The Supreme Court left the outbuildings to property owners

The Supreme Court of the Russian Federation (SC) protected the owners of housing and apartments from the loss of common house property. As part of the bankruptcy of the developer, the basement was sold at auction. The Association of Real Estate Owners tried to challenge the auction with reference to the illegal sale of common house property, but the courts rejected the claim, since the premises were officially registered as bankrupt. The Supreme Court clarified that, regardless of the state registration of property rights, common house property cannot be alienated and is in the common shared ownership of all property owners. Lawyers consider the decision of the Supreme Court important, noting the widespread attempts to transfer common property to the developer or third parties.

The Supreme Court supported the rights of homeowners to common property. LLC Intelnet Svyaz acted as the developer of the Sky Parks Club House (a complex of apartments) in Moscow. In March 2021, the developer went bankrupt. In June 2022, the bankruptcy trustee sold at auction the basement (15.9 sq. m.) that was on the balance sheet of the debtor for 351 thousand rubles. Upon learning of this, the association of homeowners of real estate (TSN) challenged the auction and asked to exclude the premises from the bankruptcy estate, since it is common house property.

In September 2022, the Moscow Arbitration Court satisfied the claim, acknowledging that the heating unit in the basement “refers to life support facilities that are part of the building.” But the appeal and cassation recognized the legality of the auction. In their opinion, since the owners of the property did not bring up the issue of the fate of the property at the meeting, the information in Rosreestr that the owner of the premises is a bankrupt has priority. TSN appealed to the Supreme Court, insisting that the premises were common property, which belonged to the owners of the apartments “by virtue of the law”, and therefore could not be sold. The case was referred to the Economic Collegium of the Armed Forces, which supported TSN.

The Supreme Court noted that, according to the law, the owner of housing in an apartment building also owns a “share in the ownership of common property”, which includes basements with utilities.

Since the relationship of the owners of non-residential premises (apartments) with common property is “not directly regulated”, the analogy of the law is applied here, the board considered. That is, the owners have common house property in shared ownership “regardless of its registration.” The disputed premises is an individual heating point, which is “necessary to provide hot water supply to the building” and is not intended for independent use “for purposes not related to building maintenance,” the economic board clarified.

Therefore, despite the registration of the right to the premises for the company, it is common house, belongs to the owners of the apartments, “could not enter the bankruptcy estate of the debtor and be sold at the auction,” the Supreme Court concluded, declaring the auction invalid.

ProLegals partner Elena Kravtsova notes that in the event of bankruptcy of the developer, its manager and creditors “tend to consider such premises as part of the bankruptcy estate”, as they are interested in receiving money from the sale. “However, if the common property is sold to a third party and then refurbished, this may lead to a failure in the operation of the entire house and, as a result, a threat to the life, health and property of the owners of apartments and other premises,” emphasizes the senior lawyer of the MEF Commercial Disputes Practice. Legal” Mark Vaskovsky.

Denis Krauyalis, junior partner at the Yakovlev & Partners legal group, says that situations are common in practice when common house property is registered not with the owners of apartments or apartments, but with other persons. “When completing the construction of a house, the developer usually retains or gives away non-residential premises to an affiliated company, among which there may be common house property,” explains Mark Vaskovsky. Sometimes, the lawyer clarifies, “this happens unintentionally, since the criteria for common property are rather vague.”

The law refers to common property that which is intended to serve more than one room in the house, specifies Elena Kravtsova. “It can perform engineering functions (pumping rooms, ventilation chambers, basements with utilities, heating point), social functions (pram room, playground), auxiliary functions (staff rest room, storage room),” adds Mr. Vaskovsky.

Denis Krauyalis notes that there is information on residential buildings in the project declaration, which since 2017 has been posted on the developer’s website: “It contains non-residential premises that are not part of the common property, that is, all other premises will be just common.” If it is not obvious whether the disputed object belongs to a common house, the court may appoint an examination, specifies Igor Guskov, partner of the legal group Guskov & Associates.

It is also important that the Supreme Court recognized the right of TSN and HOA to file claims for the protection of common house property, Mark Vaskovsky believes: “This will greatly simplify the procedure for challenging, since it will not be necessary to organize a large number of plaintiffs (owners of premises) to file a claim.”

In addition, Mr. Guskov notes, the decision of the Supreme Court will also be useful for those who are interested in buying “exotic real estate”: attics, attics, small utility rooms.

In his opinion, the outcome of the Sky Park case warns that “the purchase of such property must be treated carefully and it must first be sorted out whether the alienated asset is accidentally common house”, otherwise the buyer may lose it.

Ekaterina Volkova, Anna Zanina