Illegal retention of someone else's property - article and responsibility

Draws: Anastasia Asfandiyarova

According to Rosreestr statistics, in the first half of 2021, Russian courts considered more than 980 claims for the recovery of property from the illegal possession of another owner, with 267 claims related to the recovery of housing. But the courts are reluctant to satisfy such claims; in 74 applications, the claims were fully satisfied.

A statement of claim for the recovery of property from someone else’s illegal possession is a tool for protecting the property rights of the owner. In this article we tell you where to file such a claim and for what situations it is suitable.

Types of illegal possession of property

The Civil Code in Articles 301 and 302 identifies a number of situations with illegal possession of property.

• The theft from the owner of property as a result of theft or fraud that transfers title to the property to a third party without any authority to own it.
• The owner lost the property, and then third parties claimed rights to it without obtaining consent from the owner. In this case, the previous owner still owns the property, and the law recognizes the new owner's possession as illegal.
• Rights to property were obtained by third parties as a result of deception or threats when concluding a transaction with property. Typically, such situations arise in residential transactions, but can also concern other property.

In addition, illegal possession is recognized as:

• If the legal owner has all the evidence that the disputed property really belongs to him. For real estate, this will be an extract from the Unified State Register of Real Estate.
• The owner will prove that he lost the property without his consent as a result of theft, loss, threats or deception, as well as fraud.
• The property is in the possession of the illegal owner at the time the lawsuit is filed.

Raider seizure - article of the Criminal Code of the Russian Federation

Raiding in the Criminal Code of the Russian Federation is not enshrined in a separate article as a crime, but more than 10 different articles provide for liability for certain actions of illegal seizure of property. The most common article that is used in practice when qualifying the actions of raiders is Article 159 of the Criminal Code of the Russian Federation (fraud); The very disposition of this article, which provides for liability for the theft of someone else’s property through deception or abuse of trust, fully covers the actions of attackers to take over someone else’s business. In addition to this article, the actions of raiders are often qualified under the following articles of the Criminal Code of the Russian Federation (in combination with Article 159 or separately from it):

• 179 of the Criminal Code of the Russian Federation, if the raider forces the owner of the organization to enter into a transaction for the alienation of property under the threat of violence;
• 170.1 - in cases where knowingly false data is submitted to the registration authority in order to enter false information into the Unified State Register of Legal Entities, the securities register or the depository accounting system;
• 170 - in relation to officials who register obviously illegal transactions, distorting information from the Unified State Register of Legal Entities and the state cadastre;
• 173.1 and 173.2 - when used in the process of capturing shell companies and dummies;
• 183 - in case of illegal receipt of information constituting commercial, tax or banking secrets;
• 185.5 - falsification of a decision of the general meeting or board of directors of the company;
• 186 - regarding the production and sale of securities;
• 196 and 197 - deliberate and fictitious bankruptcy;
• 303 - falsification of evidence - when submitting forged documents to the court in order to obtain an unjust act;
• 327 - forgery of documents;
• Part 3 Art. 299 - illegal initiation of a criminal case in order to obstruct business activities.

The above list is incomplete; depending on the specific circumstances of the case and the schemes used, the investigative authorities can qualify the actions of raiders and their accomplices who commit related socially dangerous acts in the process of seizing property, under other articles of the Criminal Code of the Russian Federation, providing for liability for tax and other crimes in the economic sphere activities, crimes against property and malfeasance, crimes against justice, as well as against the life and health of citizens.

Deputies and senators of the Federal Assembly of the Russian Federation have repeatedly proposed to include in the Criminal Code of the Russian Federation Article 159.7 of the Criminal Code of the Russian Federation, which provides for liability directly for raider seizure, and the punishment was proposed to be severe - up to 20 years in prison with confiscation of property. It seems that due to the prevalence of this act and its increased social danger, such proposals are completely justified; As we noted above, the current version of the disposition of Article 159 of the Criminal Code of the Russian Federation fully covers the actions of offenders to seize someone else's property, and therefore there is no need to introduce a separate article into the code providing for liability for raiding. Meanwhile, the sanction of part 4 of Art. 159 of the Criminal Code of the Russian Federation, according to which raiders are held accountable, provides for a maximum penalty of imprisonment for up to 10 years, classifying these crimes as serious. Introduction of a separate part in Art. 159 of the Criminal Code of the Russian Federation in relation to raiders would make it possible to distinguish this act as a type of fraud, providing for increased liability for committing such acts and classifying them as especially serious crimes. All this would contribute to maintaining the harmony of the criminal legislation system, would facilitate the practical application of the article in this part, and would also contribute to a more complete implementation of the preventive function of the criminal law.

