In what cases can a real estate transaction be challenged?

Even after successfully purchasing an apartment, you cannot completely relax. Real estate transactions are considered the most complex and time-consuming. Any party can challenge it if it considers its rights to be violated. There is a time limit for filing a claim in court, which can be extended or shortened depending on the circumstances. Let us tell you what the statute of limitations is and what it depends on.

What is the statute of limitations?

Buyers should approach transactions with real estate especially responsibly. Even after the transfer of money and execution of papers, the transaction may be considered invalid if it was initially made illegally or violated someone’s rights.

Only through a judicial process can a transaction or its outcome be declared invalid. There is a limitation period for appeals - this is the period during which the injured party to the transaction and third parties whose rights have been violated can go to court and demand that the transaction be declared invalid.

The injured party has the right to initiate litigation at a later date, but then the defendant may claim that the time limit has expired, which will be a reason for dismissal of the claim.

The victim also has the opportunity to restore the statute of limitations. To do this, you need to prove to the court that there were good reasons for the absence: serious illness, temporary incapacity, helplessness.

Is it possible to extend?

The law makes it possible to extend a period lost for an objective reason. In common practice this is:

• long-term inpatient and outpatient treatment;
• completion of compulsory military service;
• participation in eliminating the consequences of natural and man-made disasters;
• being on maternity leave;
• business trips, etc.

The statute of limitations for transactions is extended if the reasons for its omission occurred within 6 months preceding the filing of the claim. The declaring party is obliged to provide documentary evidence of its arguments - a medical certificate, travel certificate, registration certificate, extracts from the place of registration in another region, etc. Not only papers, but also testimony of witnesses are accepted as evidence.

Limitation period for void transactions

The invalidity of a void transaction does not need to be confirmed in court: it should not and could not have been completed under the law. Therefore, from the very conclusion it is obviously considered invalid, and they go to court to recognize its consequences as such. Here are the grounds for insignificance:

1. Acquisition of real estate as a result of a transaction using false documents, powers of attorney, forged signatures.
2. Purchasing real estate from an incapacitated citizen.
3. Purchasing an apartment from a child under 14 years of age. In life, this, of course, almost never happens, but it’s worth knowing about all the reasons.
4. Acquiring an apartment as a result of an imaginary or feigned transaction. For example, a citizen who owes a large sum for a loan transferred his dacha to a close friend. The deal will be canceled and the property will be taken away.
5. Acquisition of an apartment during a transaction that violated the law or other regulations. This happens especially often with housing in which there should be small children among the owners, for example, when buying an apartment using maternity capital.

Sham real estate transactions

“Folk wisdom” when finalizing housing transactions does not lead to anything good. Why shouldn’t you disguise purchase and sale as a gift? How not to lose money, real estate, and faith in humanity?

Pavel Kortunov

From this article you will learn how to correctly recognize a donation agreement for an apartment, house or land as feigned. Let's imagine this using a real case as an example, which is an allegory for tens of thousands of others. This is a control shot at schemes to circumvent legal rules, which are actively used by “black realtors”, cunning scammers and simply dishonest buyers.

One pensioner opened both the doors of her apartment and her kind heart. Responding to a friend’s request, she registers her daughter in her Moscow home, and after some time sells her, at a market price, 1/4 share in the ownership. At the same time, a friend suggested that it would be better to draw up a gift agreement instead of a purchase and sale agreement (what if the married daughter gets divorced and the husband demands half the value of this share as property acquired jointly during the marriage).

The money transfer to the pensioner came not from the girl, but from her mother, so that no one would suspect anything. Thus arose a chic launching pad for the ensuing adventure, the fuel for which was... a female quarrel.

Almost three years after the conclusion of the gift agreement, a beloved friend filed a lawsuit to recover unjust enrichment from the pensioner. And she calmly won the case, since she transferred the funds, but formally received nothing in return.

What does an elderly woman do at home after receiving such an “experience”?

She files a lawsuit against the daughter of her offender, to whom she sold 1/4 share of the apartment, to invalidate the “drawn” gift agreement. Having lost her way both in her intentions and in the rules of law, she points out that the donation covered a life annuity agreement. She is alone, in need of care and maintenance, and the very money received from the defendant’s mother was rent payments.

