The dispute resolution practice of the Law Firm “Levant and Partners” informs about the ruling of the Supreme Court of the Russian Federation that is significant for judicial practice (determination dated March 3, 2016 No. 307-KG15-14692).

The Supreme Court of the Russian Federation considered the issue of qualifying transactions with future real estate, applying the rules on the agreement for the sale of future property to equity participation agreements.

The plot of the case: the entrepreneurs entered into an agreement on shared participation in construction, according to which the developer was obliged to transfer to them non-residential premises in the administrative and shopping center. The owner of the land plot was the developer.

After completion of construction, the non-residential premises were transferred to entrepreneurs, but they were denied registration of shared ownership of the land plot.

The courts of first instance, with reference to Article 36 of the Housing Code of the Russian Federation (analogy of the law), satisfied the demands of entrepreneurs and invalidated Rosreestr’s refusal to register the right. The appeal upheld the first instance decision.

The cassation overturned the court decisions and dismissed the claim, pointing out that shareholders cannot acquire ownership of the land plot under the building in which they own premises, since this is not expressly provided for by law.

The Supreme Court of the Russian Federation overturned the ruling of the cassation court, recognizing the demands of the entrepreneurs as justified, and upheld the acts of the courts of first and appellate instances.

At the same time, the Supreme Court of the Russian Federation indicated that Article 36 of the Housing Code of the Russian Federation is not applicable in this case, but Article 552 of the Civil Code of the Russian Federation on the indivisibility of the fate of the building and the land plot underneath it is applied, taking into account the fact that the developer transferred non-residential premises in the building, then the construction participants also had the right of shared ownership of the land plot.