Who has the right to purchase land under a building or structure?
Owners of buildings or structures that are located on land plots that are state or municipal property have the exclusive right to acquire these land plots for ownership or lease. This rule, enshrined in, applies to both citizens and organizations.
The exclusivity of such a right means that no one other than the owner of a building or structure has the right to acquire the land plot occupied by the corresponding building or structure.
This method of acquiring rights to land plots is aimed at implementing the principle of the unity of fate of the land plot and the real estate objects located on it.
In addition to the existence of such a right among the owners of buildings or structures, the law also establishes their obligation to register rights to the specified land plots.
This means that owners of real estate located on land plots belonging to state or municipal property are required to either lease or purchase these land plots from the state or municipal entity, unless otherwise provided by federal law ().
You can only purchase a plot of land under an existing building or structure that legally belongs to you. This means that the right to the property under which you plan to register the land plot must be registered for you in accordance with the requirements of the law or must arise by force of law (regardless of its registration).
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Rights to real estate registered after January 30, 1998 (from the date of entry into force) are subject to mandatory registration in Rosreestr and are considered to have arisen from the moment of such registration.
Rights to residential buildings registered before 01/31/1998 must be registered with the technical inventory authorities - BTI.
The case where the right of ownership to real estate objects arises by force of law is, in particular, the acquisition of rights to a real estate object by inheritance, as well as full payment of a share by a member of a consumer cooperative (,).
Recommendations: register your ownership of a building or structure if it has not yet been registered!
In cases where:
- several buildings and structures are located on a land plot, the division of which is impossible;
- the specified buildings and structures belong to several persons under the right of private ownership;
- premises in such a building or structure belong to several persons on the right of private ownership; these persons have the right to purchase such a plot of land as common shared ownership or for lease with a plurality of persons on the tenant side ().
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A lease agreement for a land plot with a plurality of persons on the lessee's side is concluded with the condition that the parties agree to the entry into this lease agreement of other rights holders of the building, structure or premises in them ( ).
The main condition for the application of this norm is the indivisibility of the land plot on which the relevant real estate objects are located. A land plot is indivisible if its division cannot be carried out without violating the requirements established by law for the land plots being formed or changed.
The size of shares in the right of common ownership or the size of the obligation under a lease agreement for a land plot with a plurality of persons on the lessee’s side in relation to a land plot provided to several right holders must be proportionate to their shares in the right to a building, structure or premises in them. It is possible to deviate from this rule only with the consent of all copyright holders of a building, structure or premises in them or by a court decision (Article 10).
The law establishes the specificity of acquiring rights to a land plot on which an apartment building is located ( ). Such a land plot belongs to the common property in an apartment building and, from the moment of formation and state cadastral registration of the specified plot, belongs on the right of common shared ownership to the owners of the premises in the apartment building by force of law (,).
The Supreme Court defended the right of peasant farms to the preemptive purchase of land from a bankrupt organization
On March 12, the Supreme Court issued Ruling No. 302-ES19-17986 in the case of the head of a peasant farm challenging the results of an open auction for the sale of a land plot of a bankrupt agricultural organization bordering the land he leases.
In December 2014, Nechaevskoye LLC was declared bankrupt, and Alexander Sherstnev became its bankruptcy manager. Two and a half years later, several land plots and agricultural properties of the bankrupt organization were sold at open public auctions, which were subsequently recognized as valid, to the head of the peasant farm, Alexander Budyakov, under the corresponding sales agreement.
In June 2021, the head of another peasant farm, Andrey Kireev, filed a claim with the arbitration court against Alexander Budyakov and demanded that the rights of the buyer under the above agreement be transferred to himself. In support of his claims, the citizen stated that he rents a plot of land directly adjacent to the debtor’s plot of land sold at auction. According to the plaintiff, the bankruptcy trustee did not offer him to exercise the pre-emptive right to purchase the disputed property, contrary to the requirements of Art. 179 of the Bankruptcy Law.
The courts of three instances rejected the claim under the pretext that the plaintiff had chosen an improper method of legal defense. In their opinion, Andrei Kireev should have challenged the auction itself. They justified their legal position by reference to Art. 449 Civil Code of the Russian Federation, Art. 139, 179 of the Bankruptcy Law, as well as the Decree of the Constitutional Court of the Russian Federation of December 21, 2004 No. 440-O and paragraph 18 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of December 23, 2010 No. 63 on some issues related to the application of Chapter III.1 of the Law about bankruptcy.
In his cassation appeal to the Supreme Court, Andrei Kireev referred to a significant violation of the law by lower authorities. The applicant’s arguments boiled down to the fact that he chose the correct method of defense, since it leads to the restoration of the violated right and complies with the general legal approach established by law in similar legal relations, as well as the explanations of the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated July 9, 2009 No. 1989/09 on case No. A14-1423/2008. In addition, the citizen noted that he did not have the opportunity to challenge the results of the auction, since he was not a participant.
