Federal Law No. 391-FZ on Amendments to Certain Legislative Acts of the Russian Federation of December 29, 2015
The Law introduced amendments to various regulatory acts in the area of bankruptcy, notaries, appraisal activities and concession agreements. We will touch on the changes most important for the real estate market:
- The Law expands the list of transactions that are subject to mandatory notarization: as of January 15, 2016 transactions for the sale of an interest in joint ownership title, including to real estate (and to an interest in land) are subject to notarization. It is important for companies managing their real estate assets through closed-and investment funds to consider that according to the new rules, all transactions related to the disposal of real estate on trust management terms are subject to notarization.
- It is already clear today that these new provisions will make it take longer to gain approval for transactions, and will also cause additional expenses for the parties to the transaction,6 which, in turn, may negatively impact commerce, especially on the closed-and investment fund market.
- The Law introduces amendments to the effective Insolvency Law governing the specifics of invalidating a developer’s transactions, the specifics of settling a developer’s obligations to construction participants and introducing rules for using a special bank account to finance construction, from which funds should be used only to build properties and achieve the purposes for which the investors’ funds were raised; funds cannot be debited to discharge other obligations of the developer.
- The Law also introduces amendments to the regulatory acts on appraisal activities: as of July 1, 2016, the person who orders an appraisal shall, in the statutorily determined cases, enter in the Unified Federal Register of Information about the Activities of Legal Entities information received as a result of the appraisal (including about the value of the subject property). Appraisal of property contributed to the charter capital of an LLC or JSC is among such cases.
The Law entered into force on December 29, 2015, with the exception of certain provisions.