Many people still prefer to purchase apartments instead of apartments, without thinking about what kind of real estate they are actually purchasing.
It is difficult to say why people suddenly decided en masse to purchase apartments for housing, the so-called “lofts,” although they, in their essence, are non-residential premises and are not intended for living.
The attractive price of apartments makes buyers forget that they are not purchasing an apartment at all and in the future they will incur quite large expenses for maintaining the apartment.
The topic of purchasing apartments for living is actively discussed in the press, as well as at the state level. Back at the beginning of 2015, the Moscow Government discussed the issue of “apartment amnesty,” which implies a massive transfer within a year of all apartments built and under construction to the status of “residential premises” and the cessation of construction of new apartments.
Apartments from a legal point of view
However, no regulatory act on the “amnesty of apartments” has been adopted; a bill equating them to “housing” is promised to be submitted to the State Duma at the beginning of 2021.
It is not yet clear whether the construction of new apartments will be stopped or not.
Let's define what apartments are, they are also lofts and studios. And how do they differ from an apartment?
What are apartments
An apartment is a piece of real estate that can be either residential or non-residential.
In the current legislation of the Russian Federation there is no definition of the concept of “non-residential premises”, and even more so, the concepts of “loft”, “studio” and “apartment”.
However, the above concepts cannot be considered equivalent. In non-normative acts, the concept of “apartment” is used mainly in relation to hotel premises; the concepts of “loft” and “studio” are not mentioned anywhere at all; they are “colloquial” or “advertising” versions of apartments.
Therefore, in this article we will use the concept “apartment”, since this is what such premises are called in sales contracts related to their acquisition.
What is considered residential premises?
According to Part 2 of Article 15 of the Housing Code of the Russian Federation, an isolated premises, which is real estate and is suitable for permanent residence of citizens, is considered residential. This means that it must meet established sanitary and technical rules and regulations, and other legal requirements. That is, non-residential premises cannot be suitable for permanent residence of citizens, and therefore registration at the place of residence in them is impossible. Such premises do not meet the system of requirements that ensure the possibility of living in it.
Registration at the place of stay in non-residential premises is carried out only when the corresponding premises belong to a specialized institution, such as hotels, rest homes, hospitals; in other cases such registration in them is also impossible.
In fact, the owner will not be able to reside permanently in either the apartment, studio, or loft, although the legislation of the Russian Federation does not provide for any responsibility for permanent residence in non-residential premises owned by the right of ownership.
In addition to the differences in the technical requirements that apply to apartments and to non-residential premises suitable for temporary residence, the following differences between apartments and ordinary apartments can be identified, which are both positive and negative.
Positive differences between apartments and residential premises:
1. The cost of the apartments is significantly lower than that of apartments of comparable size. At the same time, almost all apartments are sold with an open plan, which is attractive for those buyers who are ready to design their own housing, especially since the norms of housing legislation on the reconstruction and redevelopment of residential premises do not apply to non-residential premises.
The owner of a non-residential premises has the right to carry out work on redevelopment or reconstruction of the premises without the approval of state bodies and local governments, unless the corresponding work has signs of reconstruction.
2. You can not only live in the apartments, but also equip an office and indicate their address as the legal address of the legal entity. This feature makes the apartment a sought-after investment in large cities, where people tend to live closer to work, even in the same building as their office.
3. According to the provisions of Art. 123.12, 123.13, 123.14 of the Civil Code of the Russian Federation, owners of non-residential premises can create a partnership of real estate owners (analogous to a homeowners association) for joint ownership, use and, within the limits established by law, disposal of property that is in their common ownership or for common use, as well as to achieve other goals provided for by law.
4. Usually the developer invites the owners to enter into management agreements with the Management Company, which regulate the expenses of the apartment owner for managing the building.
5. The construction of apartments is faster than the construction of residential buildings, since the developer does not need to comply with all the numerous regulations necessary for the construction and commissioning of residential buildings.
There are also significant disadvantages:
1. The costs of maintaining apartments are significantly higher than the costs of maintaining residential premises. The property tax rate for individuals in relation to non-residential premises is no more than 0.5% of their cadastral value, while the tax on residential premises cannot exceed 0.1% of their cadastral value. The cadastral value of non-residential premises can often be higher than that of similar residential premises. Currently, the Moscow Government is considering the possibility of lowering the tax rate for non-residential premises due to the increase in the cadastral value of real estate, but a final decision on this issue has not yet been made.
