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Supreme Court Ruled How Change of Tenant Affect Agreement Terms.

15 April 2020

Nikolai Sapozhnikov, a BIEL partner, pointed out that the Supreme Court reminded the lower courts of a principal difference between the cases where public land was originally provided to tenants for construction on a time-bound basis and the cases where the long-term lease rights for land under construction originally emerged as a result of re-registration of the constant (perpetual) use right.
In the latter case, the buyer of any construction in progress will assume the tenant’s rights and obligations under such contract by virtue of direct provisions of the law (Article 552 of the Civil Code and Article 35 of the Land Code).

“This case, as the Supreme Court pointed out, does not fall under provisions of paragraph 21, Article 3 of Law No. 137-FZ, paragraph 10 (2) and paragraph 5, Article 39.6 of the Land Code which establish the procedure for one-time 3-year lease of public land originally provided for construction to the owner of construction in progress to finish the works. However, what is still more important, the Supreme Court effectively recognized that any short-term lease agreement entered between the authorities and the buyer of real estate following the purchase was irrelevant”, Nikolai Sapozhnikov said.
He pointed out that the Supreme Court formulated a position that any lease agreement entered for three years as initiated by the authorities shall not deprive the company which bought the real estate from a person who re-registered the constant (perpetual) use right into a lease agreement of the right to enter into a new agreement with him upon expiry of the previous one taking into account the term of the buyer’s outstanding lease agreement and the established maximum term of land lease of 49 years.
Nikolai Sapozhnikov believes the company owning the real estate should have contested the authorities’ refusal to re-register the long-term lease agreement in the case in question. “This would have probably saved the effort of going all the way through to the Supreme Court”, he summed up.

Source: advgazeta.ru