Land Ownership: Pros and Cons of Sole Proprietorship

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Published: 07/02/2017

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According to the Constitution of the Russian Federation, land is the property of all citizens. This means that anyone can become its owner.

Experts will tell you about the intricacies of such relationships, the pros and cons of private disposition.

• What it is. Types of private land ownership
• Legislation
• What areas can be privately owned?
• Who in Russia can have the right of private ownership of land?
• Grounds and procedure for alienation of privately owned land
• What is personal ownership of land and how does it differ from private property?

What it is. Types of private land ownership

The right of private ownership of land is a type of property in which ownership and disposal of it belongs to an individual or company.

The subject of the relationship in this case will be a plot within the boundaries established by law, which was obtained by following a certain procedure. At the same time, you can manage not only the soil, but also all the reservoirs and forests that are located on the territory of the allotment. Unless, of course, it is prohibited by law.

The following may own a plot of land as private property:

• citizens of the Russian Federation;
• organizations of all forms of ownership;
• Foreigners;
• stateless persons;
• companies registered abroad.

There are the following types of private land ownership:

• individual ownership of both ordinary citizens and various organizations;
• joint possession, when the parts of each owner are not determined;
• common shared ownership.

Both ordinary people and several companies can unite to jointly own a plot.

Minuses

But this concept has not only advantages that encourage development and enrichment, but also disadvantages.

Own:

• Generates inequality, divides people into unequal classes . There is no escape from this: there has always been a split in society between the poor and the rich.
• Leads to social stratification of society . It implies unequal opportunities to satisfy needs.
• Encourages people to strive only for personal gain, bypassing the interests of other members of society. Unfortunately, this quality is now everywhere. A person is only interested in his personal gain, regardless of anyone else. And this, in turn, develops selfishness and individualism.
• Generates large amounts of money . It is necessary to develop your business through huge material costs. Whether it will pay off is still a big question.
• It is the cause of disagreements and wars in human history.

What areas can be privately owned?

The following areas may be individually owned by citizens and companies:

• recognized by such federal laws;
• property rights arose during the delimitation of state ownership of land;
• the plot was acquired in one of the ways specified in the Civil Code;
• the plot was given for free use by federal authorities.

Private ownership may include agricultural land for personal use that has not been withdrawn from circulation.

The last category includes:

• nature reserves and national parks;
• lands on which buildings allocated for the needs of the army are located;
• areas where military court buildings are located;
• lands where there are federal security service facilities;
• those on which state security organs are located;
• given for a nuclear power plant, for the storage of radioactive substances, nuclear material;
• facilities where closed administrative entities have been created;
• areas where prisons are located;
• where military and civilian cemeteries are located;
• places where communication structures are located.

There are also lands whose turnover is limited:

• specially protected areas;
• forest fund lands;
• if within the allotment there are water bodies that belong to the state;
• related to cultural heritage;
• given to defense authorities, customs;
• on the territory of which structures for the construction or repair of transport are located;
• engaged in space infrastructure or hydraulic engineering;
• where toxic or narcotic substances are produced;
• contaminated areas;
• lands reserved for the needs of the municipality or federal authorities;
• areas close to water used for drinking or household needs.

Such plots cannot be purchased or donated to an individual or organization.

Subjects of the economic market

Subjects of the economic market are enterprises, households and the state, united in a single system of economic relationships and performing certain functions. Separate forms of management are provided for them.

It must be remembered that since 2015 there are no such management methods as CJSC and OJSC. They were replaced by public and non-public organizations.

OOO

A limited liability company (LLC) is a form of property management in which the capital of the organization is formed from the contributions of participants. They take an active part in the promotion and development of the enterprise.

Features of the LLC ownership form:

• the minimum amount of authorized capital is 10,000 rubles,
• all decisions are made at general meetings by voting,
• The founders who created the LLC do not bear financial liability for material damage resulting from their activities.

It is the last point that ensures the popularity of LLCs: citizens or organizations that are part of the company do not bear material risks in the event of bankruptcy of the company or its arrest. A striking example of an LLC in Russia is the Renault car assembly plant.

You may be interested in: Decoding LLC: what does this abbreviation mean?

Individual entrepreneurs

An individual entrepreneur (IP) is the simplest form of property that has proven itself for beginning businessmen. In modern realities, it is the most popular type of management.

Why you should open a sole proprietorship:

• there is no minimum amount of money to start an activity,
• relatively small amount of reporting,
• no territorial restrictions,
• Besides taxes, all earnings go directly to the entrepreneur.

The main feature of individual entrepreneurs is that the owners are fully responsible for material damage caused by the organization. That is, the entrepreneur will have to cover the debt from his property in the event of bankruptcy.

Video: What is IP

Partnership

A partnership is a voluntary association of two people who come together to conduct a joint business for the purpose of making a profit. Partnerships may differ in the degree of participation of partners in the company’s activities, but this will not change the essence of the organization.