After studying the materials of case No. A19-12879/2018, the highest court noted that the subject of consideration of the Judicial Collegium for Economic Disputes in this case is the question of the appropriate method of protecting the preemptive right to acquire the property of the debtor - an agricultural organization, sold at auction, by the person declaring the existence he has such a right on the basis of Art. 179 of the Bankruptcy Law.
As the Supreme Court explained, agricultural activities involve the use of land. In order to protect the rights of owners of neighboring land plots interested in consolidating their holdings, the Bankruptcy Law in its Art. 179 granted these owners a pre-emptive right to acquire the debtor's property. “The meaning of the pre-emptive right, as a rule, is that some property is sold to a third party (potential buyer), and only in this case the holder of the pre-emptive right can use it under the same conditions as the potential buyer. According to paragraph 2 of this article, first of all, persons engaged in the production or production and processing of agricultural products and who own land plots directly adjacent to the debtor’s land plot have a preemptive right to acquire the debtor’s property,” the Court noted.
The implementation of such a right, as the Supreme Court emphasized, is possible through the sale of the debtor’s property through open auction. To do this, the arbitration manager (in addition to publishing the relevant information about the sale of the debtor's property at auction in a printed publication indicating the initial sale price of the property) must also notify potential buyers who have the preemptive right to purchase such property.
“Thus, owners of a land plot adjacent to the debtor’s plot that is up for sale (adjacent land users) engaged in agricultural activities must be personally notified by the arbitration manager of the ongoing auction. After a public auction, the arbitration manager is obliged to offer adjacent land users to buy out the debtor’s property at the price determined at these auctions. At the same time, even without being participants in the auction, adjacent land users have the right to take advantage of their result to exercise their preemptive right to acquire the debtor’s property. The issue of competition between adjacent land users is resolved in favor of the one whose application was received by the arbitration manager first,” the definition noted.
The Supreme Court added that Andrei Kireev chose the proper method of defense, since challenging the results of the auction and declaring them invalid will not lead to the restoration of the violated pre-emptive right to acquire the debtor's property. He explained that the invalidity of the auction will entail the invalidity of both the market price established for it and the purchase and sale agreement, which will actually block the possibility of exercising the pre-emptive right to purchase. At the same time, the transfer of the rights and obligations of the buyer does not infringe on the validity (legality) of the trading procedure and enables the applicant, who recognizes the results of the tender as legal, to take advantage of their result. In this regard, the Supreme Court of the Russian Federation canceled the judicial acts of the lower courts and sent the case for a new trial in the first instance.
Managing partner of the legal entity Artem Denisov believes that in this determination the RF Supreme Court deciphered the behavior and motives of the plaintiff from the point of view of the application of Art. 179 of the Bankruptcy Law. “The plaintiff’s motivation is more than logical not to destroy the auction (this involves invalidating not only the result of the auction, but also the procedure during which the sale price is set), but only invalidating only part of it in the form of the determination of the buyer. It is this legal nature and logic that is provided for in a special method of protecting a similar pre-emptive right to purchase this or that property in the form of a claim for the transfer of the rights and obligations of a party to transactions in corporate law,” he noted.
The expert added that the transfer of the rights and obligations of the buyer does not infringe on the validity (legality) of the trading procedure and gives the opportunity to the plaintiff, who recognizes the results of the auction as legal, to take advantage of their result. “Due to the fact that the procedural aspect of the implementation of the preemptive right in the event of its violation was not regulated by the Bankruptcy Law, this ruling of the Supreme Court brings clarity to these legal relations. It is worth noting that the RF Armed Forces are constantly filling in the gaps in the legal regulation of the above law,” noted Artem Denisov.
Denis Bykanov, a partner at the law firm MGP Lawyers, believes that in the case under consideration, the Supreme Court examined two issues that are important for participants in civil transactions. “The first of them is the obligation of the arbitration manager to mandatory notify the owners of land plots adjacent to the one being sold at auction about the conditions of sale and the results of the auction in accordance with Art. 179 of the Bankruptcy Law. If the owner of the adjacent plot, who has a priority right, within a month from the date of notification agrees to purchase the bankrupt plot at the price that the buyer (third party) is willing to pay for it, then the purchase and sale agreement must be concluded with the owner of the adjacent plot. The exception is if the winning bidder himself is not the owner of the adjacent plot, in which case he also has priority,” he explained.
According to the expert, the second question boils down to what kind of claim the owner of the adjacent plot should file in order to restore violated rights. “SKES of the Supreme Court of the Russian Federation reasonably indicates that the claim for the transfer of the rights and obligations of the buyer is aimed at protecting the rights of the owner of an adjacent land plot. Her position is correct, because the priority is to respect the interests of persons who have a priority right to conclude an agreement over other participants in civil transactions,” concluded Denis Bykanov.
