As a general rule, the construction of capital construction projects is carried out on the basis of a construction permit, the procedure for issuing which requires, among other things, the submission of a title document for the land plot (parts 2, 7 of Article 51 of the Town Planning Code of the Russian Federation).
The completion of the construction of a capital construction project is confirmed by a permit for its commissioning (Article 55 of the Town Planning Code of the Russian Federation), which, by virtue of the provisions of paragraphs. 1 clause 3 art. 14 of Law N 218-FZ is the basis for state cadastral registration and state registration of rights.
From the moment the construction of a capital facility begins and until permission is received to put the facility into operation, such a facility, subject to certain conditions, will be considered an unfinished construction facility .
Definition of the concept of “unfinished construction object”
The Town Planning Code of the Russian Federation, when defining the concept of an unfinished construction object, uses the concept of “capital construction object”. According to paragraph 10 of Art. 1 of the Town Planning Code of the Russian Federation, capital construction projects include buildings, structures, structures, objects whose construction is not completed (hereinafter referred to as unfinished construction objects), with the exception of non-capital buildings, structures and inseparable improvements to the land plot (paving, covering and others).
According to paragraph 1 of Art. 130 of the Civil Code of the Russian Federation, immovable things include land plots, subsoil plots and everything that is firmly connected to the land, that is, objects whose movement without disproportionate damage to their purpose is impossible, including buildings, structures, and unfinished construction objects.
The current legislation does not contain clearer quantitative and qualitative characteristics of real estate objects and capital construction projects, as well as other criteria that would allow an object to be classified as real estate objects or capital construction objects, or to objects that are not real estate objects or capital construction objects (letter from the Ministry of Economic Development Russia dated March 16, 2016 N OG-D23-3182).
Thus, an unfinished construction project is considered as an independent concept of a capital construction project, and also refers to real estate.
The concept of “unfinished construction project” is not legally established.
At the same time, for example, in the Methodological Recommendations for Accounting of Investments Made in the Form of Capital Investments in Agricultural Organizations, approved. The Ministry of Agriculture of the Russian Federation on October 22, 2008, contains the following definition: objects under construction include objects:
- the construction of which is ongoing;
- the construction of which is suspended, mothballed or completely terminated, but not written off in the prescribed manner;
- in operation, for which acceptance certificates have not yet been issued in the prescribed manner.
In the legal literature and judicial practice, the following definitions of the concept of “unfinished construction object” are found:
- An unfinished construction facility is an object inextricably linked to the land, the movement of which is impossible without causing disproportionate damage to it, not put into operation in accordance with the requirements of the Civil Code of the Russian Federation, the rights to which are registered in the Unified State Register of Rights to Real Estate and Transactions with It as established by law ok.
- An unfinished construction object is a newly created (at least partially constructed) individually defined real estate object, unfinished construction (on which work is suspended or in progress) and (or) not registered in the cadastral or other register and not registered in the prescribed manner (work has been stopped or the object is mothballed or actually in operation).
- An unfinished construction facility is a capital construction facility, the operation of which for its design purpose is impossible due to the incompleteness of the construction process, the moment of which is the complete completion of foundation construction or similar work, and in the case of reconstruction, the implementation of work to change building structures.
The concept of “construction in progress” includes objects that are not only in the final stage of construction, but also in the initial stage of carrying out certain work related to construction.
An unfinished object is real estate.
What property is considered real estate? The answer is found in Article 130 of the Civil Code of the Russian Federation.
The list of types of real estate is not long:
- land,
- subsoil areas,
- objects firmly connected to the ground, the movement of which is impossible without disproportionate damage to their purpose,
- building,
- buildings, structures
- objects of unfinished construction.
As can be seen from the list, the unfinished object is directly classified as real estate.
From the fact that unfinished property is classified as real estate, two conclusions follow.
First conclusion.
Signs of an unfinished construction site
The legislation does not establish signs that allow identifying a certain object as an object of unfinished construction. In the legal literature, the following signs of an unfinished construction project are identified.
1) Compliance of the object with the approved design documentation and construction permit . If the object does not comply with the requirements of the design documentation or violates construction and urban planning standards and requirements, then it may be recognized as an unauthorized construction (Article 222 of the Civil Code of the Russian Federation).
2) Availability of properties of a capital construction object - buildings, structures, objects, the construction of which has not been completed (unfinished construction objects), with the exception of non-capital buildings, structures and inseparable improvements to the land plot (paving, covering, etc.) (clause 10 of article 1 of the Civil Code RF).
3) The construction process of the facility is not completed , i.e. In relation to an unfinished construction project, there must be no permission to put it into operation.
4) An unfinished construction project cannot be the subject of a valid contractual obligation for its creation , for example, a construction contract (clause 21 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated January 24, 2000 N 51 “Review of the practice of resolving disputes under construction contracts”). While an agreement aimed at creating an object is in force (construction contract, investment agreement), the object may undergo constant changes and ownership rights to it cannot be registered in accordance with Art. 130 Civil Code of the Russian Federation. In other words, an unfinished construction object appears at the moment of complete completion of the foundation construction work (for a new construction project) or at the time of completion of work to change building structures (for a reconstructed object).