Benefits of partnership:

• easy organization - just sign an agreement,
• large initial capital due to the combination of people,
• simplified company management due to the distribution of responsibilities between owners.

The main disadvantage of a partnership is equal rights in management. Sharing power can lead to conflicts of interest.

Who in Russia can have the right of private ownership of land?

The right of private ownership of a land plot can be granted to legally capable citizens and legal entities.

The Land Code defines the rights of foreigners, stateless persons, and legal foreign companies to acquire land. Yes, there are some restrictions:

• this category of persons can only rent land for agriculture if their share in the authorized capital is more than 50%;
• foreigners, stateless persons, companies cannot have ownership rights to lands located in border areas;
• Only citizens of the Russian Federation who live there or those companies that are registered in such a place can obtain a plot in a closed administrative organization. All other persons can privatize land only by decision of local authorities and agreement with federal authorities;
• Citizens of the Russian Federation and foreign companies that own buildings located on private territory have a preferential right to rent or purchase them.

True, the President of the Russian Federation can independently establish lists of those objects where this rule will not apply.

Denationalization process

Denationalization is usually understood as the process of transferring property from the state into the hands of private individuals. The procedure includes several directions, the main one of which is reducing the share of public sector participation in the country’s economy.

Denationalization is a system of measures aimed at transforming state property to eliminate excessive state participation in the economy.

Among other things, the procedure means the almost complete removal of most economic management functions from the state, but this does not mean that the country’s leadership ceases to play a significant role in the market economy.

Main methods of denationalization:

• liberalization of markets - opening up new opportunities for the establishment of a market by new economic entities,
• commercialization - transfer of state organizations to commercial calculation,
• encouraging the creation of mixed enterprises,
• denationalization.

All four tools are used in combination, resulting in changes in the forms of management of the organization and improvement of the mechanism of the market economy.

Grounds and procedure for alienation of privately owned land

The right to own a land plot may be terminated in the following cases:

• when transferring a land plot to other persons;
• if the owner himself renounces the right of ownership;
• collection of land for debts of the owner;
• the land was not used for its intended purpose;
• when operating a site in violation of the law;
• temporary seizure of land during natural disasters and epidemics in order to protect the interests of citizens;
• taking away a plot in the interests of the state or municipality;
• nationalization of lands;
• confiscation;
• alienation of a plot if, by law, it cannot belong to this person.

In the case where the owner voluntarily renounces the land, he must draw up the relevant documents with a notary. The owner also has the right to donate, sell, and bequeath his property.

If a decision is made to confiscate land, it is taken free of charge by court decision. But such alienation is used as a punishment for serious crimes.

When a plot is temporarily withdrawn, its owner is given a corresponding document and the amount of the possible loss is paid, and when the circumstances on the basis of which the land was taken end, the owner can get it back.

When a plot is taken in the interests of the state or municipality, the owner is notified in writing about it a year before the event, the cost of the plot is paid, or an equivalent one is provided elsewhere.

If the land is taken for debts, then you need to obtain a corresponding court decision, make an inventory and evaluate the site. Then it is sold at auction, the debt obligations are paid off, and the difference is given to the owner.

A plot of land can be taken away if it was used for other purposes or in violation of the law. In this case, the owner must be notified in writing of such a decision. If he agrees with him, then the land is sold at auction. Otherwise, you need to go to court.

When alienating a plot, if it cannot belong to this person, then such a decision is made by the court.

Nationalization can be carried out in two ways: as a gratuitous seizure or a full or partial redemption.

The procedure for inheriting land plots is regulated by the Land and Civil Code. A cadastral plan of the territory can be ordered in various ways. We talked about this in detail here. How to find out if a site has been surveyed? All information is in our article.

Formation process

The process of ownership formation directly depends on the object, its goals and purpose. According to economic theory, property can be considered useful only when it brings benefit and benefit to its owner.

Private values ​​are formed as follows:

• acquisition by an individual or legal entity of certain property,
• alienation of state objects in favor of private individuals,
• creating your own enterprise through the association of several citizens.

In a capitalist society, private property plays the most important role in the economy, so the state is increasingly trying to give up its property, transferring it into the hands of private owners.

Formation of state property:

• construction of a facility using federal funds,
• nationalization of socially useful organizations,
• purchase of a controlling stake in an enterprise.

A developed state is trying to distance itself as much as possible from private enterprises. Nationalization in modern realities is a rare phenomenon.

Social ownership is formed through the distribution of ownership rights among team members at a particular enterprise. As a rule, with this approach a closed joint stock company is formed.

Municipal values ​​appear:

1. In special ways - cash proceeds from privatization, local taxes, administrative fines and fees for the exploitation of natural resources.
2. General civil - the creation of property at the expense of municipal funds or the acquisition of property from private individuals.

The main task of municipal property is that it must fulfill specific goals necessary for the normal functioning of the settlement.