Verification of land lease agreements

Dec, 17 2021

Contents:

A land lease agreement is a document that fixes the agreement between the landlord and the tenant. The first undertakes to provide the other party with temporary possession of land or part of it. Rent implies payment, as well as the purpose of the land, the need for the tenant to comply with urban planning laws and regulations.

Verification of land lease agreements helps to avoid abuse by one of the parties to the agreement. This legal service prevents possible conflicts, litigation, helps the parties to conclude a contract on mutually beneficial terms, as well as to prevent claims from regulatory authorities.

A qualified lawyer who is well acquainted with the legislative framework should conduct an audit of land lease agreements. Issues related to land lease are regulated by the Land Code of the Russian Federation.

The content of the land lease agreement

To draw up a land lease agreement, it is necessary to include essential conditions in it:

  • Item.
  • The rental object and information that allows you to accurately determine it.
  • The amount and terms of payment.
  • All other conditions on which the parties consider it necessary to agree.

We recommend that the landlord specify in the contract.

  • The rights of third parties to the plot. If you do not provide for this clause, the tenant will be able to demand a reduction in rent or termination of the contract and compensation for damages.
  • The obligation of the tenant to make a security payment. If the tenant does not pay on time, you will be able to set off the security payment against the debt.
  • The right of the landlord to unilaterally change the rent. It will help to maintain the level of income from renting out property, despite inflation. However, it should be considered that a unilateral change in the size of the fee is possible no more than once a year.

In turn, the tenant should include the following points in the contract:

  • Limitation of the landlord’s right to unilaterally change the rent. The landlord may propose to include in the contract his right to an annual unilateral change in rent.
  • The condition of the presence or absence of encumbrances, restrictions on the use of the site, considering its permitted use. If the landlord provides you with deliberately false information about restrictions or encumbrances, you will be able to demand termination of the contract and compensation for damages or reduction of rent.

The tenant also has such rights in the case when the information about the building permit, the use of neighboring plots, the quality properties of the land, and so on is deliberately false.

We recommend that both parties specify in the land lease agreement:

  • Rental period. If it is not specified, each of the parties has the right to withdraw from the contract at any time by notifying the other party three months in advance.
  • The condition of the land plot at the time of transfer. This condition will help to avoid disputes when returning the property at the end of the lease. The fact is that the tenant must return the property in the condition in which he received it, considering normal wear and tear or in the condition stipulated by the contract. If the contract describes the condition of the plot at the time of the lease, then when it is returned, it will be possible to determine which shortcomings arose during the lease period and which were initially.

A qualified lawyer will also check the category of the land plot before concluding the contract, collect certificates on the condition of the land, its presence in the registers.

There are situations when a party enters into a lease agreement but cannot conduct activities on the site due to the fault of the lessor or other persons. For example, the plot meets the goals, but there are no necessary changes that the landlord must make. In this case, the tenant has the right to declare the impossibility of using the land for its intended purpose and terminate the contract. He has the right to challenge the calculation of rent if he could not operate the rental object through no fault of his own.

Choose land with a suitable type of permitted use

In accordance with the Land Code, any type of permitted use from the types provided for by zoning territories is selected independently, without additional permits and approval procedures. The types of permitted use of land plots are determined in accordance with the classifier approved by the federal executive authority responsible for the development of state policy and regulatory regulation in the field of land relations – the Ministry of Economic Development of the Russian Federation.

The classifier of types of permitted use was approved by Order No. 540 of the Ministry of Economic Development of the Russian Federation dated 01.09.2014 (hereinafter referred to as Order No. 540). It defines the types of permitted use of land plots established after the entry into force of the specified order.

Local self-government bodies establish the types of permitted use in accordance with the rules of land use and development, if they were adopted before the entry into force of Order No. 540, however, if the types of permitted use are established or changed in the rules of land use and development after 12/24/2014, the types of permitted use must comply with the classifier.

According to the application of the rightsholder of the land plot on the establishment of conformity of the permitted use of the land plot to the classifier of the types of permitted use of land plots, authorized to establish or change the types of permitted use of the land plot, the state authority or local self-government body within one month from the date of receipt of such an application must make a decision on the establishment of conformity between the permitted use of the land plot specified in the application and the type of permitted use of land plots, the established classifier of the types of permitted use of land plots. This decision is the basis for making changes to the information of the State Cadaster of Real Estate (GKN) on the permitted use of the land plot.

In accordance with the Federal Law “On the State Cadaster of Real Estate”, authorized bodies are required to send documents for entering information into the GKN in cases of their decision-making, including on approval of land use and development rules, on changing the type of permitted use of a land plot.

It is important to note that the types of permitted use are applied not only in connection with the provision of land plots, but also apply to land plots that are privately owned.

Arrange a lease of a land plot if you conclude a contract for the purchase of a building

Building owners are not always in a hurry to conclude a land lease agreement. For example, when a company acquires a real estate object, it does not immediately apply to the Federal Register to reissue the agreement. There is a risk: the company faces a fine. The amount of the fine is 2-3% of the cadastral value of the land.

In some cases, the companies challenged the fines. In one case, the owner of a fifteen-story non-residential capital structure achieved the cancellation of the fine. The court considered that the buyer acquires the right to use a part of the land plot that is occupied by real estate, and land for its use on the same terms and to the same extent as the former owner of the property. The fact that the owner has not registered the right does not constitute an administrative offense.

But there is another point of view. Thus, the court considered that the legislation does not exempt the owners of non-residential premises from the obligation to issue the right to land in the prescribed manner. To eliminate the risks, it is advisable to contact the territorial administration of the Federal Register and issue a lease agreement for a land plot. You should also seek the help of a lawyer who will prepare an opinion and point out possible controversial points in the contract.

Author of the article
Verification of land lease agreements
Valentina Khlavich
Managing Partner
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