Leading lawyer of the INTELLECT law firm, Marina Baykova, is convinced that the approach outlined by the Supreme Court is fully consistent with established judicial practice. “If the pre-emptive right to purchase the property of the debtor - an agricultural organization - is violated, then the appropriate method of protection is the transfer of rights and obligations under the purchase and sale agreement. From my point of view, there is an obvious need to apply other rules of law by analogy. In this situation, there is no point in challenging the auction - the sale price of the property must still be determined at the auction due to the direct indication of this in the Bankruptcy Law,” she believes.
How to register a land plot under a real estate property - ownership or lease?
So, the law provides for two options for registering land plots by the owners of real estate located on them - renting or acquiring ownership. In this case, the acquisition of such a land plot from the state is carried out without holding a tender (,).
On what right to register a land plot under a building or structure (in ownership or lease) is the choice of the owner of these objects (Clause 6, Article 39.13 of the Land Code of the Russian Federation).
However, the following should be considered:
2.1 Cases of restriction of the exclusive right to acquire land plots into ownership
The exclusive right to register land plots under buildings or structures as property may be limited by federal laws. Thus, it will not be possible to acquire ownership of a land plot if:
- the plot is withdrawn from circulation or limited in circulation (clause 2 of article 15, clause 2 of article 27 of the Land Code of the Russian Federation);
- You are a foreigner or a foreign company, and the site is located on the border territory or within the boundaries of a seaport (clause 3 of article 15 of the Land Code of the Russian Federation, part 2 of article 28 of the Federal Law of November 8, 2007 No. 261-FZ);
- some buildings (structures) or premises in a building on this site are partially owned by individuals or legal entities, and partially belong to legal entities with the right of economic management or operational management ( );
- there is an unfinished construction project on the site ();
- the site on which the building or structure is located is classified as public land ();
- the site is located on the shoreline or there is a pond or a flooded quarry on the site ( ).
The acquisition of the listed land plots, with the exception of those withdrawn from circulation, is possible on lease subject to compliance with the conditions established by law.
2.2 Cases of concluding a lease agreement with multiple persons on the lessee’s side
Land legislation prescribes the conclusion of an agreement
lease with a plurality of persons on the lessee’s side in the following cases (clauses 3, 4 of Article 39.20 of the Land Code of the Russian Federation):
- if buildings, structures or premises located on an undivided land plot are partially owned by some persons with the right of ownership, and by other persons with the right of economic management and (or) operational management;
- if buildings, structures or premises located on an undivided land plot are partially owned by some persons with the right of economic management, by other persons - with the right of operational management, or by all persons with the right of economic management.
If buildings, structures or all premises in them located on an undivided land plot are assigned to several legal entities with the right of operational management, such land plot is provided for permanent (indefinite) use to the person under whose operational management the largest area of premises in the building is located, structure or the area of buildings, structures under the operational management of which exceeds the area of buildings, structures under the operational management of other persons ( ).
2.3 Additional factors influencing the method of registration of a land plot
There is another important factor that determines how the land plot will be registered - ownership or lease.
To acquire ownership of a land plot, all owners of buildings, structures or premises in them located on such a plot must jointly apply to the authority or local government authorized to dispose of land plots ( ).
Lack of good will to register the land of at least one co-owner will deprive you of the opportunity to register the land under the real estate
into the property.
Thus, if all the owners of real estate located on the same plot have not agreed to acquire ownership of the land plot, then they can apply for its acquisition only on lease (), since any of them has the right to apply for the provision of a land plot for rent to the authorized body interested copyright holders of a building, structure or premises therein ( ).
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If the right holder of a real estate object on a land plot applies for the provision of a land plot on a lease basis, then the authorized state body, having received such an application from one of the right holders, within 30 days sends to other right holders of real estate objects on a land plot a signed draft lease agreement with plurality persons on the tenant's side.
These persons, within 30 days from the date of sending the draft lease agreement, are required to sign such an agreement and submit it to the authorized body. A land lease agreement is concluded with persons who have signed this lease agreement and submitted it to the authorized body within the specified period.
In relation to those persons who, within the specified period, did not provide the authorized body with a signed land lease agreement, the authorized body is obliged to apply to the court within 3 months with a request to force them to conclude this lease agreement.
Also, the authorized body has the right to file a lawsuit to compel the copyright holders of buildings, structures or premises in them to enter into a lease agreement for a land plot, if none of these copyright holders has applied to acquire the right to a land plot.
State or municipal land plots are not granted either ownership or lease to owners and other legal holders of structures that may be located on such land plots on the basis of an easement, public easement or permission to use such plots ( ). For example, such structures include electrical networks, heating networks, water supply networks, sewerage networks, communication lines and structures, linear gas supply system facilities, oil pipelines and oil product pipelines of federal, regional or local significance; linear structures, the placement of which does not require a building permit.
