Rosreestr was obliged to compensate losses for delaying the registration of real estate transactions

The Supreme Court of the Russian Federation (SC) determined the responsibility of Rosreestr for late registration of the purchase and sale of real estate. In January 2020, Novaya Real Estate LLC sold three Moscow non-residential premises to Novaya Version LLC; in June-July 2020, the buyer submitted documents to Rosreestr to register the transfer of ownership. Rosreestr did not complete the registration on time, indicating that it did not have enough information provided for this.

The “New Version” challenged this, and the arbitration courts supported the company, recognizing the department’s inaction as illegal. Thus, the buyer’s right to real estate was registered almost a year after the application, instead of the required seven days. After that “New version” demanded recover 1.58 million rubles from the department. losses in the form of lost rental income, which the company could have received if its rights to the premises were timely registered. The Moscow Arbitration Court recovered the claimed damages, but an appeal with cassation overturned this decision and rejected the company’s claim.

“New Version” filed a complaint with the Supreme Court, and the case was transferred to the economic board, which supported the company. The Supreme Court indicated that the loss of the opportunity to receive rent for the period of illegal delay in registration “is in a causal relationship” with the inaction of Rosreestr, therefore the buyer has the right to demand compensation for lost profits.

When making a real estate transaction, a reasonable participant in the turnover has the right to expect that state registration of the transfer of ownership will be completed within the established time frame, therefore the parties should not provide for a “mechanism for compensation for property losses” that the buyer may experience in the event of an unlawful refusal to register, the Supreme Court clarified.

At the same time, the panel emphasized, the conclusion of an agreement on terms providing for the transfer of rental payments to the seller before the completion of registration of the transfer of ownership “is not a circumstance that relieves the state of property liability” for the damage caused.

At the same time, the Supreme Court noted, when calculating lost profits, the costs that the buyer would have incurred during this time for the maintenance of the real estate, being its owner, must be taken into account. As a result, the panel overturned all decisions and sent the dispute for a new trial, instructing the courts to correctly determine the amount of damages to be recovered from Rosreestr.

Ekaterina Volkova