Real Property & Land Legislation in the Russian Federation
O'Leary, Sheila, Kaganova, Olga, Real Estate Issues
The Russian Federation has made significant progress in establishing the legal basis for private property ownership and moving a great deal of property into private hands, thus creating the environment for a private real estate market to develop.
By many accounts the Russian real estate market is beginning to thrive. This is true at least in cities like Moscow, St. Petersburg, and Nizhni Novgorod that are hubs for domestic and foreign business. Several major legal developments in the past five years have been catalysts to spur development of the private real estate industry. The legalization of private property, housing, and enterprise privatization, and the establishment of the rudimentary systems for mortgage lending and property registration all contributed to improving the climate for real estate activity in Russia.
One of the last major areas to be reformed is land ownership. Currently, the majority of urban land in Russia is government-owned. A lack of political consensus on whether and how to privatize land is probably the single most significant obstacle to land reform today. The 1993 Russian Federation Constitution established the right of private land ownership. However, numerous efforts by national legislators and policy makers to implement the language of the Constitution have resulted in a body of law that is incomplete, unclear, and sometimes ambiguous. Some progress has been madeseveral Presidential decrees on land reform and the 1994 Civil Code helped establish a workable legal framework for land relations. However, the national legislature has yet to pass the Land Code, the major piece of legislation that would provide the fundamental legal basis for land relations.
The current version of the Code was enacted in 1991. Between 1994 and 1997, the national legislature (Duma) considered and rejected several drafts of the Land Code. The most current draft Code, sponsored by Communist factions within the Duma, passed the upper house of the legislature in June and the lower house in July 1997, with huge majorities. It prohibits the privatization of agricultural land and ownership of land by foreigners. Although President Yeltsin is certain to veto the law, some analysts predict that there is sufficient support within the legislature to override the Presidential veto.
Establishing the legal and regulatory basis for real property relations is mainly the task of the national government. However, local governments, through their interpretations of federal law and the pace at which they implement new legislation, have a fair amount of control over the shape of real estate reform within their jurisdictions. For example, St. Petersburg and Nizhni Novgorod allow legal entities to buy and sell land. Moscow prohibits legal entities from owning land and allows only land leases up to 49 years. Some cities are using their new authority over legal and economic matters to attract investors and encourage development. These cities are attempting to create comprehensive and streamlined procedures to foster real estate investment. Other cities force developers to comply with a maze of confusing and inconsistently applied local regulations that ultimately stymie the goals of modernization and development.
This article' reports on the current legal framework of real property relations in Russia in four areas: property rights, registration, taxation, and land use regulation. We attempt to offer a concise overview of the relevant federal laws affecting urban real property. We do not discuss in detail any local legislation. However, the role of local government is discussed in those cases where federal legislation designates primary responsibility for a given area to local officials.
REAL PROPERTY RIGHTS
Previously a state where all property was government-owned, Russia now recognizes and constitutionally protects all major forms of private property ownership. During the early 1990s, government-sponsored programs of housing and enterprise privatization moved a great deal of property into private hands, creating the basis for a private real estate market. …