Changes in Russian Real Estate legislation - Quarter 1 of 2018

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Amendments to the federal laws

Changes in procurement legislation

Federal Law No. 505-FZ On Amendments to Certain Legislative Acts of the Russian Federation of December 31, 2017

The Law updates the rules and principles of procurement by certain types of legal entities. Some of the amendments will enter into force on July 1, 2018, but certain amendments already went into effect on December 31, 2017.

Among other things, the Law sets forth that Law No. 223-FZ1 applies to procurement for commercial use.

The Law also introduces the terms "competitive" and "noncompetitive" procurement. Competitive procurement is procurement done by holding tenders, auctions, a request for quotes or a request for bids, and entities may create their own method of competitive procurement. Such a method must meet the general requirements for competitive procurement. Generally, competitive procurement must be done electronically unless the procurement policy specifies otherwise. Noncompetitive procurement is procurement that does not comply with competitive procurement terms, including procurement from a sole supplier. The procurement policy sets the terms of noncompetitive procurement.

Federal Law No. 496-FZ On Amendments to the Federal Law on Procurement of Goods, Work and Services by Certain Types of Legal Entities of December 31, 2017

Amendments have been made to the provisions of Law No. 223-FZ regulating procurement of legal entities that implement investment projects with state support.

It has been clarified that now such projects are investment projects with state support in the amount set by the Russian Government, valued at more than RUB 500 million (previously 10 billion), and which are in the register of investment projects.

Special provisions have been introduced regarding procurement of certain types of goods, performance of work, provision of services, lease (including chartering and financial lease) by customers that are state corporations and companies, or business entities more than 50 percent held by the Russian Federation, and their subsidiaries that are more than 50 percent held by those legal entities.

The Russian Government has also been authorized to define the lists of goods and the starting/maximum contract price which, if exceeded, means that those goods cannot be procured without seeking approval from a special coordinating authority.

It enters into force on June 30, 2018.

Changes in road legislation

Federal Law No. 453-FZ On Amendments to Article 20 of the Federal Law On Roads and on Road Activity in the Russian Federation and on Amendments to Certain Legislative Acts of the Russian Federation and Article 32 of the Federal Law On Preparing for and Holding the FIFA 2018 World Cup and the FIFA 2017 Confederations Cup in the Russian Federation and Amendments to Certain Legislative Acts of the Russian Federation of December 29, 2017

A procedure has been put in place to obtain a road owner's consent to the construction, reconstruction and major overhaul of its intersection with other roads.

The Interested party will send the road owner an application that is to be considered within 30 days. The specific procedure for giving such consent is set by different agencies: by the Ministry of Transport for federal roads, by Russian Federation constituent entity authorities for regional roads and roads between municipalities, and by local government authorities for local roads.

These provisions on obtaining consent enter into force on June 27, 2018.

Federal Law No. 443-FZ On the Organization of Road Traffic in the Russian Federation and on Amendments to Certain Legislative Acts of the Russian Federation of December 29, 2017

The Law is a key regulator of road traffic management relations, and of parking organizing and engaging in parking activities.

Principles of organizing road traffic, in particular, a principle of creating conditions for pedestrian and bicycle traffic, and placing a priority on the development of public transportation, etc., have been defined.

Among other things the Law specifies requirements to public car parks and paid car parks. In order to create public car parks within an urban area built up with apartment houses the local government authorities must follow the site planning documentation and the opinions of the owners of space in the apartment houses.

It enters into force on December 30, 2018.

RF Government Resolution No. 257 On Amendments to Certain Acts of the Russian Federation Government of March 15, 2018

The definition of the term “stage of construction” for roads and capital structures of rail transport infrastructure provided in RF Government Resolution No. 87 of February 16, 2008 has been changed2.

In this instance "stage of construction" means the range of work to prepare the construction site, including obtaining the rights to own and use land plots needed to site a road and rail transport infrastructure facilities (including high-speed rail), demolish buildings, structures and constructions, move utilities, fell trees, do archaeological digs within the construction site, do mine cleaning of the construction site and other work.

Changes in legislation on utility grid construction and connection

Federal Law No. 451-FZ On Amendments to the Federal Law on Electricity and Certain Legislative Acts of the Russian Federation Related to Licensing of Power Supply Activity of December 29, 2017

A new licensable type of activity has appeared: power supply (energosbytovaya) activity, i.e., activity for the supply and sale of electricity generated and/or purchased on retail markets within the Unified Energy System of Russia and on territories that are not connected to the Unified Energy System of Russia. Power supply activity must be licensed, except in a number of cases, for example, when selling power less than the power generated on electricity generation facilities owned or otherwise legally held by the power generator.

