Changes to the legislation on operations with agricultural land.

01.02.2011

Legal Update No. 218.

Goltsblat BLP advises that Federal Law of 29 December 2010 No. 435-FZ “On Amendments to Certain Legislative Acts of the Russian Federation Relating to Operations with Agricultural Land“ (the Law) came into effect on 1 January 2011, apart from individual provisions that came into force on the day of its official promulgation (31 December 2010). The most important provisions of the Law are those:

1) Specifying the procedure for withdrawing unused agricultural land.

A land plot designated for agricultural purposes may be compulsorily withdrawn from the owner by court ruling if, within three years of gaining title to it, the owner does not use the land for agricultural production or other associated activities. The Russian Government is to establish the indications of land plots not being used in consideration of the specifics of the agriculture in constituent entities of the Russian Federation.

The given three-year period does not include time during which the land cannot not be used for its designated purpose owing to natural disasters or other such circumstances or time needed for developing a plot, which may not exceed two years.
It is now the right (but not the obligation) of an executive authority of a constituent entity of the Russian Federation to file a court claim to withdraw an unused plot. When such a claim is satisfied by the court, the plot is to be sold by public tender. If tenders are recognised as not having taken place, the plot may be acquired as state or municipal property at the tender starting price. The owner receives the plot sales proceeds minus the costs involved in the public tender.

2) Simplifying conclusion of a lease agreement to an agricultural land plot in common shared ownership.

From 31 December 2010 onwards, it is no longer necessary for all the participants in the common shared ownership of a relevant agricultural plot to sign the lease agreement. A lease agreement to such a land plot and an agreement on establishing an easement on it may now be signed by someone authorised by resolution of a General Meeting of Participants in the common shared ownership to conduct transactions with the land plot without power of attorney, provided the terms of such leases and agreements meet the conditions set by decision of the given General Meeting of Participants.

The practice of the Supreme Court of the Russian Federation in such situations (Resolution of the Supreme Court of the Russian Federation of 02 June 2009 No. 15-V09-3) has thus been legislatively secured.

3) Reducing the privatisation price for agricultural land.

The Federal Law “On Operations with Agricultural Land” previously stipulated a privatisation price for agricultural land of no more than 20% of its cadastral value, whereas, from 31 December 2010, agricultural organisations and individual farmers can now privatise any agricultural land they use at a price not exceeding 15% of its cadastral value.

4) Specifying how to form a land plot out of a land plot held in shared ownership.

There has been no fundamental in change in how a land plot can be separated out from a land share: this can still be done on the basis of a decision of the General Meeting of Participants in the shared ownership or, in the absence of such a decision, on an “individual” basis.

The procedural changes are more significant. In particular, a land plot parcel plan is now required to determine the dimensions and location of the boundaries of the land plot created out of land shares and this has to be agreed with the other participants in the shared ownership. Either they are sent a notification of the need to agree the land plot parcel plan or an announcement is made in the press stipulated by the constituent entity of the Russian Federation.

If the participants in shared ownership do not approve the land plot parcel plan or register their title to the plots in shared ownership by 1 July 2012, the local government authority at the location of the given plot must, by 1 July 2013:

  • hold General Meetings of Participants in shared ownership;
  • have parcel plans drawn up for the land plots;
  • have cadastral work performed to form the plots envisaged by the parcel plans approved by resolution of the General Meeting.

For additional information, please contact:

Vitaly Mozharowski, Partner, Real Estate and Construction, Goltsblat BLP
T: +7 (495) 287 44 44,
E: info@gblplaw.com

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