal institutions, federal state enterprises, public and local authorities, and individuals, provided this right had been accrued prior to enactment of the Code (no land lots are allocated to individuals for perpetual use after enactment of the Code);
an individual's heritable estate for life, provided such right had been accrued prior to enactment of the Code and in respect of the land lots that were public or municipal property. Disposal of the land lot being a heritable estate for life is inadmissible, except for assignment of the right by inheritance. Allocation of land lots to individuals for heritable estate for life is inadmissible after enactment of the Code;
rented to individuals and legal entities - residents of RF, foreign citizens and stateless persons;
in free fixed-term use of individuals and legal entities.

      As regards land lots being in possession, use, and disposal of certain persons, the right of restricted use of the same lots by other persons - an easement subdivided into private and public ones - may be established.

      The rights to land lots are accrued on the grounds set forth by civil law, federal laws, and are subject to a statutory registration (Art. 25 of the Code).

      In practice, the most widespread grounds for accrual of rights to land are contracts of purchase and sale and lease agreements.

      The law also sets forth a number of special grounds for accrual of rights to land lots.

      When the property right to a building or construction located on someone's else land lot is assigned to another person, the latter acquires the right to use a respective part of the land lot occupied by the building or construction and required for their use, on the same terms and conditions and to the same extent as their previous proprietor. The proprietor of the building or construction located on someone's else land lot enjoys a preemptive right of purchase or rent of the land lot (paragraphs 1, 3, Art. 35 of the Code).

      In the event the building or construction is owned by the possessor of the land lot on which these are located, their alienation is effected only together with the land lot, except in the cases of alienation of a part of the building or construction which cannot be allocated in kind with a part of the land lot, and alienation of the building or construction located on the land lot withdrawn from turnover.

      If the buildings or constructions are located on the land lot owned by their possessor, alienation of the land lot without buildings and constructions located on it is inadmissible (para 4, Art. 35 of the Code).

      The law also regulates acquirement of rights to land lots which are a public or municipal property and on which buildings and constructions are located (Art. 36 of the Code).

      In particular, the Code sets forth the following.

      Individuals and legal entities having in their ownership, business management or operative control the buildings, structures, constructions located on the land lots being the public or municipal property acquire the rights to the said land lots in compliance with the Land Code of RF, and the exclusive right to privatization of land lots or acquisition of the right to rent land lots are enjoyed by individuals and legal entities - owners of buildings, structures, constructions in a manner and on the terms and conditions set forth by the Code and federal laws.

      Since the institute of private property to the land in RF has been introduced comparatively recently, the main turnover of land lots comprises the land lots being the public and municipal property.

      The current land legislation regulates acquisition of rights to the land lots being the public and municipal property fairly sufficiently.

      The above land lots can be allocated to individuals' and legal entities' ownership or rent, and for a free fixed-term use in the cases stipulated by the Code. Besides, the above land lots can be allocated to legal entities for permanent (perpetual) use (para 1, Art. 20 of the Code).

      The Code sets forth a general procedure for allocation of land lots out of public and municipal ownership.

      At the same time, the Code sufficiently details the procedure for allocation of land lots out of public and municipal property for construction.
      Thus, it is established that allocation into ownership of land lots for construction without a preliminary approval of the location of facilities is effected only by tenders. The land lots for construction with a preliminary approval of the facilities locations can be allocated for rent, and as regards public and municipal institutions, federal government enterprises, public and local authorities - for permanent (perpetual) use (Art. 30 of the Code).

      The Code also defines the procedure for allocation to individuals of land lots being the public or municipal property for the purposes unrelated to construction (Art. 34 of the Code).

      As regards the turnover of land owned by individuals and legal entities, the law sets forth the following.

      Individuals owning a land lot are entitled to sell it, make a gift of it, mortgage or rent it, and dispose of it in any other way, since respective lands are neither excluded from nor restricted in the turnover (Art. 260 of the Civil Code of RF).

      The Land Code provides, in respect of the land lots being the private property of individuals and legal entities, for the possibility for their owners to allocate the land lots to other individuals or legal entities for free fixed-term use (para 1, Art. 24 of the Code).

      The land lots being the individuals' heritable estate for life are inherited by other persons with the same right of a heritable estate for life (para 2, Art. 21 of the Code).

      The turnover of land lots is effected pursuant to Russian civil law and the Land Code dated 25.10.2001, No. 136-FZ.

      The Code and federal laws stipulate the grounds for withdrawal of land lots from the turnover and restriction of the turnover of land lots.

