Invalidation of a transaction: grounds, terms and procedure

If a transaction contradicts the current rules of law enshrined in laws and regulations, it is invalid. Invalid transactions are void and voidable. Void transactions are invalid, regardless of whether they are recognized as such by the court. Voidable transactions are declared invalid by a court decision.

Examples and differences between void and voidable transactions

Void transactions are invalid in themselves and do not require recognition as such through a court. Examples of void transactions:

committed by a person who, by virtue of the law, does not have the right to commit it. For example, a disabled person or a child under 14 years of age. If, for example, a 12-year-old child, of his own free will and without the knowledge of his legal representatives, sells his bicycle to a friend, this transaction will be void.
the form of the transaction is violated, for example, a will requires a written form, and if it is drawn up orally, this transaction will be void, that is, it will not entail any legal consequences.
the requirement to register the transaction has been violated, for example, the ownership of real estate must be registered, otherwise the transaction will be void.

Also, void transactions can be imaginary and feigned (Article 170 of the Civil Code of the Russian Federation). Imaginary ones are those that are committed only for show, and feigned ones are those that are committed to cover up another transaction.

An example of an imaginary transaction: the debtor, not wanting to lose his property, transfers it to relatives, concluding a gift agreement. In this case, the actual transfer of real estate does not occur: he continues to live in the “donated” apartment, pays taxes and utility bills for it.

An example of a sham transaction: real estate is allegedly transferred under a gift agreement, that is, free of charge, but in fact the seller receives money from the buyer, or a lower price is indicated in the real estate purchase and sale agreement, but in fact a higher price is paid.

The sham deal is void, but the deal it covered up is valid.

Voidable transactions require evidence to be recognized as such. Contestability is the ability to invalidate a transaction.

For example, if a deal was concluded by a minor child of 17 years old, but he was previously recognized as fully capable (emancipation), then the corresponding court decision will need to be provided as evidence. Or the transaction was made under threat, with the use of deception or violence. Here you also need to prove in court that these facts took place.

To understand whether a transaction is voidable or void, you need to read the law. If it is expressly stated that a transaction is invalid , then it is a void transaction. If it is indicated that the transaction can be declared invalid by the court, then such a transaction is voidable.

Limitation period for void transactions

The invalidity of a void transaction does not need to be confirmed in court: it should not and could not have been completed under the law. Therefore, from the very conclusion it is obviously considered invalid, and they go to court to recognize its consequences as such. Here are the grounds for insignificance:

Acquisition of real estate as a result of a transaction using false documents, powers of attorney, forged signatures.
Purchasing real estate from an incapacitated citizen.
Purchasing an apartment from a child under 14 years of age. In life, this, of course, almost never happens, but it’s worth knowing about all the reasons.
Acquiring an apartment as a result of an imaginary or feigned transaction. For example, a citizen who owes a large sum for a loan transferred his dacha to a close friend. The deal will be canceled and the property will be taken away.
Acquisition of an apartment during a transaction that violated the law or other regulations. This happens especially often with housing in which there should be small children among the owners, for example, when buying an apartment using maternity capital.

Procedure for filing claims for invalid transactions

A court can recognize a transaction as invalid and apply the consequences of its invalidity; accordingly, a statement of claim must be filed within the limitation period.

For void transactions, the reasoning part of the claim specifies the requirement: to apply the consequences of the invalidity of the transaction. The requirement to recognize a void transaction as invalid is not necessary, since it is void. But the court may, on its own initiative, declare it invalid and indicate this in the decision.

In cases of contestable transactions, the claim states two demands:

invalidate the transaction;
apply the consequences of invalidity of the transaction.

Individuals need to apply to the district court. State duty according to clause 2, part 1 of Art. 333.21 of the Tax Code of the Russian Federation is 6,000 rubles.

An explanation of the application by courts of certain provisions of the civil code, including regarding the recognition of transactions as invalid and the application of the consequences of invalidity of transactions, is contained in the Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 23, 2015 No. 25.

Time limits for going to court regarding invalid transactions

file a claim to apply the consequences of a void transaction within three years after the execution of this transaction began. This procedure is established if a person who is a party to a transaction applies to the court.

