After a brief speech by my respected colleague Andrey Viktorovich Khrustalev at the November conference, I decided to develop in more detail the topic of vindication of property or its recovery from someone else’s illegal possession. The topic is relevant, interesting and often related to bankruptcy, since insolvency practitioners can file vindication claims if it is impossible to apply the consequences of transactions disputed within the framework of bankruptcy procedures, returning the property alienated by the debtor to the bankruptcy estate.
The most interesting in this area are the issues of understanding the concept of disposal of property from ownership against the will of the owner, as well as the good faith of the acquirer. The fate of the claim for the recovery of property from someone else’s illegal possession depends on the content of these concepts.
As you know, an important role in the work of a lawyer or lawyer is played by an understanding of what the judicial practice is in cases of this category of cases, how the courts understand the concepts under consideration, and how they are applied.
So, let me remind you that, based on Art. 302 of the Civil Code of the Russian Federation, if property is lost by the owner or a person to whom the property was transferred by the owner into possession, or stolen from one or the other, or left their possession in some other way against their will, then it can be claimed even from a bona fide purchaser. Therefore, in this publication I will consider the concepts of disposal of property from possession against the will of the owner and its theft for the purposes of vindication.
When can you reclaim property from someone else’s illegal possession?
One of the conditions for filing a vindication claim is that the owner acquired it illegally. This means that such a person knew, or should have known, that the property being acquired had a legal owner. This is an unscrupulous purchaser.
Accordingly, he acquired this property from a person who did not have the right to alienate it, or took possession of the property without any reason, i.e. not on the basis of a transaction, but without permission. We can talk about real and movable property (seizure of a land plot or part of it, use of residential premises rented from a person who is not its owner, or after the end of the lease period, appropriation of a find, etc.).
Both the owner and the title owner can reclaim property from someone else's illegal possession (note: the title owner is considered to be a person who owns it by right of inherited ownership, economic management, operational management or on the basis of an agreement, for example, hiring, rent, storage, etc.).
Property may be demanded from the person in whose possession it is actually located at the time of consideration of the case.
A change in the owner of a thing entails a change in the composition of the persons participating in the case. Thus, the defendant in the statement of claim for reclaiming property indicates the person who owns the property at that moment, however, if during the consideration of the case it turns out that the property has left the defendant’s possession and is transferred to another person through alienation (exchange, donation, sale), then the defendant needs to be replaced.
The fact that the defendant has been replaced in the case due to the transfer of property from the previous illegal owner to the new owner does not entail the exclusion of the former owner from among the participants in the process; he continues to participate in the case as a third party who does not make independent claims on the side of the defendant, and also gives his explanations on the merits of the dispute. This is due to the fact that in the event of reclaiming property from the defendant’s illegal possession, the obligations of the person who transferred this property to him will be affected. For example, in the event of seizure of property from the defendant and transfer of it to the owner, the defendant has the right to demand from the person who transferred the property to him that everything received under the transaction is returned. This follows from the content of Articles 460-462 of the Civil Code of the Russian Federation.
It is impossible to reclaim property from a person who does not have the disputed property in his possession at the time of consideration of the case, even if he previously had it.
If the property is temporarily transferred by the defendant to another person , for example, for rent, trust management, etc., then the temporary owner of the property is subject to involvement in the case as a co-defendant, since if the claim is satisfied, the disputed property is subject to removal from the possession of such person .
Vindication claims and related claims
According to the law, to reclaim one’s property from someone else’s possession, a certain legal structure is used, called for simplicity a vindication claim. The very history of its appearance arose in Ancient Rome, hence the specific name. Vindication always refers to the demand of the owner of property to the illegally possessing person to return it.
But in life this is often not enough. And not every encroachment on someone else’s property is deprivation of possession. Let's give a simple example. As a result of fraud, the owner lost his apartment. After which the apartment changed several owners, and the last of them registered his family members in it. By the way, this is a fairly common situation in life. According to the provisions of the law, a vindication claim can be brought against the illegal owner, that is, against the one who currently considers himself the owner.
However, family members are not the owners of the apartment, so what should be done with them? The answer is clear: to evict, but this is no longer vindication, but a completely different requirement, since the tenants prevent the owner from owning the property and deprive him of this right.
Another situation is also possible when the property has left the owner’s possession because he was unable to draw up all the necessary documents for it in a timely manner. By the way, this also happens. And since he does not have documents confirming his ownership, no court will satisfy his vindication claims against third parties.
Practice knows cases when, within the framework of one statement of claim, more than 10 claims may be presented, which arise from one another. And even experienced lawyers have to hold a “consultation” to understand the situation and understand where the “ears are coming from.” An ordinary person, with all due respect to him, cannot correctly solve such a problem. And since the solution to the issue must follow a chain, failure to resolve the next sub-issue puts an end to the entire procedure for returning one’s property. The consequences are hardly worth reminding, because housing or other real estate can play a decisive role for a person’s normal life.
Return of property to original owner
The owner must be returned specific property (premises at a specific address, land plot with a specific cadastral number, car with specific identification numbers, etc.) to which he has ownership rights.
In other words, the item of vindication must be individualized , have characteristics that distinguish it from similar things (inventory or serial number, marking, etc.). If the property cannot be identified, this will lead to the refusal to satisfy the vindication claim.
