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The Plenum of the Supreme Court is preparing a resolution to ensure uniformity in the judicial practice for contesting cadastral value results

During the 2 June 2015 session of the Plenum of the Supreme Court of the Russian Federation, the judges discussed a draft resolution on issues that arise when courts consider challenges to cadastral values. A SC representative informed the media that the plenary meeting of the SC will approve the final version in June.

The large number of lawsuits challenging the cadastral value prompted the SC’s action. Other concerns were the lack of a uniform law on the matter and last summer’s change of venue for these disputes to the courts of general jurisdiction.

Those who developed the draft strove to be consistent with arbitration court practice. Irina Abakumova, a SC judge, explained that the approaches are the same “to the extent that changes in the legislation on valuation activities allow.” Beginning on 15 September, the Code of Administrative Justice (CAJ) will govern the resolution of disputes to contest cadastral values.

In the draft, the judges stated when the court may consider a case involving cadastral values: when a dispute results from of a commission’s cadastral value determination; when there is a need to establish a cadastral value that reflects the proper market price; when there must be a correction to the cadastral value because of false information, and when there are additional circumstances that change cadastral values. Using other requirements, such as taxes or lease payments, to revise cadastral values is impermissible.

Although legal entities must employ a pretrial procedure, involving a commission, to review cadastral values, the draft excludes individual entrepreneurs (IE) from that requirement. The SC judges explained that, since an IE is a natural person who engages in entrepreneurial activity, without forming a legal entity, the Law on Appraisal Activity does not require individuals to appeal through commissions.

For those subject to a mandatory pretrial procedure for settling cadastral value revisions, that is, legal entities, government bodies, and local authorities, the date of submission corresponds to the date of application to a commission, while for individuals and entrepreneurs, the submission date is when the case appears before the court or commission.

The draft also explains to whom the requirements apply. A former property owner has the right to request a cadastral value revision if the valuation affects his or her rights in the fiscal period during which he or she initiates the application. The courts do not always allow tenants to challenge cadastral valuation of publically owned property. Nevertheless, the fifth point of the draft confirms the right of tenants to apply to the courts if the rent is based on the property’s cadastral value. Tenants also can appeal if a cadastral value review changed after the conclusion of a lease agreement. For private property leases, the approach is different. The tenant may challenge the cadastral evaluation only if the contract stipulates that right. Lawyers note that these provisions will create disparities in the rights of tenants, depending on the type of property they occupy. Paragraph 7 of the draft states that, in the case of joint ownership, one owner may apply to revise the cadastral value of the entire property, without the consent of the other owners. The opposition of the other co-owners cannot be a basis for denying the claim.

Applying to the court to revise the cadastral value is possible within five years from the date a cadastral value appears in the State Real Estate Cadastre (SREC), but if the cadastral value does not appear on the SREC at by the time of the court date, the basis of the revision will be the newly posted amount (Paragraph 3, Article 245, Administrative Procedure Rules). The absence of a cadastral value in the SREC is not grounds for rejecting an appeal. In any case, the five-year time limit for beginning the appeal process will begin only when the posting of the cadastral value appears.

One of the most important clarifications concerns the revision of SREC archival records. The draft excludes the possibility of challenging the archival information since SREC updates are continuous. The only exceptions occur as a result of corrections because of technical and cadastral errors (Paragraph 4, Article 24.20 of the Valuation Act and Article 28 of the Law on State Real Estate Cadastre). As a result, if the proceedings establish that the archival cadastral value is not useable, the court will terminate the proceedings. However, the approval of the new cadastral valuation, during the course of the proceedings, will not result in the automatic termination of proceedings or absolve the court from considering the case.

The draft also considers the distribution of court costs. Only in cases when market value determines the cadastral value does the burden of court costs rest solely with the applicant. In this case, the applicant’s claim is aimed at determining the just value of the estimate and does not imply a refutation of the authenticity of the cadastral value or the existence of a dispute about the applicant’s right to review the cadastral value. It seems that such an approach is inconsistent with the general principle of the recovery of legal costs from the losing party, specifically when the applicant first applied to a commission that rejected the claim, necessitating that the applicant defend his or her right in court to establish a market-based cadastral value. For legal entities, a pretrial procedure is mandatory. According to a literal interpretation of Paragraph 25, the draft does not differentiate between situations when the applicant refers to a commission before the court and when he does not do so. In all other cases, the commission that created the cadastral value, which receives its funding from the public, pays the court costs.

The SC judges were comprehensive in completing the draft, which contains both substantive and procedural clarifications. The draft also addresses jurisprudence that is not united, for instance, the possibility of revising the cadastral value based on archival information. However, lawyers are concerned about how the new rules may complicate cadastral disputes. For example, the draft includes nothing about the consequences of considering cadastral disputes in adversarial as opposed to administrative proceedings.

The text of the draft (in Russian) is available here