2. The burden of maintaining apartments is higher than that of apartment owners, since utility tariffs for non-residential premises exceed the corresponding tariffs for residential premises by up to 40%.
3. The ability of the owner of non-residential premises to use it in any way may be a disadvantage for the neighbors of such an owner. That is, some apartment residents can use them for living, and their neighbors can set up hostels and cafes in them, for example. There are practically no legal ways to prohibit your neighbors in non-residential premises from opening a hotel or hostel there.
4. Currently, residential premises under construction can only be purchased on the basis of an agreement for participation in shared construction.
You can also purchase apartments on the basis of other, including preliminary sales and purchase agreements, the terms of which are less favorable to potential buyers due to their absolute insecurity, since the legislation does not regulate the apartment market in any way, which is especially dangerous in our time, when developers are going bankrupt everywhere and more and more fraudulent schemes are being invented.
It should be noted that at the moment, as part of the bankruptcy procedure, not all courts consider it possible to recognize the right of ownership of non-residential premises in an unfinished building, since this possibility is not expressly provided for by law.
According to the Federal Law “On Insolvency (Bankruptcy)” dated October 26, 2002 N 127-FZ, all claims for recognition of ownership rights against a developer in respect of whom an arbitration court has introduced a monitoring procedure are considered as part of the bankruptcy procedure.
This means that once the monitoring procedure is introduced, it will no longer be possible to file a claim in a court of general jurisdiction at the location of the property. If the recognition of ownership of non-residential premises is refused, all premises will be transferred to the bankruptcy estate and sold during the bankruptcy process, and the buyer of the apartments can only demand the return of the money paid.
Therefore, even before the introduction of surveillance against the developer, it is necessary to have time to recognize the ownership of non-residential premises in a court of general jurisdiction in order to avoid a possible refusal to recognize the ownership right in an arbitration court.
5. In relation to the sale of apartments, it is practiced to conclude preliminary sales and purchase agreements, which have a number of nuances. This is due to the fact that a purchase and sale agreement can only be concluded for non-residential premises that have already been built and duly registered, and an equity participation agreement is simply not beneficial for the developer, since its conclusion is regulated in detail by current legislation, imposing certain obligations on the developer.
A preliminary agreement is not subject to mandatory state registration , like an agreement on shared participation in construction, therefore the same apartment can be “sold” under a preliminary agreement to several buyers, and this fact cannot be verified. In addition, when concluding a preliminary agreement, the developer is not required to enter into an insurance contract against failure to fulfill obligations to transfer the premises to the buyer.
Unfortunately, many preliminary agreements do not indicate the exact period when the main purchase and sale agreement must be concluded with the transfer of the premises to the owner, which is a big problem for potential buyers. Most often, this period depends on the registration of the developer’s ownership of the premises, that is, it is not a predetermined date, but depends entirely on when the developer submits the relevant documents to Rosreestr. Sometimes such agreements indicate a date no later than which the purchase and sale agreement must be concluded.
The legal consequence of not concluding a purchase and sale agreement before the expiration of the period specified in the preliminary agreement is the termination of the preliminary purchase and sale agreement, that is, the termination of the developer’s obligations to transfer ownership of the premises to the buyer, since in accordance with clause 6 of Art. 429 of the Civil Code of the Russian Federation, the obligations provided for by the preliminary agreement are terminated if, before the end of the period within which the parties must conclude the main agreement, it is not concluded or one of the parties does not send the other party an offer to conclude this agreement.
Therefore, in order to prevent the consequences of missing the specified period, an application for concluding the main purchase and sale agreement should be sent to the developer shortly before the expiration of the specified period. If, before the expiration of the period specified in the preliminary agreement, the purchase and sale agreement has not been concluded, and the application for the conclusion of the agreement has not been sent to the developer, the latter only has obligations to return the funds received, the right to recognize ownership of the apartment will be lost.
6. The procedure for converting non-residential premises into residential premises is quite complex. At the moment, the procedure and the list of documents required for this are described in detail in the Administrative Regulations for the provision of state documents, approved by Decree of the Moscow Government of October 27, 2015 N 692-PP.