If a new part of Art. 159 of the Criminal Code of the Russian Federation, it would be quite logical to classify the investigation of criminal cases of this category as the jurisdiction of investigators of the Investigative Committee of the Russian Federation, which includes the bulk of crimes in the field of economic activity; this, in our opinion, would have a positive impact both on the quality of the investigation and on the elimination of disputes about jurisdiction and compliance with deadlines when conducting verifications of reports of raider takeovers.

In what cases can property be reclaimed from illegal possession?

The former owner can demand that the illegal owner return the property only if he points out signs by which he can be identified. For example, these could be:

• Availability of serial numbers and other marks from the manufacturer;
• Numbers put on the balance sheet by the company during the inventory;
• Other property markings or identification marks.

If the new owner has lost the property as a result of destruction or the identification marks on it have been erased and identification cannot be carried out, then the court will not accept the statement of claim, and it is impossible to reclaim the property from illegal possession. However, the legal owner may demand compensation for the damage caused to him or demand compensation for unjust enrichment.

Claim procedure

The pre-trial or claim procedure for resolving a dispute with an illegal owner is valid if this condition is specified in the agreement on the basis of which the illegal owner received the property. For example, if a claim is filed regarding company property, then a pre-trial claim must first be filed. If the illegal owner does not respond to it within 30 calendar days, then the statement of claim is filed with the arbitration court.

However, the legislation does not provide for an obligation in cases of reclaiming property from someone else’s illegal possession. The court may consider compliance with such a requirement by analogy with a claim for the return of unjust enrichment. At the same time, Article 303 on settlements when returning property from illegal possession should be taken into account in priority over the general rules on the return of unjust enrichment, as stated in paragraph 12 in the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated November 17, 2011 No. 73, the Presidium of the Supreme Arbitration Court of the Russian Federation dated April 6, 2004 No. 15828/03. Interest on income from illegal possession of someone else's property in this case should not be accrued. The courts proceed from the fact that illegal possession of a thing is the unjust use of property, not income, and they will not apply Article 395 in this case.

Protection from raiding - how to protect your company?

In the global understanding, raiding is ineradicable as long as there are gaps in legislation, bribery and corruption. But any company can reduce the risk of falling into the hands of raiders. To do this, you should adhere to the following rules:

• powers in a power of attorney for any employee should be strictly limited to solving a narrow range of tasks;
• transfer of assets and alienation of property may be the prerogative of the board of directors rather than managers;
• the process of sale (transfer) to third parties of shares in the authorized capital of the company, real estate, fixed assets must be strictly regulated by a separate internal regulatory document of the company defining the fundamental provisions in the statutory documents;
• the choice of employees, especially top managers, accountants, financially responsible and trusted persons should be taken carefully - it is better to check their identities through security services or special agencies;
• share capital should be consolidated as much as possible in one hand; if there are many shareholders, it is necessary to implement a system of measures to prevent the purchase of a certain number (giving the right to a decisive vote) of shares by third parties without the knowledge of the founders (major shareholders);
• the charter should include a rule on the pre-emptive right to purchase shares or shares, real estate, fixed assets, internal (intra-holding) bills and other debt obligations, respectively, by participants (founders) and legal entities included in a holding or a group of enterprises;
• nominees in company management should be avoided;
• the company must have a well-functioning information security system;
• the organization requires separate regulation and strict accounting of actions for issuing bills and other debt obligations;
• regulation and strict accounting of all actions for the production, storage and use of seals and stamps used by the organization in its activities are necessary;
• it is necessary to regulate and strictly take into account the relationships between managers and employees included in the administrative apparatus of the company, with the introduction of the practice of “internal notes” at least in relation to those actions or processes that may lead to the formation of debt, the sale of shares in the capital of the company, real estate and fixed assets ;
• concentration of functions for the sale of the main assets of the company and the disposal of large sums of funds in the hands of one person who is not the main or sole owner of the company should be avoided; when business owners are removed from the management of the company, it is necessary to regulate in the statutory documents the procedure for obtaining their consent to carry out significant transactions;
• it is necessary to instruct a lawyer or legal department to check the databases of the State Automated System “Justice” and other databases of the courts at least once a month for the presence of cases in court proceedings involving or in relation to the company;
• it is desirable to enshrine in the statutory documents of the company the principle according to which all actions related to the sale of shares in the authorized capital, real estate and fixed assets are carried out by a specific notary or notaries of certain notarial districts;
• All activities of the company must be carried out in strict accordance with current legislation.

