What is property rights
The Constitution of the Russian Federation and the Civil Code of the Russian Federation provide for the following types of property:
- state (two levels - federal and constituent entities of the Russian Federation);
- municipal;
- private property of citizens and legal entities;
- other forms (Article 8 of the Constitution of the Russian Federation, Article 212 of the Civil Code of the Russian Federation).
The legislation establishes three powers that form the right of ownership of citizens and legal entities, municipalities, the Russian Federation and constituent entities of the Russian Federation: possession, use and disposal (Article 209 of the Civil Code of the Russian Federation, Article 35 of the Constitution of the Russian Federation). In other words, the owner has the right, at his own discretion, within the framework provided by law, to determine the fate of the objects that belong to him. The Constitution of the Russian Federation proclaims the inviolability of private property rights of citizens and legal entities; deprivation of property is allowed only by a court decision (Article 35 of the Constitution of the Russian Federation), and restrictions are established by laws (Article 213 of the Civil Code of the Russian Federation).
On the limits of disposal of real estate and possible risks when acquiring it
The right of ownership constitutes the unlimited and exclusive dominion of a person over a thing. The rights of the owner in relation to his property are defined in paragraph 1 of Art. 210 GK.
Thus, the Civil Code identifies the so-called triad of possibilities of the owner in relation to his property: the right of ownership, the right of use and the right of disposal. In this case, these powers can be exercised by the owner both separately and in aggregate.
In addition, the Civil Code gives the owner certain power over his property. At the same time, the exercise of power over one’s property must occur in the manner established by law and not contradict it. Accordingly, the powers belonging to the owner can be exercised by him at his own discretion within the limits permitted by law.
Thus, the subject of property rights can do with the thing that belongs to him everything that is not expressly prohibited to him. This confirms the theory that ownership is unlimited dominion over a thing.
In this material, the author raises the issue and considers the legal consequences if the owner exercises his powers in relation to real estate during the so-called legal pause, i.e. in the period between the state registration of the alienation agreement (in the case when the owner is not yet deprived of the opportunity to dispose of the property) and the moment of state registration of the transfer of rights.
Real estate, rights to it and transactions with it are subject to state registration in cases provided for by legislative acts <*>.
State registration of a transaction and registration of rights in the time period may not coincide <*>.
As a general rule, the burden of registering title falls equally on both the buyer and the seller. Therefore, each of the parties to the contract, to a greater or lesser extent, has an interest in the speedy (or vice versa) transfer of ownership with appropriate title registration.
At the same time, in practice there are cases when the parties enter into a real estate purchase and sale agreement, register it, but for one reason or another decide to wait a little while registering the transfer of ownership.
The seller of real estate can exercise all the powers of the owner for several years, since until the state registration of the transfer of ownership and despite the existing registered purchase and sale agreement, the seller of the thing continues to be the owner.
It should be noted that such property may be seized for debts of the owner.
Example 1
The dispute was considered, during which the court established the following. On December 7, 2017, the parties entered into and registered a real estate purchase and sale agreement. The buyer applied for state registration of the transfer of rights only on August 30, 2018. However, he was denied registration due to the presence of a ban from a bailiff dated August 24, 2018 in enforcement proceedings in which the seller was a debtor.
The Judicial Collegium for Economic Cases of the Supreme Court of Belarus indicated the following on this matter. Since the transfer of ownership of the disputed property was not registered in the prescribed manner, in this case the plaintiff’s right of ownership of the real estate could not arise without the termination of this right of the seller.
Accordingly, if the seller remains the owner, then, despite the purchase and sale agreement concluded and registered in the prescribed manner, the latter continues to bear responsibility for his obligations with all his property, and also have the full scope of powers provided for in Art. 210 GK.
This judgment is also confirmed by paragraph 2 of Art. 522 of the Civil Code, according to which the execution of a contract for the sale of real estate by the parties before state registration of the transfer of ownership is not the basis for changing their relations with third parties.
