To answer the questions posed, let us recall the June Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 35. In particular, on the specifics of the return of property transferred under the contract in the event that the contract is terminated due to a significant violation of one of the parties’ obligations. As a general rule, the parties to a terminated contract do not have the right to demand the return of what was performed before its termination, unless otherwise established by law or agreement of the parties (clause 4 of Article 453 of the Civil Code of the Russian Federation).
If the contract specifies the possibility of return, and the subject of the transaction was real estate, then in order to register the reverse transfer of ownership, former partners should apply to the registration authority, presenting evidence of the termination of the contract and the agreement reached by them on the return of property (clause 4 of Resolution No. 35 ). In other words, the seller’s chances of getting the sold land or building back are quite real, and the algorithm of actions when reflecting in the contract the right to return meters in case of non-payment is more or less clear. But what to do if there is not a word in the agreement about the possibility of returning the property if it is not paid for after the transfer of rights? Two companies from Yuzhno-Sakhalinsk recently had to look for the answer to this question, literally in combat conditions.
The plot of the conflict was as follows. Several years ago, two companies entered into a real estate purchase and sale agreement. According to the document, one party transferred to the other a warehouse, a checkpoint, a production facility, as well as a large plot of land. The contract stipulated that payment for the purchase would occur in stages: once a year, the new owner would transfer a clearly fixed amount to the seller for ten years.
However, despite the agreement, the buyer was in no hurry to transfer money to his partner. But some time after the registration of property rights, he began to completely openly make attempts to sell the property received under the contract, but unpaid for.
Having observed the actions of the new owner for several years, and without waiting for any constructive response to its own claim, the selling company filed a claim in arbitration to terminate the contract and return the transferred objects.
Real estate or interest?
In the courtroom, the plaintiff’s representative explained that from the moment the contract was concluded and the property was transferred, the buyer did not make a single deduction due to the former owner. And this is a significant violation of the terms of the contract, and gives him the right to terminate the unpaid contract unilaterally (clause 1, clause 1, article 450 of the Civil Code of the Russian Federation).
However, the judges of the first instance rejected the company's demands (decision of the Arbitration Court of the Sakhalin Region dated December 19, 2013 in case No. A59-4421/2013). The arbitrators indicated that the buyer’s violation of the agreement is not significant, therefore, all that the plaintiff can demand in this situation is the collection of the unpaid amount and interest according to the rules of Articles 486 and 395 of the Civil Code of the Russian Federation.
If the contract does not contain a direct indication that the seller does not have the right to demand the return of unpaid, but already registered real estate in the name of the buyer, then the first has every chance of regaining the building or land that was once sold by a court decision.
But the servants of Themis from the appeal, to whom the plaintiff turned in the hope of overturning the decision of the first instance judges, indicated that the seller’s demands were completely legal. And they motivated their decision as follows: according to paragraph 65 of the Decree of the Supreme Court of the Russian Federation and the Supreme Arbitration Court of the Russian Federation No. 10/22 of April 29, 2010, registration of the transfer of ownership to the buyer of the sold real estate is not an obstacle to termination of the contract on the grounds provided for in Article 450 of the Civil Code of the Russian Federation .
According to Part 2 of Article 450 of the Civil Code of the Russian Federation, at the request of one of the parties, the agreement can be changed or terminated by a court decision only in the event of a significant violation of the agreement by the other party. In this case, a violation is considered significant if it entails such damage for the other party that it is largely deprived of what it had the right to count on initially. In addition, the arbitrators pointed to the fact that the defendant had been using real estate for more than three years without making any payment, as well as the fact that the defendant had been trying to sell unpaid real estate during this time.
Thus, the appellate judges decided that the buyer’s failure to make payments can be considered a significant violation of the terms of the contract, leading to its termination (decision of the Fifth Arbitration Court of Appeal dated March 14, 2014 in case No. A59-4421/2013).