Any bookmaker would offer a high odds against such a claim being rejected. And, indeed, the case was lost. At that time, five years had already passed since the signing of the agreement.

However, the status quo has not been restored. The heroine has no share in the apartment, no money for it. And she brings a new claim, in which - for the first time - both real circumstances and correct demands are set out: for recognition in accordance with paragraph 1 of Art. 572, art. 170 of the Civil Code of the Russian Federation, the gift agreement is invalid due to sham; on the application of the consequences of the invalidity of a void transaction in the form of transferring to the daughter of a friend the rights and obligations under the purchase and sale agreement with the establishment of the contract price in the amount of funds that were seized from her as unjust enrichment.

There are several “buts” at once: by that time, eight years had already passed since the conclusion of the deal, and the plaintiff signed that she had previously behaved in bad faith, providing false information to the court.

And here the bookmakers’ game would be reminiscent of turns on a “roller coaster”: at first the players would face big losses, but then they would hit a big jackpot. The courts of three instances tore this claim to smithereens, including due to the missed three-year limitation period. But all judicial acts were overturned by the highest court.

The Judicial Collegium for Civil Cases of the Supreme Court of the Russian Federation, by Decision dated August 11, 2020 No. 5-KG20-44, returned the case for review. The judges patronizingly “did not notice” the long and ornate chronology of the litigation, focusing on its very essence. Yes, it was not a donation, since its characteristic is the gratuitous nature of the transfer of property. Yes, the debtor can assign the fulfillment of an obligation to a third party.

The following historical fragment of the Definition is worthy of a separate direct quotation:

Any counter-provision on the part of the donee makes the gift agreement invalid. For a grant to be considered consideration, it does not have to be provided for in the same contract as the original gift. It may be the subject of a separate transaction, including with another person. There must be a causal condition of the gift by a counter-provision on the part of the donee, in the presence of which the rule on a sham transaction will apply.

On October 15, 2020, the grandmother’s claim was fully satisfied by the Babushkinsky (which is symbolic!) District Court of Moscow, decision in case No. 2-4546/2020. It once again confirmed that cunning people are best at outwitting themselves.

In the new court verdict, the flashing beacons of prejudice and the statute of limitations flicker especially brightly.

On the meaning of prejudice

The prejudicial significance of the court's decision in favor of the pensioner's friend regarding the recovery of unjust enrichment was gracefully circumvented. Themis emphasized that when it was adopted, the circumstances established in the present case were not taken into account. The fact that the decision itself was made before the consideration of the last case does not mean anything, and the parties are not limited in the right to present their arguments and present evidence in accordance with the principle of adversarial proceedings, enshrined in Part 3 of Article 123 of the Constitution of the Russian Federation.

On reinstating the statute of limitations

The court noted that, due to the direct instructions of the law, a sham transaction is considered void (Article 170 of the Civil Code of the Russian Federation), which means the statute of limitations is three years. However, in accordance with Part 1 of Art. 204 of the Civil Code of the Russian Federation, it does not flow at all from the day of going to court for protection of a violated right!

This lawsuit was filed eight years after the conclusion of the sham contract, which means five years after the expiration of the statute of limitations. But the woman filed her previous claim (to invalidate the gift agreement as committed under the influence of deception in exchange for a promise to pay rent) on time, when the three-year period had not yet expired. Being legally illiterate, she could not foresee the refusal to satisfy her demands on the chosen legal grounds.

From this followed a conclusion, the power of the effect produced is comparable only to the mirage of an oasis for an exhausted traveler in the desert:

choosing the wrong method of protecting a violated right within the statutory limitation period does not indicate the absence of legal grounds for restoring this period.

Among the valid circumstances for missing a deadline in Art. 205 of the Civil Code of the Russian Federation refers to legal illiteracy. The specificity of civil legal relations does not in any case imply unconditional certainty in the understanding of their legal qualifications.

Once again it was recognized that the choice of method of defense is made not by the plaintiff, but by the court! Indicate any grounds of claim. The court is not bound by them.

In one and the same case we saw two resounding victories of true impartiality over the formalism of the law. Although it generated a storm of criticism in the legal community.

How is it that the principle of legal certainty is violated (when the consideration of a dispute is finally completed in the case in which it began). In addition, ten years from the date of the transaction, the court restored the term, considering that the incorrect method of defense and legal illiteracy were sufficient grounds for this. Militant proposals are being put forward to limit as strictly as possible the institution of restoring the statute of limitations.

