The Supreme Court clarified how a tenant can use state or municipal land

The Supreme Court of the Russian Federation (SC) recognized that part of the state land leased by a business can be used not for its main purpose, but for an auxiliary purpose. This does not require changes to the lease if permitted by regional development and land use regulations. For example, if a site is transferred for trade, household and educational services can also be provided there. Local authorities still often regarded any ancillary activity as a violation, issuing fines to tenants. Now, according to lawyers, the volume of claims should decrease, in particular, against tenants of land for shopping centers.

The Supreme Court clarified the extent to which a tenant can use state or municipal land. In March 2017, Vantage LLC (45% of the shares belongs to Valery Meladze, 10% to his sister Liana and another 45% to Giorgi Machaidze) rented a plot from the Moscow City Hall for a shopping center (TC) with the type of permitted use (VRI) – retail trade in food products and non-food products. Based on the results of the inspection, the capital’s state inspectorate for control over the use of real estate objects issued a fine of 50 thousand rubles to the company. for using part of the site for purposes other than those specified in the contract.

Vantage challenged the department’s decision. The Moscow Arbitration Court rejected the claim, agreeing with the misuse of the land (Article 6.7 of the Moscow Administrative Code), since part of the premises on it are occupied not only by trade organizations, but also by those providing household, insurance and educational services, as well as a pawnshop. The appeal sided with the company, declaring the fine illegal. However, the cassation appeal was again supported by the capital’s authorities (see Kommersant, September 21).

“Vantage” complained to the Supreme Court, insisting that he, as the owner of the building, can choose auxiliary activities for which no more than 25% of the total area is allowed to be used according to the land use and development rules (PLZ) of Moscow. Here, less than 10% of the area was allocated for additional activities. As a result, the Economic College of the Supreme Court sided with business and canceled the fine.

The Supreme Court explained that the choice by the tenant of the land plot without additional permits and approvals “is lawful and cannot be qualified as a violation of the legal regime of the land plot (capital construction project).” An auxiliary type can only be chosen in addition to the main one, and not instead of it, the board clarified. In this case, the building is used in accordance with the permissible VRI, and the area of ​​premises for auxiliary purposes does not exceed 25% of the total, so there is no violation. In addition, the Supreme Court emphasized, neither federal legislation, nor Moscow laws, nor the lease agreement for the site oblige to make changes to the current lease agreement for this purpose.

The capital’s state inspectorate “Kommersant” refused to comment on the decision of the Supreme Court. Previously, they explained strict control over the use of land by the risks of unauthorized construction and by the fact that a business can save on rental payments by using the land for an auxiliary purpose without fixing it in the contract. According to the department’s calculations, changes in VRI and misuse of plots account for about 40% of all violations of property and land law in the capital.

Advisor to the dispute resolution and bankruptcy practice of BGP Litigation Ruslan Petruchak notes that the rental business is now “going through hard times” – finding a tenant for premises is sometimes “quite difficult”, the areas are “empty and do not generate income for the owner of the shopping center.” If the Supreme Court had supported the government, this could have aggravated the situation, since “the auxiliary VRI indicated in the case are standard activities for a shopping center,” explains the lawyer, and “the opposite approach would greatly limit the building owner in searching and selecting tenants.”

According to Roman Parkhomenko, partner of the Pen & Paper Bar Association, the decision of the Supreme Court is fair, since the PZZ is approved by the authority itself, “recognizing any use of land plots as acceptable within the limits established by the rules,” which should not require separate approval and stipulation in the lease agreement. “A different approach led to a significant restriction of the right of land users to conduct economic activities, especially since they did not commit violations within the framework of public regulation,” agrees Orchards lawyer Piotr Matskevich.

By consolidating this position, the Supreme Court sends “an unambiguous signal to lower courts and government agencies not to exert unreasonable pressure on small and medium-sized businesses,” Mr. Matskevich believes. Mr. Petruchak is confident that entrepreneurs will become “a little freer” and will be able to successfully challenge an administrative fine in such a situation. In addition, according to Roman Parkhomenko, the decision of the Supreme Court can reduce the number of claims and disputes with authorities regarding the use of land plots.

Anna Zanina, Ekaterina Volkova