If a third party who is not a party to the transaction goes to court, then the three-year period begins to count from the moment when the person learned or should have learned about the beginning of its execution. Here you need to take into account that the statute of limitations in this case cannot exceed ten years .

As for voidable transactions , a statement of claim to declare such a transaction invalid, as well as to apply the consequences of its invalidity, can be filed within one year .

This period begins to count from the moment when the violence or threats under the influence of which the transaction was concluded cease. Or from the moment the plaintiff learned that his right was violated and there are grounds for declaring the transaction invalid.

The limitation period for invalid transactions is regulated by Art. 181 Civil Code of the Russian Federation.

What is the statute of limitations?

Buyers should approach transactions with real estate especially responsibly. Even after the transfer of money and execution of papers, the transaction may be considered invalid if it was initially made illegally or violated someone’s rights.

Only through a judicial process can a transaction or its outcome be declared invalid. There is a limitation period for appeals - this is the period during which the injured party to the transaction and third parties whose rights have been violated can go to court and demand that the transaction be declared invalid.

The injured party has the right to initiate litigation at a later date, but then the defendant may claim that the time limit has expired, which will be a reason for dismissal of the claim.

The victim also has the opportunity to restore the statute of limitations. To do this, you need to prove to the court that there were good reasons for the absence: serious illness, temporary incapacity, helplessness.

Grounds for invalidity of transactions

Transactions are invalid or can be recognized as such by a court on the following grounds:

Violation of the form - for example, failure to comply with the requirements for notarization of the contract, or its state registration.

Violation of content - if the content of the transaction contradicts the basics of law and order and morality, for example, imaginary or feigned transactions.

Violation of will - if the transaction was not concluded according to the good will of its participants or at least one of them, or if the internal will was formed incorrectly, for example, under threat or deception.

Violation of the subject structure - the participants in the transaction did not have the right to complete it, for example, the transaction was carried out by an incapacitated person or during its execution the powers were exceeded, etc.

Consequences of invalid transactions

According to Art. 167 of the Civil Code of the Russian Federation, an invalid transaction does not provide for the occurrence of legal consequences, except for those associated with its invalidity. A person is considered to have acted in bad faith if he knew about the grounds for the invalidity of the transaction.

The parties are obliged to return everything received as a result of an invalid transaction to each other , and if this is impossible, for example, the property received as a result of an invalid transaction has already been sold, to reimburse the other party for its value.

An example with a marriage contract: if the contract and some of its individual clauses are declared invalid, then the spouses are obliged to return to each other all the property that they received as a result of compliance with this contract.

It is important to take into account that the court has the right not to apply the consequences of invalidity of a transaction if they contradict the fundamentals of legal order and morality. For example, if, according to the same marriage contract, one of the spouses is in an extremely unfavorable position.

Specialists from the Ministry of Finance explained how to determine the amount of state duty when filing a claim in a court of general jurisdiction to invalidate a purchase and sale agreement and apply the consequences of the invalidity of a void transaction.

As a rule, the amount of the state duty depends on whether the claim is classified as property or non-property. In addition, a claim of a property nature may or may not be subject to assessment.

The amount of the state duty when filing a claim of a property nature subject to assessment depends on the value of the claim.

Since the claim for invalidation of the purchase and sale agreement

and the application of the consequences of the invalidity of a transaction
related to rights to property
, the state duty when filing such claims is determined on the basis of subparagraph 1 of paragraph 1 of Article 333.19 of the Tax Code of the Russian Federation. This provision establishes the amount of the state duty for cases considered in courts of general jurisdiction when filing a claim of a property nature, subject to assessment, at the price of the claim:

up to 20,000 rubles - 4 percent of the claim price, but not less than 400 rubles;
from 20,001 rubles to 100,000 rubles - 800 rubles plus 3 percent of the amount exceeding 20,000 rubles;
from 100,001 rubles to 200,000 rubles - 3,200 rubles plus 2 percent of the amount exceeding 100,000 rubles;
from 200,001 rubles to 1,000,000 rubles - 5,200 rubles plus 1 percent of the amount exceeding 200,000 rubles;
over 1,000,000 rubles - 13,200 rubles plus 0.5 percent of the amount exceeding 1,000,000 rubles, but not more than 60,000 rubles.

Therefore, when filing an application to invalidate a contract of sale or gift, the state duty is calculated depending on the price of the claim.