It is difficult for a full-time lawyer who has never encountered the seizure of someone else’s property to assess all the risks and reduce them. In cases where an organization is subject to hostile takeover, the affected persons face a number of problems: law enforcement agencies refuse to initiate criminal cases;

• checks on allegations of crime are carried out by employees of the EBiPK units of the Ministry of Internal Affairs of the Russian Federation formally and in violation of procedural deadlines;
• inspection materials are sent from one territorial unit to another, from the police to the Investigative Committee in connection with a dispute over jurisdiction;
• It is not uncommon for a person to refuse to initiate a criminal case citing the existence of a corporate dispute and a civil violation.

In recent years, the term “technical failure”, not provided for by law, has become widespread in recent years - operational officers, not having time to complete the inspection within the maximum 30-day period provided for by the Code of Criminal Procedure of the Russian Federation, issue unfounded decisions to refuse to initiate a criminal case in the hope that the decision will be canceled by the prosecutor’s office with receiving an additional month to conduct additional verification.

Lawsuit

You can protect the violated rights of the owner to own property by filing a vindication claim.

A vindication claim is a demand from the legal owner to return his property, which was taken by other persons without the consent of the previous owner. As part of the trial, the new owner must prove that he can legally own the thing or real estate and confirm the fact of a transaction or other transfer of the disputed property to him. If the old owner wants to regain the property, he must prove the illegality of possession by the new owner.

A vindication claim differs from a negatory claim. Both claims are aimed at restoring the rights of the owner, but there are differences:

• The negative is filed when the property is in the possession of the owner. A vindication claim concerns the recovery of property from someone else’s illegal possession;
• A negative claim resolves problems regarding the right to use or dispose of property; a vindication claim is filed only if there are disputes regarding ownership;
• Such claims also differ in terms of statute of limitations. If a vindication claim is filed within three years after the violation of the rights to own property, then a negatory claim can be filed at any time when the owner learns of the violation of the rights of use and disposal.

The owner can file a statement of claim in relation to any property – real and movable. It is necessary to attach title documents for the disputed property to the application, otherwise the case is unlikely to be considered. Such documents may be:

• An extract from the Unified State Register of Real Estate, if the application is submitted in relation to real estate, or a certificate of registration of property rights (if the premises were registered before 2021);
• Contracts of purchase and sale, donation, exchange;
• Will.

What can be subject to appropriation?

As part of bringing to responsibility for any forms of theft, including misappropriation and embezzlement under Art. 160 of the Criminal Code of the Russian Federation, the following objects are considered as property:

• money in rubles or other foreign currency;
• things, objects and other material products;
• real estate objects or rights to them;
• securities, including in non-documentary form;
• other types of property for which ownership belonged to another person.

The amount of funds appropriated, which will affect the division of responsibility for different parts of Art. 160 of the Criminal Code of the Russian Federation coincide with similar criteria for other types of theft. They are listed in the notes to Art. 158 of the Criminal Code of the Russian Federation. A large size must exceed 250 thousand rubles, and a particularly large one - 1 million rubles.

If a case of embezzlement of funds is being investigated, determining the amount of the stolen money will not be difficult. If the object of the theft were any things, objects or other material assets, their value will be determined during the investigation of the case by assigning various types of examinations.

If you are facing criminal prosecution for illegal retention of someone else's property, contact our lawyers who have extensive practice in handling such cases. Call us at the numbers listed on the website or ask your question online.