The list of licensing requirements, the list of grounds for refusing to grant or renew a license, how licensing oversight is done and how a license is terminated have been determined.

A license must be obtained by the end of 365 days after the Law enters into force, i.e., by December 29, 2018.

These rules entered into force on December 29, 2017.

RF Government Resolution No. 1661 On Amendments to the Rules For Connection Of Electricity Customers’ Devices, Electricity Generation Facilities And Power Grid Facilities Belonging to Grid Operators and Other Entities, to the Power Grid of December 27, 2017

The Resolution unifies the procedure for grid connection and the procedure for connecting to other utilities. In particular, the terms and conditions of the standard connection agreement have been amended.

It entered into force on March 28, 2018.

RF Government Resolution No. 82 On Amendments to Certain Acts of the Russian Federation Government on Issues of Improving the Procedure for Connecting Capital Structures to Gas Distribution Networks and Improving the Efficiency of Energy Infrastructure of January 30, 2018

The amendments are intended to cut the time and improve the procedure for connecting permanent structures to gas distribution networks and provide, inter alia:

  • The ability to accept connection requests from customers via the Internet with the ability to track fulfillment of the requests
  • Cutting the time for issuing draft connection agreements between the applicant and the gas distributor from 20 to 15 business days
  • Adjustment of the mechanism and rules for redistributing capacity reserved but not used by a customer to other applicants
  • Adjustment of the procedure for executing (renewing) documents confirming connection and the relevant maximum volumes of gas consumed by equipment that runs on gas
  • Changes in the procedure of paying for connection if the applicant delays action under the connection agreement, etc.

With the exception of certain provisions, the amendments entered into force on February 9, 2018.

Russian Federation Government Resolution No. 111 On Amendments to Certain Acts of the Russian Federation Government of February 6, 2018

The Resolution updated the lists of procedures in the construction of electricity, heating and water supply and wastewater disposal facilities.

A number of items have been eliminated from the lists, including:
1) the submission of technical conditions for meter design; 2) the submission of technical conditions for the efficient use of gas; 3) the submission of approval of the heating energy meter design; 4) the signing of commissioning certificates for meters of resources used; 5) the signing of statements of demarcation of balance sheet attribution; 6) the signing of statements of demarcation of operational responsibility.

Other amendments and updates have also been made to the lists.

The amendments will enter into force on May 8, 2018.

Federal Law No. 471-FZ On Amendments to the Russian Federation Forestry Code with respect to Improving the Procedure for Use of Forests with and without Providing Forest Plots

The Law updates the procedure for organizing tenders to enter into sale and purchase agreements for woodlands and lease of forest plots.

An auction to enter into a forest plot lease agreement may be held, inter alia, on the basis of applications from individuals and legal entities.

An auction is generally held electronically and the information about the auction must be posted on the torgi.gov.ru website.

The Law entered into force on January 9, 2018.

RF Government Resolution No. 1670 On Amendments to Certain Acts of the Russian Federation Government of December 27, 2017

The Resolution updates and brings the lists of exhaustive procedures in housing construction into compliance with the laws. For example, the procedure for submitting a project declaration to Rosreestr and the procedure for registering a gas supply project by a gas distribution entity have been eliminated.

It entered into force on January 5, 2018.

RF Government Resolution No. 65 On Setting Restrictions on the Publication on the Internet of Information about the Pledgeholder of Movable Property of January 25, 2018

The RF Government has established grounds for not having to publish information about a pledgeholder of movable property on the Internet. For example, information about the pledgeholder does not need to be published on the Internet if disclosing such information might result in restrictive measures imposed by foreign states, government associations and/or state/interstate institutions of foreign states and/or government associations and/or unions being applied to the pledgeholder.

It entered into force on February 6, 2018.

RF Government Resolution No. 213 On Approval of the Criteria for Assigning the Activity of Legal Entities and Sole Proprietors Engaging in Economic Activity to Risk Categories when Performing Government Oversight of Compliance with Russian Federation Antimonopoly Law of March 1, 2018

The Resolution establishes criteria for assigning legal entities and sole proprietors to risk categories to determine the frequency of audits for compliance with antimonopoly law requirements.

The following frequency of scheduled audits is determined for a business entity depending on the risk category:

  • Not more than once every three years for the medium risk category
  • Not more than once every five years for the moderate risk category

Scheduled audits are not done for the low risk category.