We will gladly risk being in opposition to such colleagues and believe that this is one of the most courageous and worthy decisions of the Russian court. In it, he did the work for the citizen on procedural errors, defended his rights and, thereby, raised the law, an imperfect regulator of human legal relations, to the level of justice.

Read on the topic: Bona fide purchaser The judge is the best lawyer The secret of black realtors

We invite you to a consultation, and the company will definitely protect your rights!

Sincerely, Managing Partner Pavel Kortunov

Voidable transaction

Voidable transactions can only be declared invalid in court proceedings. Here are examples of voidable transactions:

1. One of the parties entered into the transaction as a result of fraud, coercion, or threat from the other party.
2. The victim entered into a transaction as a result of being materially misled. For example, when instead of a two-story country house, the buyer received a dilapidated two-story barn.
3. The transaction was concluded by a person with limited legal capacity. This includes people who are addicted to alcohol or drugs.
4. The transaction was concluded with a child between 14 and 18 years of age without the consent of parents, guardians or trustees.
5. The deal was concluded for an apartment, not all of whose owners gave their consent.

After the transaction is declared invalid, both parties must return to the original owners everything they received under the transaction. The buyer returns the property, and the seller returns the money. If something happens to the property and there is no way to return it, it is necessary to reimburse the cost.

○ Legislative regulation of the issue.

Depending on each specific situation, real estate transactions, including paid and gratuitous transactions, are regulated by:

• In cases of disputes concerning family relationships (for example, division of property or challenging a will) - by the norms of the Family and Housing Code of the Russian Federation (LC RF).
• In matters relating to the legality and procedure for the exercise of property rights - the Civil Code of the Russian Federation (Civil Code of the Russian Federation).
• In cases of fraud caused with the intent of significant damage to the victims - using the norms of the Criminal Code of the Russian Federation (CC RF).

What determines the statute of limitations?

The statute of limitations depends on the type of transaction. For insignificant ones, the standard period is 3 years. It begins to be counted from the day the deal was concluded.

For voidable transactions, the period is reduced to 1 year. But its course begins only from the moment the danger or threat under the influence of which the transaction was concluded has disappeared, or from the moment when the person should have received information about the violation of his rights.

The period cannot be more than 10 years (Article 196 of the Civil Code of the Russian Federation). It is also impossible to change it by mutual agreement of the parties.

What are voidable and void transactions?

Statutes of limitation may be reduced

The limitation period can not only be increased, but also reduced depending on which category the transaction is classified into. In Russia, there are two types of contracts that can be declared invalid:

• Void transactions: these are agreements made in circumvention of the law, which are illegal or infringe on someone’s interests. For example, if an heir sells an apartment without a confirmed right to inheritance, sells the apartment, other heirs can sue him and the transaction will be declared void. In this case, the statute of limitations is 3 years from the date of discovery of the violated rights of homeowners.
• Voidable transactions are an agreement concluded under pressure, without the desire of the seller and buyer. If fraudsters used threats, blackmail, misrepresentation, or otherwise forced the owner to sell real estate, such transactions may be considered voidable. However, the participant will have to prove that he performed this or that action under pressure from the seller or buyer.

If the transaction is declared voidable, the victim can file an application within a year and demand restoration of the violated rights.

Contracts concluded under the influence of persuasion by fraudsters are most often considered voidable. At risk in this situation are suggestible elderly people who do not have the opportunity to consult with relatives.

There are other cases: for example, if a wife sells a jointly owned apartment without her husband’s knowledge and without his notarized consent, such an agreement can also be declared voidable. After this, the injured party can file a lawsuit within a year. The year will be counted from the moment the deprived owner learned that the transaction was concluded without his desire.

How to protect yourself from scammers and lawsuits

Before concluding any real estate transaction, especially on the secondary market, carefully study all documents and owners. Errors, forgeries, lack of consent of one of the owners - all this can lead to the transaction being declared invalid.

The main step when checking real estate is obtaining an extract from the Unified State Register of Real Estate. In it you can see all the main characteristics of the property, information about the owners, sales history, the presence of encumbrances and many other factors that may be a warning sign. If you see that the seller has owned the property for more than three years, then there is much less risk.

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