Court

In court, the plaintiff must state:

• On the return of all income received from illegal possession of property, or compensation of income that the owner could have received when owning the thing for the period during which the property was in illegal possession;
• On the return of income from a bona fide owner. The income must be received from the moment when the bona fide owner became aware of his illegal possession. The plaintiff may also request compensation for lost profits during the period of illegal possession.

But the Civil Code also protects the bona fide owner. In response to the claim, he may demand compensation for the maintenance of the property for the period for which the income from the property was calculated. However, the expenses must be justified; they must really improve the characteristics of the property or add new functions to it.

In addition, if improvements can be separated from the thing, then the bona fide owner can keep them or demand compensation if separation is impossible. The amount of compensation should not exceed the amount of improvements made.

The statement of claim is filed with the court at the location of the defendant, that is, the bona fide or dishonest owner. The limitation period during which the court can accept the application for consideration is three years. This period begins to run from the moment:

• When the previous owner learned about the violation of his rights to property;
• When the previous owner found out the exact location and new owner of the lost item.

The state fee when filing a claim is paid by the plaintiff. Its size is calculated based on the value of the disputed property.

For example, the state duty for a claim for the return of real estate will be calculated based on its cadastral value. And the duty for movable property will be calculated based on its value indicated on the documents when purchasing the item. If the property has already lost its marketable appearance, then to assess the value you need to order an expert assessment from appraisers.

The plaintiff can return the court costs if the claim is fully satisfied, and if the case is partially won, then the state fee can be returned in proportion to the requirements that the court satisfied. If the court rejects the claim, then the state fee is not returned.

How to take ownership of someone else's and ownerless property

Grounds for acquiring property rights

Citizens and legal entities can acquire ownership of someone else's or ownerless property for free. To do this, you must honestly, openly and continuously own movable property as your own for five years or real estate for 15 years. This process is called acquisitive prescription (clause 1, article 234 of the Civil Code).

Integrity

It is implied that the owner does not know and should not have known that he has no grounds for the emergence of ownership rights (Resolution of the Plenum of the Supreme Court No. 10, Plenum of the Supreme Arbitration Court No. 22). “The main problem of obtaining a thing by acquisitive prescription is that you need to prove a lot, in particular to confirm your good faith. Essentially, the owner must believe that he is the owner of the thing,” explained a partner in the dispute resolution practice of Bryan Cave Leighton Paisner (Russia) LLP Bryan Cave Leighton Paisner (Russia) LLP Federal Rating. foreign trade group/Customs law and currency regulation group PPP/Infrastructure projects group Land law/Commercial real estate/Construction group Intellectual property (including disputes) group Compliance group Corporate law/Mergers and acquisitions group International arbitration group Tax consulting and disputes (Tax disputes) group Natural resources/Energy group TMT (telecommunications, media and technology) group Transport law group Pharmaceuticals and healthcare group Financial/Banking law group Digital economy group Antitrust law (including disputes) group Arbitration proceedings (major disputes - high market) group International litigation group Tax consulting and disputes (Tax consulting) group Labor and migration law (including disputes) group Family and inheritance law group Criminal law group Private wealth management group Bankruptcy (including disputes) 3rd place By revenue 3rd place By number of lawyers 5th place By revenue per lawyer (more than 30 lawyers) Company profile (RUSSIA) LLP Ivan Veselov. “A person should not know about the illegality of taking possession of property. This is possible, for example, if the property was initially stolen, and then it passed to the heirs who are not aware of the theft,” said Moscow City Agency lawyer Barshchevsky and Partners Barshchevsky and Partners Federal Rating. Group Criminal Law Alexander Didenko. Partner of Pepelyaev Group Pepelyaev Group Federal rating. group Foreign trade activities/Customs law and currency regulation group Tax consulting and disputes (Tax consulting) group Tax consulting and disputes (Tax disputes) group Labor and migration law (including disputes) group Digital economy group Antimonopoly law (including disputes) group Land law/Commercial real estate/Construction group Intellectual property (including disputes) group Compliance group Natural resources/Energy group Pharmaceuticals and healthcare group Environmental law group Bankruptcy (including disputes) group Corporate law/Mergers and acquisitions group Family and inheritance law TMT group (telecommunications, media and technology ) group Financial/Banking Law group Arbitration proceedings (major disputes - high market) group Dispute resolution in courts of general jurisdiction Alexey Konevsky advises showing that the citizen exercised the rights and obligations of a public legal entity (No. 5-КГ17-76). “Inventory cards of objects will help prove good faith - the organization on whose balance sheet they were indicated is indicated there. The privatization plan will confirm the right of the successor if the property has not been removed from the possession of his predecessor. The good faith of the purchaser is also indicated by the fact that the property was not stolen. You can also present documents confirming the costs of maintaining the property,” said the manager of MAB Lawyers and Business Lawyers and Business Federal Rating. group Arbitration proceedings (medium and small disputes - mid market) group Dispute resolution in courts of general jurisdiction group Criminal law 5th place by revenue per lawyer (less than 30 lawyers) 26th place by revenue Company profile Dmitry Shtukaturov.

