28.01.2021 — Supreme Court: Court Validation of Real Estate Objects Constructed without Required Permits is Possible Only in Exceptional Cases

In one recent case the Supreme Court dismissed the claim of developers to validate a reconstructed object, once again emphasizing that validation of ownership title to an unauthorized construction through court is possible only in exceptional cases. In order to succeed, the developer has to prove that all necessary measures to obtain necessary construction permits were taken. If the developer applies for construction permits only after the completion of construction or reconstruction of the object, this means that the developer intentionally refused to comply with the mandatory regulations. This cannot serve as a ground to validate the construction object in court.

In a recent case the owners of the real estate object carried out its reconstruction, increasing the area of the object by more than 4 thousand square meters. After the reconstruction was completed, the owners applied to the state authorities to obtain construction and commissioning permits. However, the state authorities refused to grant both the construction permit and the commissioning permit to the owners. Therefore, the owners filed the claim with the court to confirm their ownership for the reconstructed object via court proceedings.

The lower courts expressed different views about the possibility to recognize the developer’s ownership for the reconstructed object. The final decision was adopted by the Supreme Court, which dismissed the developer’s claim to recognize its ownership title to the unauthorized construction object. Since the developer applied for the construction permit after the reconstruction was actually completed, the Supreme Court found that it violated the town-planning regulations.

At the same time, the Supreme Court emphasized that the attempt to validate an unauthorized construction cannot be used to evade the town-planning legislation, which provides for prior consent of the authorities for the construction and registration of new real estate objects. If the courts validated title to unauthorized construction objects in cases where this procedure was deliberately breached, this approach would put other developers, which acted in good faith and obtained the documents in accordance with the established procedure, in a worse position compared to unauthorized developers which did not comply with the legal requirements (see Decision of the Supreme Court of the Russian Federation dated 17 January 2020 No. 306-ЭС20-118 on the case No. А57-26100/2018).

25.01.2021 — Adjustment Procedures for Cadastral Value of Real Estate are Simplified

Amendments simplifying the procedure for adjusting the cadastral value of real estate came into force on 1 January 2021. One of the key changes is that owners of real estate may apply for adjusting the cadastral value in accordance with the market value of the object without applying to court. This can be done by filing a motion with the state institution that carried out the initial cadastral evaluation. The authorities plan to implement these amendments in practice by 1 January 2023.

The law amending the rules on the cadastral evaluation came into force on 1 January 2021 (see Federal Law dated 31 July 2020 No. 269-ФЗ). At the same time, the law envisages a transition period until 1 January 2023 to put these changes into motion.

In accordance with the amendments, Rosreestr adopted the number of decrees that change the procedure for adjusting the cadastral value. The amendments are intended to make it easier for real estate owners to adjust the cadastral value of their properties to the market value, where the cadastral value was initially miscalculated. For this purpose, it will now be possible to submit the relevant application in writing or in electronic form. It will also be possible to submit the application to the state institution which carried out the initial cadastral evaluation with the request to clarify the grounds for the cadastral evaluation of the real estate object.

Another significant change is the possibility to apply for the adjustment of the cadastral value in accordance with the marker value of the real estate object without going to the court. The respective decision will be adopted by a state institution which carries out cadastral evaluation of real estate in the relevant region.