      Thus, the Code sets forth the grounds for withdrawal from the turnover of land lots occupied by federal property. These comprise:

public natural reserves and national parks. At the same time, subject to para 6, Article 95 of the Code it is admissible in individual cases to have other users within the boundaries of national parks, as well as the owners whose activities do not have a negative effect on the land of the national parks;
buildings, structures and constructions accommodating the Military Forces of RF, Border Guards of RF, other troops and military formations, and agencies;
buildings, structures and constructions accommodating court-martials;
the Federal Security Service's facilities;
the Federal State Security agencies' facilities;
facilities using atomic energy, storing nuclear materials and radioactive substances;
the facilities in compliance with whose activities closed territorial and administrative formations have been established;
penitentiaries and preventoriums of the Ministry of Justice of RF and the Ministry of Interior of RF, respectively;
military and civil burial places;
engineering communication line facilities erected in the interests of protection and defense of the State boundary of RF (para 4, Art. 27 of the Code). The Code also stipulates restriction of the turnover of land lots being the public or municipal property.

The lands, whose turnover is restricted, comprise the following land lots:

within the limits of specially protected natural territories, except for state natural reserves and national parks;
within the limits of forest fund, except for the cases specified by federal laws;
occupied by public or municipal water facilities incorporated in the water fund;
occupied by especially valuable objects of cultural heritage of Russian peoples, those included in the List of world heritage, historical and cultural reserves, archeological heritage objects;
allocated to ensure defense and security, defense industry, customs needs, except for those withdrawn from the turnover and occupied by federal property;
within the boundaries of closed administrative-territorial formations, except for those withdrawn from the turnover;
allocated for needs of transport organizations, including sea and river ports, railway stations, air fields and airports, navigation facilities for air traffic and shipping, terminals and terminal complexes in the zones of international transport corridors;
allocated for communication needs;
occupied by space infrastructure facilities;
located under hydroengineering facilities;
allocated for manufacture of poisonous and narcotic substances;
polluted with dangerous wastes, radioactive substances subjected to biogenic pollution, other degraded lands (para 5, Art. 27 of the Code).

      The Code does not regulate the turnover of agricultural lands. Such turnover is regulated by the Federal Law On the Turnover of Agricultural Lands.

      Federal Law No. 101-FZ On the Turnover of Agricultural Lands was adopted on 24 July 2002.

      The above law regulates the relations connected with possession, use, disposal of the land lots designated for agriculture, sets forth the rules and regulations for the turnover of land lots and shares in the common property right to land lots designated for agriculture, defines the conditions for allocation of agricultural land lots being the public or municipal property, as well as their withdrawal to the public or municipal property.

      Thus, in particular, in the agricultural lands turnover the purpose of use of the land lots must be preserved, the maximum area and location requirements, as well as other principles set forth by law must be met.

      The Law specifies the peculiarities of agricultural lands turnover in their purchase and sale, rent, inheritance, allocation of public or municipal agricultural lands to the property of or for rent by individuals or legal entities, as well as the peculiarities of the turnover of shares in the common property right to the land lots.

      The Law has also introduced the restrictions of rights to agricultural lands for foreign individuals, foreign legal entities, stateless persons, and legal entities in whose authorized capital the share belonging to foreign individuals, foreign legal entities, stateless persons exceeds 50%.

      The provisions of the Federal Law On the Turnover of Agricultural Lands are not applicable to land lots allocated from agricultural land to individuals for individual housing or garage construction, personal farming, gardening, animal husbandry, vegetable gardening, as well as to land lots occupied by buildings, structures, constructions. Such land lots turnover is regulated by the Land Code of RF.

      Russian law sets forth the principle of payment for land tenure.

      The land lots are used, except in cases specified by the Code, against payment of either a land tax (prior to enforcement of the real estate tax) or rent (para 1, Art. 65 of the Code).

      When the land lots owned by individuals and legal entities are alienated, the cost of such land lots is defined in the purchase & sale contracts.

      Natural persons and legal entities - owners of land lots may also alienate these for free, pursuant to deeds of gift.

      The land lots being the public or municipal property are allocated to the ownership of individuals and legal entities is for value, apart from the cases specified by the Code, federal laws and the laws of the subjects of the Federation (para 2, Art. 28 of the Code).

      The rental amount is fixed in the lease contracts.

      The procedure for determining the amount of rentals, the manner, terms and conditions and the periods for payment of rentals for the land being the property of the RF, subjects of RF or municipal property are established, accordingly, by the Government of RF, governmental authorities of the subjects of RF, and local authorities (para 3, Art. 65 of the Code).

      For the purposes of taxation, as well as for other purposes specified by the Code a cadaster value of the land is established in a manner set forth by the Russian Government (para 2, Art. 66 of the Code).

      The market value of the land lots is fixed in accordance with the federal law on the appraisal activities (para 1, Art. 66 of the Code).

      The current laws establish the principle of rating of the land lots allocated.