RF Government Resolution No. 222 On Approval of the Rules for Establishing Sanitary-Protection Zones and Using Land Plots located within Sanitary-Protection Zones of March 3, 2018

The Resolution, which entered into force on March 15, 2018, defines the procedure for establishing, changing and terminating sanitary-protection zones (SZZ) and how the plots located within them are used.

Information about the creation of a sanitary-protection zone is recorded in the EGRN, and the SZZ itself and the use restrictions of land plots are considered established as of the day the relevant amendments are recorded.

Generally, construction, reconstruction and use of a land plot inconsistent with the established restrictions are not allowed from the date the SZZ is established on land plots located within such a zone the permitted use of which does not comply with the land plot use restrictions envisioned in the decision establishing the SZZ.

Titleholders of facilities commissioned before this Resolution entered into force and for which SZZs are to be established are required to do certain investigations (measurements) and submit an application to the Federal Service for the Oversight of Consumer Protection and Welfare (Rospotrebnadzor) to establish the SZZs within not more than one year from the day this Resolution entered into force. The permitted use type of the plot and facilities located thereon can be brought into compliance with the land plot use rules envisioned by the decision to establish the SZZ within two years of its establishment.

Ministry of Finance of Russia Decree No. 165n On Approval of the Procedure for Maintaining the Unified State Register of Legal Entities and the Unified State Register of Sole Proprietors, Making Corrections to the Information Included in the Records of the Unified State Register of Legal Entities and the Unified State Register of Sole Proprietors on Electronic Media Not Corresponding to the Information Contained in the Documents on the basis of which Such Records were Made (Correction of Clerical Error), and on Repealing Ministry of Finance of the Russian Federation Decree No. 25n dated February 18, 2015 of October 30, 2017

A new procedure for maintaining the EGRUL and EGRIP that contains the rules, procedure and timeframe for recording information, the procedure for correcting clerical errors and requirements to the content of the registers has been approved.

The Decree determines that information contained in paper documents takes priority over information in electronic documents.

It entered into force on March 1, 2018.

Clarifications of federal legislation

Ministry of Construction of Russia Letter No. 2890-KhM/08 On the Need for Membership in Two Self-Regulating Organizations, in Engineering Surveys and in Architectural and Construction Design, of January 30, 2018

An entity doing work on engineering surveys and drafting design documentation must be a member of two self-regulating organizations at the same time: in engineering surveys and in architectural and construction design.

Each self-regulating organization is liable for the relevant part of the entity’s obligations if the above-mentioned works are done on the basis of a single contract.

Information about environmental engineering surveys

Ministry of Natural Resources and Environment of Russia Letter No. 05-12-32/5143 On the Submission of Information for Environmental Engineering Surveys of February 20, 2018

A list has been prepared of municipalities of Russian Federation constituent entities that have federal specially protected natural territories (OOPT), their protection zones and territories reserved to create new federal OOPTs.

The list was prepared due to the large number of queries to the Ministry of Natural Resources and Environment when environmental engineering surveys are done. The list can be used in preparing certain sections of the report on the results of such surveys.

Now application needs to be made to the Ministry of Natural Resources and Environment only when projects are implemented on the territories that are on the list.

This letter with the attached List may be used as information about data on federal OOPTs issued by the competent state environmental protection authority when doing engineering surveys and developing design and estimate documentation.

Ministry of Natural Resources and Environment of Russia Decree No. 670 On Approval of the Administrative Regulation for Provision by the Ministry of Natural Resources and Environment of the Russian Federation of the Government Service to Issue Permits for Construction and Reconstruction of Capital Structures Planned within Federal Specially Protected Natural Territories and Commissioning Permits for those Structures of December 14, 2017

The Administrative Regulation governs the procedure for obtaining a permit for construction within federal specially protected natural territories and a commissioning permit, and for amending and extending the construction permit.

The period for deciding whether to issue a construction permit and commissioning permit is not more than seven business days from when the application is recorded.

The Administrative Regulation entered into force on March 30, 2018.

BIM Technologies in Construction

Three new building information modeling (BIM) codes (SP) entered into effect as of March 1, 2018:

  • Building Information Modeling SP. Rules for Describing Information Model Components
  • Building Information Modeling SP. Rules for Building Information Modeling at Different Stages of the Lifecycle
  • Building Information Modeling SP. Rules for Exchange between Building Information Models and Models Used in Software Complexes

Amendments to the laws of St. Petersburg and Leningrad Region

St. Petersburg Law No. 882-162 On Approval of the Cooperation Agreement between Leningrad Region and St. Petersburg on the Issue of Industrial and Consumer Waste Management of December 29, 2017

An agreement has been approved for regulating the activities of regional industrial and consumer waste management operators; for organizing activities to transport, process, recycle, decontaminate and dispose of wastes coming to Leningrad Region from St. Petersburg.

