Clínker

In Russia there are currently two systems: a system of state registration of real estate and a system of state registration of rights to real estate and transactions therewith. Moreover, the state registration of land plots and other real estate is carried out in different ways.

Nonetheless, current legislation will soon provide for a significant change to the ex- isting procedure by unifying the aforementioned registration systems. By 2013, the unification of the procedures for registering land plots and other real estate is planned. This will result in the creation of a unified state cadastre of real estate – a systematized collection of information on all real estate registered in Russia. A unified federal infor- mation system is being developed that contains not only information on real estate, but also information on rights to real estate and transactions therewith. At some point in the future, the introduction of universal registration procedures, that will preclude

duplication of information in the state real estate cadastre and the register of rights to real estate, is planned.

3.2.1 State Registration of Land Plots

Land plots in Russia are subject to state cadastral registration. Conducting transac- tions with land plots that have not undergone state cadastral registration is not per- mitted.

In the course of cadastral registration, in the state cadastre of real estate information is entered on the borders and area of the land plot, its cadastral number, the buildings and structures located on the land plot, as well as other unique characteristics of the plot. Cadastral registration results in the creation of a cadastral passport of the land plot.

The state cadastral registration of land plots is carried out by regional bodies of the Federal Service for State Registration, Cadastre and Cartography at the location of the land plots. The procedure for carrying out a state cadastral registration is regulated in detail by the Federal Law “On State Cadastre of Real Estate” dated July 24, 2007, No. 221-FZ.

3.2.2 State Registration of Other Real Estate

The state registration of buildings, structures, premises and unfinished construction projects (jointly referred to as capital structures) is carried out by conducting the tech- nical registration of these facilities. Real estate is individualized within the framework of the system of state technical registration (description, determination of the techni- cal characteristics, assignment of cadastral numbers).

State technical registration results in the creation of cadastral and technical passports for the real estate. These documents contain information on the main parameters of the real estate (address, area, cadastral number, designation, stories, etc.) as well as its plan. A cadastral passport contains the information about the real estate that is required for the state registration of rights thereto or transactions therewith. The technical passport contains more detailed (in comparison with the cadastral passport) information about the technical characteristics of the real estate.

When reviewing the cadastral or technical passport for real estate an investor must pay special attention to the designation of the property, i.e. determine whether the property is residential or non-residential. It should be remembered that in Russia it is prohibited to use residential premises for commercial activities (for example, locating offices, stores, etc.). At the same time, it is possible to convert premises from resi- dential to non-residential upon receipt of a special permit from local authorities. In a case involving a change in the technical characteristics of real estate due to altera-

tions, reconstruction, a change in the level of utilities development, etc., it is neces- sary to reflect these changes in both the cadastral and technical passports.

The system of technical registration of real estate is currently undergoing both struc- tural and qualitative changes. It is intended that as of January 1, 2013, the procedure of technical description and registration of capital structures will have been fully altered and will be similar to the existing procedure of cadastral registration of land plots.

3.2.3 State Registration of Rights to Real Estate

The existing system of state registration of rights to real estate in Russia is estab- lished by the Federal Law “On State Registration of Rights to Real Estate and Trans- actions Therewith” dated July 21, 1997, No. 122-FZ (hereinafter the “Law on State Registration of Rights to Real Estate”).

As a general rule, rights to real estate and transactions therewith are subject to obliga- tory state registration in the Single State Register of Rights to Real Estate and Trans- actions Therewith. The state registration is a legal act of the state’s recognition and confirmation of rights to real estate.

The right to lease real estate is an exception to the general rule, but only if such a right is established for a period of less than one year. In addition, rights to real estate that commenced prior to the entry into force of the Law on State Registration of Rights to Real Estate, i.e. prior to January 31, 1998, are recognized without the state registra- tion.

The Federal Service for State Registration, Cadastre and Cartography is charged with maintaining the Single State Register of Rights. Regional subdivisions (departments) of the Federal Service, which maintain the register and implement registrations of rights and transactions with real estate, are present in all regions of Russia. State registrations of rights to real estate and transactions therewith are implemented at the locations of such real estate. The Law on State Registration of Rights to Real Es- tate determines the registration procedure, the required documents, as well as other procedural issues.

It is important for investors to realize that the fact of state registration of rights to real estate, in and of itself, is not an absolute guarantee of the protection of the rights and interests of investors. A state registration of rights to real estate may be annulled by a court decision, where the governmental act or agreement which serves as the basis for the registration of the rights has been deemed invalid. Therefore, an independent legal expert evaluation of the rights to be acquired by the investor is a necessary con- dition for any transaction involving real estate in Russia.