      Thus, the maximum and minimum sizes of the land lots allocated to individuals' ownership out of the public or municipal property for farming, gardening, vegetable gardening, animal husbandry, summer cottages construction are specified by the laws of the subjects of the Federation, and for personal farming and individual housing construction - by regulations of local authorities.

      The maximum size of the land lots allocated to individual's ownership free of charge for the above purposes is defined by:

federal laws - for the land being the federal property;
laws of the subjects of the Federation - for the land being the property of the subjects;
regulations of local authorities - for the land being the municipal property.

      For the purposes other than the above ones, the maximal and minimal size of the land lots is established in compliance with the land allocation rates for concrete activities or in compliance with the rules of land tenure and construction, land planning, city planning and project documentation (Art. 33 of the Code).

      The land legislation and, in particular, the Land Code of RF specify the grounds and procedure for termination and restriction of rights to land.

      Chapter VII of the Code contains the grounds which make it possible to terminate the following rights: the property right to the land lots, the right of permanent (perpetual) use of the land lots, the right of a heritable estate for life, the right to rent, the right of free fixed-term use of the land lot, to terminate easement, and the terms and conditions of such terminations.

      In addition, the law sets forth the procedure and grounds for withdrawal of the land lots. The land lots can be withdrawn, including by buying out, for public and municipal needs, may be confiscated or requisitioned.

      As regards restriction of the rights to land, the Code stipulates that the grounds for such restrictions may be contained in the Code and in federal laws.

      The Code also sets forth a number of concrete restrictions of the rights to land.

      Thus, special conditions may be set for use of the land lots and for business activities in protected zones, zones of sanitary protection zones, special conditions for protection of the environment, including flora and fauna, historical, cultural and natural monuments, archeological objects, preservation of the soil fertile layer, natural habitat, wild animals migration routes, conditions for commencement and completion of construction on or development of a land lot within the periods stipulated for a project approved in a prescribed manner, construction, repair or maintenance of an automobile road (part of it) when the right concerns the land lot being a public or municipal property (Art. 56 of the Code).

      The Code defines the procedure for protection of rights to land and land disputes consideration (Chapter IX of the Code).

      The Code, in particular, establishes that the right to a land lot is recognized in court and that land disputes are also tried by a court.

      It seems reasonable to dwell on the issues of land tenure in Russia with respect to foreign legal entities, foreign individuals, and stateless persons.

      Russian law sets a number of restrictions for foreign individual and legal entities, and stateless persons in the sphere of land tenure in Russia.

      These restrictions have been defined for the lands specified by the Code, with the exception of agricultural lands.

      Thus, foreign individuals, stateless persons, and foreign legal entities can have no property right to the land lots located in the areas adjacent to borders, whose list is established by the President of RF in accordance with federal laws on the State Border of RF, and in other special territories of Russia defined in compliance with federal laws (para 3, Art. 15 of the Code).

      Unlike individuals and legal entities - residents of RF who can be allocated land lots being the public or municipal property both free of charge, in the cases specified by current laws, and against payment, foreign individuals and legal entities, and stateless persons can get public or municipal land only for payment (para 5, Art. 28 of the Code).

      The right to rent land lots is granted only to foreign individuals and stateless persons, i.e. to natural persons. Foreign legal entities do not enjoy the right to rent land lots in Russia (para 1, Art. 22 of the Code).

      Allocation state-owned or municipal land lots to foreign individuals, stateless persons and foreign legal entities for construction is effected with due regard for the following legislative provisions:.

      The land lots are allocated to the above persons for construction and ownership, without a preliminary approval of location of facilities, exclusively by tenders (para 2, para 12, Art. 30 of the Code) and only for payment (para 5, Art. 28 of the Code), except for the lots located in the areas adjacent to the border (para 3, Art.15 of the Code).

      The land lots for construction with preliminary approval of facilities location are allocated for rent (para 3, Art.30 of the Code) only to foreign individuals and stateless persons, i.e. to natural persons (para 1, Art. 22 of the Code).

      At the same time, no land lots are allocated to ownership if these land lots are:

withdrawn from the turnover;
prohibited for privatization;
reserved for public and municipal needs (para 4, Art. 28 of the Code).

As regards the rights of foreign individuals, stateless persons, and foreign legal entities to land lots with respect to which they are no owners, but on which buildings they own are located, it is established that they have a preemptive right to buy or rent the said lots (para 5, Art. 35 of the Code).

As regards the agricultural lands, the Federal Law On the Turnover of Agricultural Lands establishes that foreign individuals, stateless persons, foreign legal entities and the legal entities in whose authorized capital the share of foreign individuals and legal entities, and stateless persons is over 50% may only rent the lots of agricultural land (Art. 3 of the Law).

Olga V. Zabelinskaya,
Partner

Alexandra V. Plotnikova,
associate lawyer