Now the defendant has a desire to challenge the arbitrators' decision. Having appealed to the cassation, he stated that the seller, absolutely unreasonably, and most importantly - without evidence, considered the long-term non-payment to be a significant violation. In addition, in his opinion, the only consequence of non-payment after registration of the transfer of rights can only be the collection of the established payment and interest.
How to return a purchased apartment or house back
If defects are found in the purchased housing or house, act correctly to return it back.
Preparation
There are two options for declaring a purchase and sale agreement illegal and returning the living space to the former owner: pre-trial by peaceful agreement or through the court if the agreement is declared invalid.
If any deficiencies are found, proceed as follows:
- Study the document: nuances can be discussed earlier.
- Send a complaint to the seller specifying your requirements: reduce the cost, eliminate the defects at your own expense, or reimburse additional costs for their correction. If such deficiencies in the purchase are identified, the agreement may be terminated. The buyer must strengthen his claims with reference to Article 475 of the Civil Code of the Russian Federation.
- If the seller does not agree with the claims made, conduct an independent examination and notify the other party: the former owner has the right to be present during the investigation. The specialist will determine the amount of costs required to eliminate the defects, indicate the cause and approximate date for the appearance of the defect or non-compliance of the condition of the living space with the standards.
- The seller does not provide a response to the application, the parties cannot agree? This is a good reason to go to court. The time for response is indicated in the complaint, otherwise the default is 30 days.
- If the parties agree peacefully, then they do not sign an agreement to terminate the contract or amend it.
- If they come to the conclusion that it is necessary to terminate the contract, they file a complaint with Rosreestr in order to go through the procedure for transferring ownership from the buyer to the seller.
Attention! There are samples of documentation - a claim for purchase and a change in the circumstances of the concluded contract, as well as an agreement on the termination of purchase and sale obligations or on its changes.
Required documents
If we follow Article 452 of the Civil Code, then a party makes claims to the court only if it is impossible to peacefully resolve the conflict in pre-trial proceedings. The claim for termination or amendments to the conditions of purchase and sale of living space does not have a specific standard sample. When concluding, adhere to the requirements of Article 131 of the Code of Civil Procedure of the Russian Federation.
The structure must indicate:
- Details of the court where the claim was sent.
- Full name, passport and contact information of the parties.
- Cost of claim.
- Document's name.
- Reasons to submit an application, reasons to change your mind due to shortcomings in the living space that interfere with normal living.
- Evidence in the form of technical expertise.
- Requirements for the developer or owner for payment of compensation or termination of contractual obligations, return of funds, etc.
- List of attached documents.
- Date and signature.
Important! In the statement of claim, be sure to indicate that it was not possible to resolve the situation peacefully.
Having considered the application and found it true, the court will force the seller to satisfy the buyer’s demands.
Deadlines
Article 181 of the Civil Code establishes a 3-year statute of limitations on the applicant’s request to terminate the sales contract due to the consequences of the invalidity and insignificance of the transaction, as well as recognition of its illegality. This period begins to count from the moment the document is signed.
Consequently, the grounds for terminating contractual obligations are only significant defects in the property. They must significantly complicate the use of the presented living space or make living in it impossible.
The court considers the application within 2 months from the date of its receipt.
Impossibility - not provided
But the federal arbitrators found the defendant's arguments unconvincing. They, on the contrary, indicated that, judging by the method of payment, the disputed contract is an agreement for the sale of goods on credit with the condition of payment in installments. And if so, then by virtue of Part 3 of Article 488 and Part 2 of Article 489 of the Civil Code of the Russian Federation, when the buyer does not make the next payment within the period established by the contract for the goods sold in installments and transferred to him, the seller has the right, unless otherwise provided by the contract, to demand a return.
In almost all court decisions where the seller was denied a claim to return unpaid property, the judges indicated that the plaintiff must clearly prove that the delay actually caused serious damage to the plaintiff, that is, that the lack of money is a significant breach of contract.