Taking into account the above “disadvantages”, the high costs of maintaining an apartment, if you purchase it for further living in it, it makes sense, after all, to transfer it to the status of “residential premises”, which, however, will not prevent neighbors from renting out their apartment in quality of hotel rooms.
Transfer of premises as a solution to the problem
It should be noted that Part 2 of Art. 23 of the Housing Code of the Russian Federation establishes a list of documents required for the transfer of residential premises to non-residential premises. For this transfer, it is not necessary to obtain the consent of all owners of an apartment building, including in the case of redevelopment of the premises. However, if such a transfer is related to the reconstruction of the house, then it will be necessary to obtain the consent of all owners of the premises or a decision of the general meeting of owners of the premises in the apartment building.
To change the status of non-residential premises, it must be owned by the applicant and not be encumbered with anything.
Moreover, it must meet the requirements for residential premises, or there must be a technical possibility to bring the premises into compliance with the requirements established by Part II of the Government of the Russian Federation of January 28, 2006 N47 (as amended on March 25, 2015) “On approval of the Regulations on the recognition premises as residential premises, residential premises unsuitable for habitation and an apartment building in disrepair and subject to demolition or reconstruction”, SNIPs, Federal Law of December 30, 2009 N 384-FZ “Technical Regulations on the Safety of Buildings and Structures” and the provisions of the Housing Code of the Russian Federation.
List of documents required for transfer of premises
The list of documents that must be submitted by the applicant to the authorized body is specified in Art. 23 of the Housing Code of the Russian Federation and in the Administrative Regulations for the provision of state, if the applicant is an individual.
According to clause 2.5. of the specified Administrative Regulations, the applicant must submit the following package of documents:
- request (application) for the provision of a public service to transfer non-residential premises to residential premises;
- a document certifying the identity of the applicant, or a document certifying the identity and powers of the applicant’s representative;
- title documents for the premises, the rights to which were registered before January 31, 1998 (and copies thereof);
- project for reconstruction or redevelopment of premises (if necessary);
- minutes of the general meeting of owners of premises in an apartment building, to which should be attached notices of the meeting, documents confirming the delivery of the notice to each owner, a registration sheet for meeting participants, decisions of owners on issues put to a vote, lists of owners, powers of attorney (if voting is in general representatives took part in the meeting of owners);
- conclusions of authorized organizations on the compliance of the transferred non-residential premises with the requirements for residential premises;
- a decision of the guardianship and trusteeship authority confirming the powers of the legal representative if the owner of the transferred premises is a minor child;
- birth certificate or corresponding document in relation to orphans, as well as if the certificate or document confirming the fact of birth and registration of the child was not received in Moscow.
In addition to the above, an extract from the Unified State Register, a unified housing document, a floor plan with explication, an extract from the technical passport, a certificate from the technical registration authority on the condition of the building/premises, a floor plan of the house in which the transferred premises are located, a cadastral passport of the land plot, the conclusion of the Committee on Architecture and urban planning of the city of Moscow,
No state fee is paid when submitting the listed documents.
If the transfer is agreed upon, the local government authority issues a notice of transfer of non-residential premises to residential premises. If approval is refused, this will be reported in the notice of refusal to transfer non-residential premises to residential premises.
The decision to refuse to transfer premises from non-residential to residential may be appealed by the applicant in court within three months from the date of receipt of notification of the refusal.
If the transfer has been agreed upon, then you can safely receive new BTI documents and a new Certificate of Ownership for residential premises, that is, an apartment.
Based on the content of this article, I would like to advise: think, weigh all the pros and cons before purchasing an “apartment” for further living in it, because it may not be possible to convert it into residential premises, and the low price upon purchase will be “compensated” by the high costs of its maintenance.
Ksenia Vlasova, lawyer at the Moscow Bar Association “Yulova and Partners”
What other objects are not provided for permanent residence?
Non-residential premises - an architectural object or part of it, which, according to its intended purpose, is not intended for permanent residence of people. The belonging of an object to a specific type determines the exercise of the right to a structure and affects its civil legal status.
Based on their use for commercial and administrative purposes, the following varieties are distinguished:
There is a classification of non-residential objects according to their purpose:
- used to generate income (commercial);
- used to create conditions for generating income (industrial as well as industrial).
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