The term of the agreement has not been defined.

It entered into force on December 30, 2017.

St. Petersburg Law No. 888-165 On Amendments to the St. Petersburg Law on Public Green Space of December 29, 2017

St. Petersburg Law No. 890-166 On Amendments to the St. Petersburg Law on Public Green Space of December 29, 2017

St. Petersburg Law No. 3-1 On Amendments to the St. Petersburg Law on Public Green Space of January 26, 2018

The boundaries of public green space (ZNOP) have been substantially updated. The Law establishes the areas of municipal and local public green space and the maps of such space. These acts entered into force on January 9, 2018, and the last one entered into force on February 6, 2018.

A key amendment is that private land plots have been included in ZNOP areas, which directly conflicts with the provisions of the law being amended.

By now some of these amendments have been declared illegal by the St. Petersburg City Court3, however, according to public sources, St. Petersburg Legislative Assembly representatives plan to challenge that judicial act.

St. Petersburg Law No. 107-21 On Amendments to the St. Petersburg Law on the Method for Determining Rent for Nonresidential Fund Properties for which St. Petersburg is the Lessor of March 12, 2018

The draft envisions the possibility of “leasing for one ruble” a cultural heritage site that is unused and is in poor condition.

The idea is that a 49-year lease of the property will be granted at tender and the lessee will do repair/restoration within seven years (two years to develop the design documentation and five years to do the work).

Once the work is done the lessee will be entitled to submit an application to the City Property Committee (KIO) to set a minimum rent of RUB 1 per square meter per year.

The lessee will pay the rent specified in the tender until the work is completed.

The Committee for State Control, Use and Protection of Historical and Cultural Landmarks (KGIOP) has generated a list of properties that may be involved in the “Lease a Landmark for One Ruble” program. The list includes about 30 properties, such as the K. Sivers Dacha (Kirovsky Gorodok complex), the Tsar's Pavilion, and the Stepanov house at 8 Konstantin Zaslonov Street and others.

It entered into force on March 24, 2018.

St. Petersburg Government Resolution No. 1151 On Amendments to St. Petersburg Government Resolution No. 632 dated July 26, 2016, of December 29, 2017

The St. Petersburg State Property Privatization Program for 2017 and Planning Period of the 2018 and 2019 has been updated.

The anticipated income from privatization of St. Petersburg state property in 2017 has been changed from RUB 0 to RUB 4,100,000. Also were included indicators of the area of immovable properties, free-standing buildings, structures and constructions mentioned in the Privatization Program and in the St. Petersburg treasury each of whose total area is more than 3,000 square meters or which are included in the unified state register of cultural heritage sites (historical and cultural landmarks) of the peoples of the Russian Federation for 2017.

It entered into force on December 29, 2017.

St. Petersburg Government Resolution No. 1164 On Amendments to St. Petersburg Government Resolution No. 832 dated July 21, 2009, of December 29, 2017

The sectoral plan for siting air transport infrastructure facilities in St. Petersburg has been updated.

The Committee on Town-Planning and Architecture (KGA) will have to consider the sectoral plan at the stage of deciding whether to develop site planning documentation, not while it is being developed.

The list of air transport infrastructure facilities that are components of St. Petersburg’s aviation hub has been updated and expanded. Now the list includes the Pushkin airfield and the Gorskaya airfield, among others.

There is now a new version of the Model Target List of Air Transport Infrastructure Facilities in St. Petersburg and their Site Plan.

It entered into force on December 29, 2017.

Construction Committee of St. Petersburg Order No. 269-r On Approval of the Administrative Regulation of the Construction Committee to Perform the Government Function of Regional State Control (Supervision) in the Shared Construction of Apartment Houses and/or Other Immovable Properties in St. Petersburg, Control over the Activities of a Housing Construction Cooperative related to Raising Funds of Cooperative Members for the Construction of an Apartment House in St. Petersburg, and over Compliance by the Housing Construction Cooperative with the Requirements of Article 110(3) (other than the Subsequent Maintenance of the Apartment House) and Article 123.1 of the Russian Federation Housing Code of December 25, 2017

The newly approved Administrative Regulation replaces the one previously in effect.