Since the court established that the defendant did not make a single payment, and the terms of the agreement do not provide for the seller’s inability to refuse to fulfill the contract, the latter’s right to demand termination of the contract and return of the transferred property arises by virtue of Articles 488 and 489 of the Civil Code. As for the prohibitions set out in paragraph 4 of Article 453 of the Civil Code and Resolution No. 10/22, they do not apply in this case, because otherwise is precisely established by law (i.e., Articles 488 and 489 of the Civil Code of the Russian Federation). And besides, according to Article 1103 of the Civil Code, provisions on unjust enrichment can also be applied in cases of return under an unfulfilled transaction. Therefore, in the event of termination of the contract, the seller who has not received payment has the right to demand the return of the property transferred to the buyer on the basis of Articles 1102, 1104 of the Civil Code of the Russian Federation.
As a result, the buyer was obliged to return all objects to the seller. Moreover, the judicial act in this case is the basis for state registration of the termination of the buyer’s ownership and its re-registration to the seller (Resolution of the Federal Antimonopoly Service of the Far Eastern District dated June 30, 2014 No. F03-2476/2014).
What to do if they refuse
If the seller refuses to return the money or pay a penalty, you must try to resolve the situation peacefully: contact the developer or seller in writing indicating the requirements. If there is no response, the complaint is forwarded to the court with all necessary documentation attached.
During the proceedings, the court will definitely find out whether there were attempts to resolve the conflict on its own. If you document that you tried to negotiate with the seller, the advantage will be on your side.
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Buyer support
This dispute confirms the point of view that state registration of the buyer’s property rights is not an obstacle to the return of unpaid real estate to the seller, unless the “body” of the contract clearly states that such “cancellation” of the transaction cannot take place. However, as practice shows, many arbitrators and practicing lawyers have developed a different opinion on this matter. They, of course, also emphasize that termination of a contract at the request of one of the parties by a court decision is possible only in cases provided for by law (in particular, in case of a significant violation of the contract by the other party) or by agreement. Accordingly, the possibility of returning the object of the transaction to the seller must also be provided for by law or contract. Further, they point out that in the paragraph of the Civil Code, the rules of which are specifically devoted to the sale of real estate, there are no provisions allowing for the termination of a real estate purchase and sale contract with the return of the property to the seller and the annulment of the buyer’s ownership rights due to his failure to pay the purchase price.
At the same time, paragraph 3 of Article 486 of the Civil Code contains a special rule defining the legal consequences of late payment. They are as follows: the seller has the right to demand money and interest in accordance with Article 395 of the Civil Code. That is, based on the law, a return is categorically impossible. Therefore, only the contract remains. And here, the servants of Themis who support the sellers, emphasize that if the contract contains a condition on the possibility of returning the property to the original owner if the buyer suddenly “forgets” to pay for it, then this will greatly increase the seller’s chances of winning (see, for example, the resolution of the Federal Antimonopoly Service of the North-West District dated December 29, 2005 in case No. A05-1018/2005-24, as well as the ruling of the RF Armed Forces dated October 21, 2008 No. 82-B08-11).
Anna Mishina
, for the magazine "Calculation"
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Return of a sold apartment
Return the purchased apartment through legal proceedings
Legal experts will help you resolve these and other serious issues. Contact us for help.
Yes, there are options for returning a purchased or sold apartment (namely, returning an apartment after purchase in the sense of registration), for example:
- the seller or buyer is declared incompetent, and the transaction was made without the consent of guardians and guardianship authorities;
- one of the parties was forced to carry out such a purchase and sale (this will also have to be proven in court);
— the apartment was sold twice, the second time using duplicate documents;
- fraudulent actions were carried out when showing or selling an apartment (falsified documents, a hung street sign on the house, a number on the apartment, other deliberate misrepresentation regarding the characteristics of the object or deception, etc.);
— criminal acts of various nature;
- there are facts proving the invalidity of the transaction, etc.
In order to return a sold or purchased apartment, it is necessary to collect a serious evidence base even before going to court. It may be necessary to conduct a series of examinations and collect the necessary documents and evidence. When filing a claim, a clear, specific position must already be developed. The judge must understand the meaning of the dispute and the grounds for returning the apartment from the text of the statement of claim.