There are more court decisions refusing to apply acquisitive prescription than on its application. To win, you need to prove a lot of facts, which is difficult to do in practice.

Victoria Danilchenko

Openness

A person must not hide ownership of property (resolution of the plenum of the Supreme Court No. 10, plenum of the Supreme Arbitration Court No. 22). You can help confirm open ownership by:

• lease agreement for the land plot on which the disputed object is located. “Often in the process of recognizing ownership of buildings by acquisitive prescription, there is a risk of complete loss of the land plot. Sometimes illegal use and disposal of land is discovered, which can lead to fines,” said lawyer, chairman of the Moscow Pavel Astakhov Bar Association, Victoria Danilchenko;
• lease agreement for the disputed object. In this case, the openness of ownership can be confirmed, for example, by resolutions and orders of local governments in relation to the disputed property;
• contracts for electricity supply, gas supply, security, garbage removal, maintenance of gas equipment and other evidence of the maintenance of the facility, as well as receipts for payment for all these services;
• documents on registration of the owner at the location of the disputed property (No. A56-16350/2015);
• checks for repairs of the facility;
• permission to reconstruct the facility;
• acts and notifications on the transfer of ownerless property and placing it on the balance sheet of the acquirer (No. 13AP-20619/2015);
• correspondence on issues of property ownership with authorities;
• witness's testimonies.

The Supreme Court told how to get ownerless property
Continuity

It is necessary that the new owner has movable property (for example, a car) for at least five years, and if it is real estate - 15 years (Resolution of the Plenum of the Supreme Court No. 10, Plenum of the Supreme Arbitration Court No. 22). As the Supreme Court points out, the transfer of property for temporary possession to another person does not affect continuity (No. 32-KG15-16, No. 307-ES14-329). Continuity is indicated by:

• lease agreements and additional agreements thereto;
• financial documents;
• documents confirming the placement of equipment at the site;
• property tax payment receipts;
• receipts for repairs and operating costs.

All these documents must relate to different time periods (for example, from 2013 to 2021 the car was rented out under a contract, and in 2021 it was repaired five times, for which there are receipts).

If the object was sealed and the owner could not use it, there would be no continuity (No. A40-115/13).

Owning a thing as one's own

There should be no rental, storage, gratuitous use or other agreements between the owner and the owner (Resolution of the Plenum of the Supreme Court No. 10, Plenum of the Supreme Arbitration Court No. 22 of 04/29/2010). Otherwise, a thing cannot be acquired into ownership, since its possession is carried out not instead of the owner, but along with him - unless, of course, the owner has renounced his right to the thing and has not lost interest in it (No. 127-KG14-9).

Ownership of property as your own is confirmed by witness testimony, inventory cards for recording fixed assets, property tax declarations, service agreements, and documents on the costs of maintaining the facility.

The 10-year “objective” limitation period established by the legislator (clause 2 of Article 169 of the Civil Code) will help you defend your interests in property. This period is much more difficult to recognize as unexpired, which increases the chances of fighting off other claimants for the property.

Ivan Veselov

Procedure for acquiring ownership rights

If you have owned movable property (for example, a car) as your own for five years in good faith, openly and continuously, ownership of it will arise automatically. In the case of real estate, you will have to go to court with a claim against the previous owner. If the previous owner is unknown, the trial takes place as a special proceeding, and a representative of Rosreestr is involved as an interested party. The court decision becomes the basis for registration of property rights (clause 1 of Article 234 of the Civil Code).