Control (supervision) actions are organized in the form of inspections (whether scheduled or unscheduled, desk or field inspections) that result in the generation of reports. If violations are discovered, orders to remedy them are issued or an administrative violation case is opened.

The control actions are preventive and aimed to monitor the activities of entities being inspected and issue cautions that violations are impermissible.

It entered into force on December 25, 2017.

St. Petersburg Property Relations Committee Order No. 19-r On Approval of the Administrative Regulation of the St. Petersburg Property Relations Committee to Provide the Government Service of Approving a Draft Permit to Create an Artificial Land Plot on a Federally Owned Body of Water or Part Thereof if Such Artificial Land Plot is Created in the Russian Federation Constituent Entity Federal City of St. Petersburg of March 5, 2018

This act governs relations arising between applicants and the Property Relations Committee in providing the government service of approving a draft permit to create an artificial land plot on a federally owned body of water or part thereof if such artificial plot is created in the RF constituent entity federal city of St. Petersburg.

Order No. 6-r of the St. Petersburg Property Relations Committee On Approval of the Administrative Regulation of the St. Petersburg Property Relations Committee to Provide the Government Service of Deciding on Preliminary Approval to Grant St. Petersburg State-Owned Land Plots and Land Plots Located in St. Petersburg for which State Ownership Has Not Been Delineated, to Individuals and Legal Entities (other than Decision-Making on Preliminary Approval to Grant Land Plots for Single-Family Homes or for Dachas, with Due Account for the Specifics of Article 39.18 of the Russian Federation Land Code) of January 30, 2018

The administrative procedures, forms of control, forms of requests, etc. have been described and their timing provided.

Documents can be filed for approval through the multifunctional center or the St. Petersburg Property State Public Institution, sent via the government services portal (electronically) or by mail.

It entered into force on January 30, 2018.

St. Petersburg Property Management Committee Decree No. 166-p On Determination of the List of Immovable Properties for which the Cadastral Value is the Tax Basis, for 2018, of December 25, 2017

The List of Immovable Properties for which the Cadastral Value is the Tax Basis, for 2018, was determined on December 25, 2017.

St. Petersburg Property Relations Committee Order No. 23-r On Approval of the Administrative Regulation for the St. Petersburg Property Relations Committee to Provide a Government Service of March 7, 2018

The Order governs the relations arising between the competent authority and applicants for permits to use land located in St. Petersburg for which state ownership has not been delineated, land plots owned by the city or for which state ownership has not been delineated.

Applicants should contact the Property Relations Committee in order to receive this service. Documents can be submitted through the multifunctional center or by mail. This service cannot be provided via the government services portal.

The Regulation includes the necessary reference information, provides a description and timeframe for performing administrative procedures, discusses the procedure and forms of control over provision of the service and how potential disputes are resolved.

Legal precedents

Overview of Legal Precedents of the RF Supreme Court No. 1 (2018)

An overview of legal precedents of the RF Supreme Court has been published.

Among other things, the RF Supreme Court found that a public land lease agreement cannot be extended to complete construction of a facility if the construction has not yet commenced.

Ruling No. А40-233364/2016 of the Moscow Circuit Commercial (Arbitrazh) Court of February 2, 2018

According to the case file, instead of accepting the works, the customer sent the contractor a “pre-arbitration claim” as a reasoned refusal to accept the works. The customer was of the opinion that some of the works were of poor quality. The customer refused to make payment in full.

The courts found that a claim for poor workmanship cannot be considered as reasoned refusal to accept the works. It does not meet the requirements of the contract and was sent to the contractor to comply with the claim procedure. Thus, the disputed works under the contract are considered accepted and the customer should have paid for them.

Ruling No. А40-35769/2017 of the Moscow Circuit Commercial (Arbitrazh) Court of March 5, 2018

A land plot was leased from the owners of the building located on it. The building was demolished under an act of the State Real Estate Inspectorate. The lessor filed an action to terminate the land lease agreement based on the fact that the building had been demolished.

The claim was granted, as the court considered the demolition of the building a material change of circumstances. In such a situation the land plot cannot be used for the purpose provided by the lease agreement.

It should be noted that the Moscow Circuit Commercial (Arbitrazh) Court had previously taken a similar approach.


1 Federal Law No. 223-FZ On Procurement of Goods, Work and Services by Certain Types of Legal Entities of July 18, 2011.

2 On the Composition of the Sections of the Design Documentation and the Requirements for their Content.

3 Decisions of St. Petersburg City Court of March 26, 2018 in case No. 3а-80/2018; 3а-79/2018

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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