5) An unfinished construction object is a capital construction object that has all the properties inherent to immovable things contained in clause 1 of Art. 130 of the Civil Code of the Russian Federation, with the exception of the intended purpose, registered in the prescribed manner in the state real estate cadastre.
At what point does ownership of an unfinished construction project arise?
An unfinished construction project is subject to state cadastral registration, and ownership rights can be registered in respect of it (Part 7 of Article 1, Article 40 of Federal Law No. 218-FZ of July 13, 2015 “On State Registration of Real Estate”).
As a general rule, ownership of an unfinished construction project arises from the moment of state registration of ownership (Articles 131 and 219 of the Civil Code of the Russian Federation, paragraph 21 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated January 24, 2000 No. 51 “Review of the practice of resolving disputes under construction contracts” ).
Objects of unfinished construction, the rights to which are not registered in the prescribed manner, are withdrawn from civil circulation until the state registration of rights to them, and transactions made with them are void as contrary to the law.
In paragraph 16 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 16, 2001 N 59 “Review of the practice of resolving disputes related to the application of the Federal Law “On State Registration of Rights to Real Estate and Transactions with It”” it is established that “ownership of real estate , not completed construction, is subject to registration only if it is not the subject of a valid construction contract and if the owner needs to make a transaction with this object.”
What if an unfinished construction project is an unauthorized construction?
An unfinished construction project as real estate can also be recognized as an unauthorized construction.
In paragraph 30 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 and the Plenum of the Supreme Arbitration Court of the Russian Federation No. 22 of 04/29/2010 “On some issues arising in judicial practice when resolving disputes related to the protection of property rights and other property rights” it is explained:
“In accordance with Article 130 of the Civil Code of the Russian Federation, unfinished construction objects are classified by law as real estate. Based on paragraph 1 of Article 222 of the Civil Code of the Russian Federation, unauthorized construction is recognized not only as a residential building, other structure, structure, but also other real estate. Consequently, an unfinished construction project as real estate can also be recognized as an unauthorized construction.
Ownership of an unfinished construction project as an unauthorized construction may be recognized if there are grounds established by Article 222 of the Civil Code of the Russian Federation.”
In this case, ownership of an unauthorized construction can only be established in court.
How is the write-off done?
There is another option for the development of events. If a decision has been made not to complete construction of the structure or there is no need to register ownership of an unfinished construction project, material assets can be written off. For this purpose, the owner or investor must draw up an official document on the liquidation of the structure. In this case, a commission is created that carries out all the necessary write-off procedures. First of all, you need to identify all material assets and components that can be used in the future.
You should also collect all the necessary technical documentation. After this, a write-off act can be created. At the same time, the purpose of the unfinished construction site does not in any way affect the legal status of the building. Despite the final goals of the work, if there is a lack of funding, you can still obtain ownership of the unfinished construction project.
What are the legal consequences of registering or recognizing the right to an unfinished construction project?
First of all, this is the possibility of making transactions . State registration of the right to an unfinished construction project is necessary for the participation of such an object in civil circulation. For example, if a person wants to sell an unfinished house, then it is first necessary to register ownership of this unfinished construction object, and then transfer this object under a purchase and sale transaction.
It should be taken into account that the object of unfinished construction in accordance with paragraphs. 5 p. 1 art. 401 of the Tax Code of the Russian Federation is an object of taxation . An unfinished construction object can be recognized as a taxable object only under the following conditions: the corresponding rights to this unfinished construction object have been registered and its cadastral value has been determined.
Individuals become taxpayers only from the moment ownership of real estate objects arises, therefore, the tax in relation to an unfinished construction project must be paid only from the moment it was registered.
Basic terms
What is an unfinished construction project? In legal activities there are practically no regulations regulating this area.
Signs by which a structure can be considered unfinished are given in the protocol of the Interdepartmental Commission of 1994:
- upon expiration of the construction period of the facility;
- construction stop due to insufficient funding for the project.
Recognition of the right to an unfinished construction project cannot be formalized. The legal status of the frozen building has not yet been determined. In Russia, litigation is often fought over the identification of the status of a building. How then to properly register an unfinished construction project? Without financial resources to complete the work, the question of selling the structure sometimes arises. After all, if you have the status of real estate, the price increases significantly. Otherwise, you risk simply selling the property at the cost of building materials.
Provision of a land plot for an unfinished construction project
An unfinished construction project erected on a leased land plot is not subject to dismantling in the event of termination of the land lease agreement . “In the case when on a rented land plot that is in public ownership, there is an unfinished real estate object, erected legally and owned by the tenant, Art. 622 of the Civil Code of the Russian Federation cannot serve as a basis for imposing on the tenant the obligation to vacate this land plot, regardless of whether the lease agreement is terminated or terminated.” This legal position is given in paragraph 21 of the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 4 (2017) (approved by the Presidium of the Supreme Court of the Russian Federation on November 15, 2017). See the full text of the specified Review paragraph in the attachment below .
The presence of an unfinished construction project on a leased land plot makes it possible to provide the tenant with this land plot in accordance with clause 10, clause 2 of Art. 39.6 of the Land Code of the Russian Federation, which states that a lease agreement for a land plot located in state or municipal ownership is concluded without bidding in the case of provision of a land plot on which unfinished construction objects are located, once to complete their construction to the owners of unfinished construction objects in cases provided for in paragraph 5 of this article.
