The Supreme Court will clarify how much the authorities owe the tenant of the building for delaying privatization

The Supreme Court of the Russian Federation (SC) will determine the limits of liability of a government body that evades the sale of property in the framework of “small privatization”. The tenant of municipal real estate asks to recover losses from the Omsk administration for several years, during which he twice asked for the redemption of property. According to the company, it should be reimbursed the amount of rent from the date of the first application for redemption. The lower courts rejected the claims. Lawyers are counting on the support of the business position.

The Supreme Court will explain for what period it is possible to recover losses in connection with the delay in the implementation of “small privatization”. It is understood as the right of small and medium-sized businesses to rent state or municipal property (premises, buildings and land plots) with the condition that in a few years (at least two years) in the absence of violations, they can buy property from the authorities without bidding, but at a market price.

In October 2013, ViTa Management Company LLC leased an administrative building and a garage from the Department of Property Relations of the Omsk Administration for five years. In December 2017, the company decided to buy the property and contacted the department, but the department did not respond. In July 2020, ViTa sent a second request, and the department announced that it was assessing the market value of the property. In January 2021, the company received a draft contract for the sale of buildings and the land under them.

The price of buildings is 24.14 million rubles. arranged for the tenant, but he did not agree with the valuation of the land at 19.84 million rubles. Vita turned to another expert who estimated the land at 8.4 million rubles, but the department did not agree with this. The company had to go to court, which ordered the authorities to sell the site for 6.28 million rubles, as it was estimated by a forensic examination.

After that, Vita demanded to recover 4.69 million rubles from the department. damages arising from “unlawful evasion of the conclusion of a contract of sale”. According to the company, the authorities should reimburse her rent payments from April 2018. In July 2022, the Arbitration Court of the Omsk Region partially satisfied the claim, recovering 3.44 million rubles. The court agreed that if the authorities had “timely fulfilled the obligation” to sell the property, the payment of rent would have ceased from the moment the contract was concluded, but, taking into account the statute of limitations, limited the period for calculating damages to the last three years.

But the appeal overturned the decision and dismissed the claim in its entirety, finding that the company itself “contributed to increasing the amount of damages” by not appealing the department’s inaction on the first appeal. Such behavior, according to the appeal, indicates a loss of interest in the purchase of property. According to the second appeal of Vita, the sale and purchase agreement could be concluded no later than November 21, 2020, and the draft agreement was sent to the authorities in January 2021. That is, losses can only be recovered for these two months, but the rental costs for the period are not confirmed. Cassation agreed with this position.

ViTa complained to the Supreme Court, stating that the courts did not take into account violations by the department, and the conclusion about the loss of interest in the purchase of property “does not correspond to reality.” At the same time, the law does not oblige “to appeal against the inaction of the body to induce the fulfillment of the duties assigned to it.” The hearing of the case is scheduled for September 28.

Disputes within the framework of “small privatization” are a frequent occurrence, says Almaz Kuchembaev, head of the law firm Kuchembaev and Partners. In general, the right to refund rent from the moment of refusal to buy property was previously recognized by the courts, adds Piotr Matskevich, lawyer at Orchards law firm. But it often happens that the applicant is forced to apply for “small privatization” again, explains Almaz Kuchembaev, while the courts consider that the unjustified payment arises not in the case of the authorities’ silence, but in the event of an official refusal, which is appealed in court.

Thus, the SC must decide whether the authorities can be held liable from the moment of the first failure to respond to the ransom offer, which increases the amount of damages several times over. For the first time this issue was considered by the Economic Board, emphasizes Mr. Kuchembaev.

Ruslan Petruchak, adviser to BGP Litigation’s dispute resolution and bankruptcy practice, notes that, in addition to inaction on the first appeal, the authorities offered an excessively high price on the second one. This, he clarifies, necessitated the settlement of disagreements in court, which also increased the period of the forced lease. Lawyers expect that the sun will take the side of the business. According to Petr Matskevich, such a decision will create “a certain direction of practice, focusing on which the authorities will not delay the registration of the property buyout.”

Ekaterina Volkova, Anna Zanina