The applicant, a long-term acquirer, must prove the moment of possession of the thing. There is no need to register ownerless real estate; it is also not necessary to wait for the court to refuse to recognize the right of municipal ownership of real estate (clause 19 of the Resolution of the Plenum of the Supreme Court No. 10, Plenum of the Supreme Arbitration Court No. 22 of 04/29/2010).

The Supreme Court indicated: the owner of real estate always knows that he does not have ownership rights, since it needs to be registered, but this should not interfere with obtaining ownership rights due to acquisitive prescription (clause 20 of the resolution of the Plenum of the Supreme Court No. 10, Plenum of the Supreme Arbitration Court No. 22 of 04/29/2010, No. 127-KP6-12).

When the municipality or other interested parties claim their rights to real estate before the long-standing owner has managed to register ownership of this property, the court proceeds to litigation. In this case, it will be decided whether the previous owner was known to the old owner. The court takes into account:

• whether the municipality took any action prior to filing the claim;
• whether the municipality exercised its rights as an owner in relation to the said property;
• whether he challenged the legality of the plaintiff’s possession of the disputed property (No. 5-КГ17-76).

“A person who considers himself the owner of real estate due to acquisitive prescription must prove that local authorities knew exactly about his disposal,” noted Capital Legal Services partner Capital Legal Services Federal Rating. PPP group/Infrastructure projects group Arbitration proceedings (medium and small disputes - mid market) group Land law/Commercial real estate/Construction group Dispute resolution in courts of general jurisdiction group Antimonopoly law (including disputes) group Intellectual property (including disputes) group Private capital management Group Bankruptcy (including disputes) Group Corporate Law/Mergers and Acquisitions Group Tax Consulting and Disputes (Tax Consulting) Company Profile Elena Stepanova. The inaction of a public legal entity means that the property can be transferred to the applicant (No. 81-КГ18-15). If the municipality did not show interest in the disputed property and did not declare its ownership, no obstacles should arise for the long-term acquirer.

What you can and cannot buy

“There is no acquisitive prescription in land legislation. The rules on public ownership of land should be known to everyone, therefore a person who has built an object on someone else’s land is not a bona fide developer and cannot acquire ownership of it (“Review of judicial practice in cases related to unauthorized construction”, approved by the Presidium of the Supreme Court 19.03 .2014),” said the head of the real estate and construction practice Maxima Legal Maxima Legal Regional rating. group Land law/Commercial real estate/Construction group Intellectual property (including disputes) group Corporate law/Mergers and acquisitions group Tax consulting and disputes group Bankruptcy (including disputes) group Criminal law group Arbitration proceedings Konstantin Boytsov. The fact is that land that is not owned by citizens, legal entities and municipalities is state-owned (clause 2 of Article 214 of the Civil Code). The land plot abandoned by the owner becomes the property of a public entity from the date of state registration of termination of ownership rights (clause 1 of article 16, clause 1.1 of article 19 of the Land Code). However, do not forget about the “dacha amnesty” - if you have a land title document issued before October 30, 2001, the property must be registered (“The Federation Council has extended the “dacha amnesty” until 2020”).

It is impossible to obtain ownership of an unauthorized construction by acquisitive prescription if it threatens the life and health of citizens (Article 222 of the Civil Code, Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 143). When there is no threat and the interests of third parties are not violated, no problems arise (clause 12 of the Information Letter of the Presidium of the Supreme Arbitration Court No. 143). An unauthorized building must be located on a legally occupied land plot (“Review of legislation and judicial practice of the Supreme Court for the first quarter of 2003”), provided that its owner could not previously legalize the construction (clause 9 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 143).

• Alina Mikhailova

The court's decision

There are situations when the court's decision when considering a case on the recovery of property from illegal possession will be negative. The owner will definitely lose the claim; if the property is destroyed, there is nothing left to claim. An owner may be recognized as an unscrupulous owner if he:

• Quickly resold the item;
• Sold it at a price below the market price;
• Depends on the buyer's decision.

