The 8th International Conference “Gde Marzha” for agricultural producers and suppliers of inputs and services for agricultural sector was held in Moscow on February 9, 2017.
Traditionally, the main topics of the conference concerned the problems of introduction, acquisition and use of land assets, primarily agricultural lands.
Olga Romanova, advocate and managing partner of Ratum Law Group, took part in the 2nd session related to market issues of agricultural land and real estate.
BASIC POINTS of Olga Romanova’s speech:
1. As far back as 2013, one has predicted the growth of legal cases related to the rights to land assets, including agricultural lands.
The most frequently occurring disputes:
• Termination of long-term lease agreements with the purpose of transferring the land assets to other persons;
• Contestation of decisions of General meetings of the common ownership participants’, and transactions based on these decisions (formation of lease agreements, land plot allocation, renewal of lease agreements which terms come to an end);
• Disputes related to the introduction of the unclaimed land shares, including the challenging of sales contracts of land shares by municipal formations;
• Disputes relating to the allocation of land shares with a long-term lease.
• Disputes with the Federal Service for State Registration, Cadastre and Cartography and The Cadastral Federal Council, including disputes connected with a reduction of the earth cadastral cost.
2. Changes of the Law “On Turnover of Agricultural Lands” for the period from 2013 to 2016 hasn’t solved the problems related to the introduction of the unclaimed land shares:
• Agricultural organizations and farmers are unable to buy on preferable terms unclaimed land shares, since they have no title documents that corresponds to current legislation.
Verbal agreements with the administrations don’t have the legal power to register the land shares rights.
• Courts refuse to take jurisdiction, if there is no certificate from the Civil Registry Office and the notary officer about the deceased and the heirs.
• Courts exclude from the lists the land shares of those who have heirs without registration of their inheritance rights.
• Recognition of unclaimed land shares as an escheated property.
• The termination of action proceedings against the dead.
3. New legislative initiatives can make the situation of existing reliable agricultural organizations even worse, and can give the raiders the opportunity to influence the possession of agricultural assets. A draft law № 1069701-6 On amendments to Article 14.1. of the Federal Law “On Turnover of Agricultural Lands” (in the part that clarifies the provisions on the General meeting of participants of the common ownership of agricultural land) is on the State Duma’s consideration. The draft law has passed through first reading
Paragraph 5 of Article 14.1. to read as follows:
“The General meeting is considered competent if it is attended by not less than 50 percent of participants of common ownership or if the way of specifying the land share size allows the comparison of the shares in the right of the land common ownership, owning more than 50% of such shares”.
The draft law was introduced by the State Duma deputies O. Timofeeva and V. Klimov. The initiators of the draft law believe that since the adoption of Article 14 of the Law On Turnover of Agricultural Lands (as amended on July 24, 2002 No. 101-FZ) “there have been made many legislative changes, including the regulations of the land tax payment by the participants of share ownership, detailed regulation of the legal regime of unclaimed land shares, etc. These measures have helped to solve many issues related to the establishment of subjects of rights to land shares – the participants of common ownership of land plots”.
The findings of the draft law’s supporters don’t correspond to the facts. Till the present moment the problems of turnover of the unclaimed land shares haven’t been solved. In addition, many long-term lease agreements, signed in the early 2000s, come to an end, and one must call a meeting to extend agreements and to make a decision about changing the amount of rent.
It’s impossible to secure an attendance of 50 % of participants on such meetings in most regions.
Thus, existent agricultural producers will take a disadvantageous position and since there’s no quorum, they won’t be able to extend the lease agreements.
Besides, the leasing rights are often used as mortgage security. In addition, if the rights to the land use are lost, the possibility of gaining credit funds will lost either.
It’s a big trouble for existing agricultural producers, regardless what bank land they own and what size the enterprise is.
The draft law is supported by the Department of Agriculture. Perhaps, the farmers should make a formal address on the current draft law, and to postpone its further consideration as the initiators of the draft law haven’t presented a reasonable estimate of the consequences of its introduction.