Thus, the judicial panel for economic cases of the Supreme Court of Belarus indicated that, within the meaning of this article, for persons who are not parties to the transaction and do not participate in the case, rights to property subject to state registration arise, change and terminate from the moment the corresponding entry is made in the state register, and not from the moment of completion or actual execution of the transaction <*>.
Thus, until the state registration of the transfer of ownership to the buyer, the seller remains the owner of the property for third parties.
In this regard, it seems interesting that the case when the owner, during the so-called legal pause, makes another transaction for the alienation of property: will this transaction compete with the transaction concluded earlier, and is there any priority in this case for any of the buyers regarding the priority concluded agreement; whether the transaction will violate the legal rights of third parties.
Example 2
LLC “A” (plaintiff), as part of enforcement proceedings, through the electronic bidding procedure, acquired real estate owned by private unitary enterprise “B” (a third party who does not make independent claims on the subject of the dispute, on the defendant’s side). After completing all the formalities related to the auction, LLC “A” applied for state registration of the transfer of ownership of the acquired property. However, he was denied registration on the basis of sub. 1.3 clause 1 art. 36 of Law No. 133-Z in connection with the violation of the legal rights of other persons, since previously a purchase and sale agreement concluded between Private Unitary Enterprise “B” and Individual Entrepreneur V was registered in the Unified State Register of Real Estate in relation to the same property.
According to the terms of the agreement between Private Unitary Enterprise “B” and Individual Entrepreneur V., ownership of the property passes to Individual Entrepreneur V. only if three conditions are met in total:
1) full payment of the cost of the object;
2) signing of the transfer deed by the parties;
3) state registration of the transfer of ownership of the object.
At the same time, payment for the cost of the property was made by IP V. only in part <*>.
Thus, the circumstances of this case demonstrate to us the case when in relation to the same piece of real estate two legal administrative acts were made, which in essence are transactions:
1) alienation of real estate on the basis of an agreement - at the will of the owner;
2) alienation of real estate in the form of its seizure by foreclosure with subsequent sale through electronic auctions - against the will of the owner, but in accordance with the procedure for forced seizure established by law.
At the same time, despite the fact that these are two legal facts that are completely different in their legal nature, they entail exactly the same legal consequences for both the owner and third parties in the form of the transfer of a thing and the transfer of ownership of it.
It is worth noting that holding electronic auctions with a previously registered agreement does not contradict current legislation, since state registration of the transfer of ownership to the buyer has not been carried out, and the seller remains the owner of the property with all the ensuing legal consequences. Thus, the presence of two obligatory transactions for the alienation of real estate does not in itself entail the invalidity of one or both such transactions.
When answering the question regarding competition of transactions (if the seller has entered into several purchase and sale agreements in relation to the same real estate), the following should be noted.
In similar circumstances, Art. 369 of the Civil Code and, according to the author, in the event of competing claims, priority will be given to one of the creditors to whom the thing has already been transferred into actual possession. If there was no fact of transfer of the thing, then the creditor in whose favor the obligation arose earlier has the advantage, and if this cannot be established, the one who files the claim earlier has the advantage.
The author believes that such a conclusion follows from the meaning of Art. 520, 522 and 525 Civil Code. According to the contract for the sale of real estate, the property is subject to alienation, and the reason for the transfer of the right to the buyer is its transfer by the seller into the ownership of the buyer, i.e. The transfer of the right to a thing occurs as a result of the transfer of the thing. At the same time, the above norms cannot be interpreted and applied separately from Art. 224 Civil Code.
It is also necessary to take into account that for priority under Art. 369 of the Civil Code, the fact of transferring the thing to the buyer into actual possession is equally of fundamental importance <*>, since the owner of the thing within the meaning of Art. 369 of the Civil Code has the right to demand the transfer of a thing into ownership, and not recognition of the right. Accordingly, the claims of creditors should be formed according to priority: if the item was not transferred into actual possession of any of the creditors, then the general rule of Art. 369 of the Civil Code, but if the thing has already been transferred to one of these creditors into actual possession, then, in the author’s opinion, such a creditor has priority in obtaining the title of owner over all others in relation to Art. 369 of the Civil Code, since in the presence of two independent contracts, the right of ownership of one buyer cannot arise when the thing is transferred into the possession of another buyer. In this case, the remaining creditors have only the right to claim for damages <*>.