The court recognizes such transactions as invalid. As a result, the buyer must return the item to the owner, and the contract is terminated.

The Supreme and Supreme Arbitration Court, in a joint Resolution of the Plenums of April 29, 2010 No. 10/22, explained that if the property is not registered in the Unified State Register of Real Estate under the previous owner, the buyer may be considered dishonest. If the acquirer has managed to register other people in the real estate, then he must write them out from there. Finally, if the buyer refuses to comply with the approved court decision, then the plaintiff needs to obtain a writ of execution and contact the bailiffs, who will forcibly evict the buyer and his family members from someone else’s property.

The buyer is also recognized as a bona fide buyer if the item was purchased on a reimbursable basis. If the transaction was gratuitous, then the new owner returns the property to the previous, legal owner of the thing, regardless of how the property was acquired.

The buyer must prove that the property was transferred to him at the will of the previous owner. But if the property was seized by a court decision, which was subsequently overturned, then the court recognizes the transfer of property against the will of the owner.

When considering a case, the court checks the legality of the owner’s powers, and if the lower court made a mistake in determining the legality, then the higher authority must send the case for a new trial.

Who is considered a bona fide owner?

From January 1, 2021, bona fide owners will be paid compensation for money spent on property that was seized from illegal possession. To do this, it is necessary that the purchaser of the property be recognized in good faith - such an owner does not and cannot know that the seller acquired the property being sold illegally and should not be its owner. A bona fide purchaser must prove that reasonable care and diligence was exercised when completing the transaction. He must prove that he was able to check the counterparty to the transaction and he had no doubts about the honesty of the seller. A conscientious buyer must rely on data from official registers and not be aware of fraudulent activities with property.

According to general rules, a bona fide buyer should not be deprived of purchased property for which the new owner paid the actual price. But the legislation provides for norms according to which the seller or the previous owner can reclaim property from illegal possession.

Reclaiming property from a bona fide owner

The acquired property will be taken away from a bona fide owner at the request of the previous owner in several cases:

1. The thing left the possession of the legal owner against their will, for example, due to malicious intent, theft, loss, or other interference of third parties in ownership.
2. The property was purchased from a seller who had no authority to sell. For example, a power of attorney to complete a transaction was not issued, or an agency agreement was not signed.

Recent changes to the Civil Code provide broader protection for the rights of a bona fide purchaser, and he can now count on compensation for losses when purchasing property from an illegal owner. So, if within six months a bona fide purchaser has not received compensation for losses under the writ of execution, then he is paid a one-time lump sum compensation at public expense.

The amount of such compensation is determined by the court in each specific situation. For example, if we are talking about the purchase of housing, then he can be paid either the value of the property under the purchase and sale agreement, or at the cadastral value of the claimed property, which is determined on the date of entry into force of the judicial act on compensation for expenses incurred.

If during the enforcement proceedings the acquirer was able to partially compensate for the losses, the compensation will be reduced by the amount of expenses already collected.

After payment of compensation, the state will have the right to recover expenses from the illegal seller of real estate, which will demand the return of the amount of expenses spent on compensation to the bona fide purchaser.

Courts, Real estate

Save:

What is unlawful detainment of property

According to Ozhegov’s explanatory dictionary, to retain means to preserve, to save, not to let go, not to give away, not to allow something to be revealed.
Illegal retention is the retention of a thing contrary to the law, without any reason. Thus, the retention may be legal or illegal. If you simply take an item from the owner and do not give it back, it is illegal. An example of a legal lien would be a lien in civil law. The creditor legally holds the property of the debtor until the latter pays his debt for this thing or debt. A striking example of such a technique would be the landlord’s actions of not returning the tenant’s belongings due to the latter’s rent arrears.

How to distinguish illegal retention of someone else's property from legal one?

1. The measures will be legal if the thing is in the possession of the person holding it on legal grounds (in accordance with the contract or by virtue of the law).
2. To recognize retention actions as legal, there must be a debt or obligation on the part of the owner of the thing to the one who is retaining it.

However, in any case, it is important to remember that the line between legal retention actions and an offense is quite thin. Therefore, you need to be confident in the legality of your actions so as not to become involved in a criminal case. We’ll talk about how to distinguish legal from illegal retention below.