The controllers agree with this in letter No. 03-05-04-03/86 of the Ministry of Finance of Russia dated December 15, 2011, in which they explain that when filing statements of claim with courts of general jurisdiction containing demands to recognize transactions as invalid, a state fee must be paid in in accordance with subparagraph 1 of paragraph 1 of Article 333.19 of the Tax Code of the Russian Federation, depending on the value of the property determined by the transaction.

The filing of claims containing demands for recognition of ownership of real estate also falls under this provision on determining the amount of state duty depending on the value of the property to be assessed.

, including on the recognition of ownership of real estate by right of inheritance (letter of the Ministry of Finance of Russia dated December 5, 2011 No. 03-05-06-03/94).

What is the difference between applying the consequences of invalidity of a transaction and terminating a contract?

Termination should not be confused with the recognition of the contract as invalid and the application of the consequences of invalidity of the transaction. An agreement can be amended or terminated not only due to its invalidity, but also by agreement of the parties or by a court decision.

In the event of termination or change in the terms of the contract, the parties do not have the right to demand from each other to return what they received during the validity period of the contract. A court decision or agreement to terminate or change the terms of the contract begins to take effect from the moment it comes into force or is signed, respectively.

Let's return to the example of a marriage contract; above, we considered the case of declaring it invalid and returning the property.

If, for example, the spouses, of their own free will, decide to terminate the contract, then its effect will cease only after its termination. Property received during the period of its validity will not need to be returned to each other. But the terms of the terminated contract will no longer apply to property that they acquire in the future.

Therefore, in order to determine which claim to file in court: to declare a transaction invalid or to terminate or amend a contract, one should proceed from an understanding of the legal consequences.

What determines the statute of limitations?

The statute of limitations depends on the type of transaction. For insignificant ones, the standard period is 3 years. It begins to be counted from the day the deal was concluded.

For voidable transactions, the period is reduced to 1 year. But its course begins only from the moment the danger or threat under the influence of which the transaction was concluded has disappeared, or from the moment when the person should have received information about the violation of his rights.

The period cannot be more than 10 years (Article 196 of the Civil Code of the Russian Federation). It is also impossible to change it by mutual agreement of the parties.

Examples of common risky trades

Examples of the most common risky transaction scenarios in the real estate industry. When to be wary and what to pay attention to and check legal compliance:

violation of privatization conditions - the seller of the apartment did not formalize privatization in the proper manner and in fact the property is owned by the state;
buying an apartment that was inherited by the seller - the main risk here is that it is difficult to check all the other potential heirs who may subsequently make their claims on the property;
the apartment is sold by a person recognized as incompetent - according to the law, only his legal representative can sell the apartment of an incompetent citizen with the permission of the guardianship authorities;
the rights of minors have been violated - for example, parents bought an apartment using maternity capital and sell the apartment without allocating shares to the children; such a transaction is illegal.
the real estate seller did not receive the consent of the spouse for the sale - the apartment was purchased during marriage, registered in the name of one of the spouses, he sells it without obtaining the consent of the second spouse.
they are selling housing that they received as a gift - here it is important to understand whether the gift agreement was not a sham transaction covering up the purchase and sale of an apartment;
sale of an apartment received under a rent agreement - even when purchasing an apartment under an executed rent agreement, it is difficult to completely protect yourself from the appearance of uninvited relatives or heirs of the renter; it is advisable to check such points in advance;
the transaction is handled by a trusted person - potential risks in this case: improper execution of the power of attorney, whether the power of attorney was given by a person who was misled;
sale of a share - pitfalls can be: disagreements with the owners of the remaining shares, possible disagreement of the guardianship authorities on the sale of the share if the shares belong to minors;
an apartment is being sold by an elderly person - here it is important to check that the transaction is made in good faith, that the elderly person is not under pressure and is not misled.

How to protect yourself from unreliable transactions

To avoid troubles when making real estate transactions and other types of transactions, to protect yourself from unreliable transactions, you should carefully check all the documents provided. If in doubt, make inquiries to the relevant government authorities or contact a specialist.

To make safe real estate transactions, it is better to act through a realtor. When concluding other transactions that require special knowledge in the field of law, it is advisable to contact a lawyer or lawyer.

Courts, Contracts, Real Estate

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