Thus, if the real estate is not transferred into the possession of the buyer, then the latter has the right on the basis of Art. 369 of the Civil Code to require the seller to take it away with the subsequent presentation of a requirement for state registration of the transfer of ownership <*>.
The above rules on competition of transactions, in the opinion of the author, provide a direct answer to one of the circumstances of the above dispute <*>.
The author believes that in the described situation, the registrar’s refusal to perform a registration action with reference to sub. 1.3 clause 1 art. 36 of Law No. 133-Z is not correct for the reasons that:
a) at the time of contacting the registering authority, the thing was transferred by the bailiff to the auction participant (LLC “A”) into actual possession under the act of transfer of property, therefore this participant has an advantage in obtaining the title of owner relative to the buyer under the purchase and sale agreement (IP V.) ;
b) for the buyer (IP V.), the circumstances stipulated by the real estate purchase and sale agreement did not occur, according to which the ownership of the real estate object passes to him after full payment of the cost of the object, the signing of the transfer deed by the parties and state registration of the transfer of ownership of the object, i.e. .e. the buyer (IP V.) has neither ownership nor rights, but only a registered agreement;
c) there is no subject as such whose legal rights are violated as a result of the registration action, and the mere existence of a previously concluded agreement for the purchase and sale of real estate does not indicate that any legal right of the buyer (IP V.) according to the specified is thereby violated agreement.
At the same time, it is worth considering that in the absence of a violation of the legal rights of other persons, the sequential registration of the above transactions contradicts the essence and purpose of the Unified State Register of real estate.
Thus, the Unified State Register of real estate must contain registration records that do not contradict each other: about registered real estate; on registered ownership of real estate; on registered transactions with real estate <*>.
Accordingly, the presence in the said register of an entry about a registered agreement for the purchase and sale of real estate should prevent the making of an entry about the registration of another transaction in relation to the same immovable property until a corresponding entry is made in the registration book about an agreement that is earlier in date. relation to the transaction in connection with its termination <*>.
Thus, based on the above, the author comes to the conclusion that any real estate transaction involves obvious risks with the likelihood of adverse consequences as a result of its implementation. And, as practice has already shown, when a transaction is conducted by a compulsory enforcement agency, the onset of risks is not at all minimized.
The author recommends that interested parties, before making a decision to purchase real estate in order to assess the various risks associated with investment, do not rely on the legal purity of the transaction accompanied by an enforcement agency, but collect and analyze information about the acquired property independently or through legal due diligence.
Note: Due diligence is a legal examination aimed at collecting, understanding and objectively assessing all legal risks associated with the investment process.
Read this material in ilex >> *follow the link you will be taken to the paid content of the ilex service
What legal acts regulate property issues of citizens and legal entities
It is impossible to answer in monosyllables the question of what law determines the rights of citizens to property, since the main regulation is contained in civil legislation, general provisions are provided for in the Civil Code of the Russian Federation (Section II). Certain types and regimes of property, accounting and registration rules are also regulated by special legal acts, for example:
- land plots - by the Land Code of the Russian Federation;
- water bodies - by the Water Code of the Russian Federation;
- property relations of spouses by the Family Code of the Russian Federation.
Very often, references to special regulatory legal acts are contained in the general rules of the Civil Code of the Russian Federation, as an example - the norms of the Civil Code of the Russian Federation on the mandatory state registration of rights to real estate, restrictions (encumbrances) in relation to them. Regulation of this issue relates to the Federal Law “On State Registration of Real Estate” No. 218-FZ dated July 13, 2015.