When we are talking, for example, about real estate, vehicles, or other equipment that can be identified by identification features, etc., then problems with vindication do not arise. Particularly difficult are disputes involving generic things, the ownership of which is difficult for anyone, or is not possible due to the lack of individual characteristics that distinguish these things from similar ones. Satisfaction of a claim the subject of which is such property is possible only if there is no dispute regarding the possibility of identifying the thing claimed.
Thus, the law clearly defines the conditions under which it is possible to reclaim property from someone else’s illegal possession:
- Only the owner or title holder of the relevant property can act as a plaintiff in a case of reclaiming property from someone else’s illegal possession
- The plaintiff has evidence that the plaintiff is the owner or title holder of the claimed property (extract from the Unified State Register of Real Estate, other documents confirming the emergence of ownership or title rights in relation to property, including movable)
- There is evidence that the property is in the actual possession of a specific person who has no legal basis for it
- The subject of claim from illegal possession can only be an individually defined thing, i.e. the item of vindication is irreplaceable .
- between the parties regarding the disputed (claimed) property . Otherwise, the dispute between the parties cannot be resolved by filing a vindication claim, but must be based on the contractual relations of the parties.
- Only property that was preserved in kind at the time of consideration of the case is subject to reclaim, i.e. safe and sound . If the thing subject to claim no longer exists (has been taken out of circulation, disposed of, destroyed, etc.), then the vindication claim cannot be satisfied, regardless of whether the thing was destroyed before or after the claim was filed in court. Protection of the owner's rights in this case can be carried out by filing a claim for compensation for material damage, or by providing the plaintiff with an equivalent thing in return for the lost one, in accordance with Art. 1064 of the Civil Code of the Russian Federation, or through a claim for the recovery of unjust enrichment, in accordance with Art. 1102 of the Civil Code of the Russian Federation.
- Property can be reclaimed from the illegal possession of only the person who actually has it , with the obligatory replacement of the defendant in the event of transfer of possession to another person during the trial of the case by the court.
If at least one of the listed conditions is absent, the claim may be denied.
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Who is considered a bona fide purchaser?
A person is considered a bona fide acquirer if, at the time of the compensation transaction for the acquisition of property, he did not know and should not have known that the property was alienated to him illegally. It is assumed that at the time of the transaction he should have taken all measures to clarify all the powers of the seller to alienate this property. For example, an extract from the Unified State Register shows who the legal owner of the property is; such a document may also contain information about encumbrances and the existence of a legal dispute regarding the property. Therefore, with due diligence, the acquirer can ascertain the seller's authority. The burden of proving these circumstances lies with the acquirer of the property.
In turn, the owner has the right to prove the fact that when making a transaction, the purchaser of the property should have doubted that the seller was lawfully alienating the property to him, i.e. take measures to clarify this circumstance.
Reclaiming property from a bona fide purchaser
The owner can claim his property from a bona fide purchaser, provided that this property has left his possession, or from the possession of a person to whom the owner transferred the property for temporary possession, against the will of one or the other - as a result of loss, theft or otherwise against their wishes .
At the same time, an important point is that the property was acquired by a bona fide purchaser in a paid transaction , since the latter circumstance also indicates his good faith.
However, the good faith of the acquirer is excluded if the other party proves that at the time of the compensation transaction the acquirer was aware of the claims of third parties to the disputed property.
If the property was received by the acquirer as a result of a gratuitous transaction, then it can be claimed by the owner in all cases , that is, even if it left his possession at his request.
If the gratuitous acquirer, in turn, alienated this property under a paid transaction to a third party, then the latter will also be considered a bona fide acquirer, reclaiming the property from whom is possible only if it is proven that the property has been removed from the possession of the owner or title holder against their will.
The law prohibits demanding money and securities from a bona fide purchaser - clause 3 of Art. 302 of the Civil Code of the Russian Federation.
To summarize:
- A person is recognized as a bona fide purchaser if: 1. The property was acquired through a compensated transaction; 2. The acquirer did not know and should not have known about the illegality of the alienation of the property by the seller; 3. The buyer has taken reasonable measures to clarify the seller’s powers
- It is impossible to reclaim property from a bona fide purchaser if it has left the possession of the owner or title holder at their will
- Reclamation of property from a bona fide purchaser is possible in cases of loss of property by the owner or the person to whom it was transferred by the owner, or disposal of property from the possession of one or another as a result of theft or other unlawful means
- When receiving property under a gratuitous transaction from a person not authorized to alienate this property, the owner may reclaim his property in all cases.
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What is the disposal of property against the will of the owner for the purposes of its subsequent vindication?
The idea of vindicating property even from a bona fide owner in the event of its theft, loss or disposal against his will is quite simple. If the owner voluntarily transfers ownership to a person, then by choosing such a person he accepts the risk that this person may turn out to be dishonest.
In addition, the owner knows the person to whom ownership is transferred, and if the property is alienated by such a person, the owner can recover damages from him. In such a case, the risk of vindication of the property cannot be placed on the innocent, bona fide purchaser of such property.
In general, at one time the famous Soviet civil specialist A.A. Agarkov wrote that the risk should be placed on someone who can, through his actions, by taking certain measures, if not eliminate this risk, then at least reduce it. The civil law of many countries is practically based on this principle. In our case, the owner has more opportunities to prevent the risk of loss of his property, since it is the owner who chooses the counterparty.
