Often in this country the land suitable for an investment project is public.
According to the Land Code of the Russian Federation (the Land Code), public land can be made available for construction purposes through the procedure of a prior approval of the location of a facility or without such an approval.
Obtaining of a prior approval of the location of the future facility is a long and difficult process without guaranteed success. However the second option also implies difficulties, because the Land Code requires a tender or auction in the event the land is made available to an investor without a prior approval of the location of the future facility.
Certain investors believed that this rule does not apply to cases where the investor owns a similar parcel of land (i.e. with similar area, zoning and permitted use requirements), and this parcel is exchanged with the local authorities for the parcel the investor wants.
However according to a recent decree of the Superior State Arbitration Court of Russia, an agreement for an exchange of parcels that violates the procedure stipulated in the Land Code (tender or auction) is invalid (Decree No.18545/10 of the Presidium of the Superior State Arbitration Court of the Russian Federation dated June 21, 2011).
Therefore it is still difficult to involve public land in the investment process despite statements of local authorities about the improvement of the investment climate and their assistance to potential investors.
Please leave a comment if you would like to share your experience in transactions with public land in Russia or would like to obtain additional information.
This post first appeared on Business Lawyer, St. Petersburg, Russia, please read the originial post: here
