Law of the Russian Federation dated July 4, 1991 N 1541-1 (as amended on December 20, 2017) “On the privatization of housing stock in the Russian Federation”

What housing can be privatized

Not all types of residential state real estate can be converted into private property free of charge. The Law clearly defines premises that can be privatized:

1. Apartments owned by the state or municipality. However, there is an exception - if these premises are in disrepair, then they will not be privatized.
2. Rooms in dormitories, which are structural units of the social education system. This type of housing cannot be privatized if the hostel belongs to a specialized housing stock.
3. Service housing, but only if the apartment is not located in a closed military camp and the person applying for privatization has lived in it for more than 10 years.
4. Apartments that have not been privatized.

We have already talked about how to privatize an apartment in this article, and if you need to convert only part of the housing into your property for free, then read useful information here.

Who has the right to privatize housing

The Law “On Privatization” establishes that citizens who are registered and permanently reside in an apartment provided by the state under a social tenancy agreement have the right to privatize residential premises.

Typically, a tenancy agreement is concluded for one person – the responsible tenant. However, this does not mean that only he has the right to privatize the apartment. All members of his family who are registered in the apartment and live in it have the right to their share.

There are categories of citizens who have been deregistered from the apartment or do not live in it, but still have the right to participate in privatization. These include:

1. Those convicted of crimes and serving sentences in prison.
2. Persons undergoing training in another city.
3. Employees sent abroad or to another locality.

If for some reason privatization is carried out without their participation, then upon returning home (or remotely) they will be able to appeal to the judicial authorities and recognize the agreement on free transfer of ownership of the apartment as illegal and subject to cancellation.

If a person does not want to participate in privatization, then he must draw up a written refusal from a notary. In this case, the right to a free transaction with the state to acquire ownership of housing remains with him, and the Law also regulates that he can live in the apartment for life (regardless of the change of owner).

Example. Konovalova I.S. lived in an apartment with her son V.R. Konovalov. In 1998, the man was convicted of the crime. He was sentenced to 18 years in prison to be served in a maximum security colony. In 2005, Konovalova discharged her son from the apartment by court decision (we talked about how to do this in our article), but Konovalov retained the right to use housing after his release. In 2010, the woman privatized the apartment only for herself, without notifying her son, and after that she sold it to the Guryev family.

In 2021, Konovalov was released from MLS and returned to his home apartment, but the Guryevs did not let him in and provided him with a certificate of ownership. Then Konovalov filed a lawsuit to declare the privatization deal invalid. The judge decided to satisfy the man's demands in full. The apartment was deprivatized, transferred to the balance of the municipality, and a social lease was again concluded with the mother and son Konovalovs. The Guryevs left the apartment and recovered from Konovalova the money paid for the apartment and moral damages.

Stages of privatization of state and municipal property

In Art. 1 of the Law of July 3, 1991 No. 1531-1 “On the privatization of state and municipal enterprises in the Russian Federation”

(
lost force from 08/02/1997
) privatization was understood as the acquisition by citizens, joint-stock companies (partnerships) from the state and local Councils of People's Deputies into private ownership of enterprises, workshops, production facilities, sites, and other divisions of these enterprises, separated into independent enterprises; equipment, buildings, structures, licenses, patents and other tangible and intangible assets of enterprises (operating and liquidated by decision of bodies authorized to make such decisions on behalf of the owner); shares (shares, shares) of the state and local Councils of People's Deputies in the capital of joint-stock companies (partnerships); shares (shares, stocks) owned by privatized enterprises in the capital of other joint-stock companies (partnerships), as well as joint ventures, commercial banks, associations, concerns, unions and other associations of enterprises.

In subsequent Laws of 1997 ( Federal Law of July 21, 1997 No. 123-FZ

-
lost force from January 26, 2002
) and 2001 (
Federal Law of December 21, 2001 No. 178-FZ
), this definition becomes more specific, with the appearance of a very important sign of retribution. It notes that the privatization of state and municipal property is understood as the alienation for a fee of property (objects of privatization) owned by the Russian Federation, constituent entities of the Russian Federation or municipalities into the ownership of individuals and legal entities.

Thus, the period between these two Laws can be characterized as a transition from the distribution of state property to its sale.

Most economic and legal sources distinguish two stages of privatization: check (voucher) - from June 1992 to July 1, 1994 and cash - from July 1, 1994. However, some lawyers and economists divide the privatization process in Russia into three stages . For example, Yu.N. Argunov connects the first stage with the adoption of the USSR Law of May 26, 1988 No. 8998-XI “On Cooperation in the USSR” ( does not apply in terms of consumer cooperation, in terms of agricultural cooperation, in terms of regulating the activities of cooperatives in the spheres of production and services, in part regulating the activities of gardening partnerships and dacha cooperatives

), Fundamentals of the legislation of the USSR and union republics on rent (approved by the Supreme Soviet of the USSR on November 23, 1989 No. 810-1 -
not applied from 03/01/1996
), Regulations on joint-stock companies (approved by Resolution of the Council of Ministers of the RSFSR dated December 25, 1990 No. 601 -
no longer valid as of 03/06/1996
).
It was marked by the lifting of direct bans on the development of the non-state sector. Stage 2 is determined by the entry into force of the Law of 07/03/1991 No. 1531-1 ( lost force from 08/02/1997
).
This period can be called the period of legal-spontaneous privatization. The mentioned Law was of a general, declarative nature; it clearly did not pay enough attention to the privatization mechanism itself. The work notes that the start of stage 3 was the State Program for the Privatization of State and Municipal Enterprises for 1992. It defined the goals and mechanism of privatization, and established a classification of property according to the possibility of their privatization. Decree of the President of the Russian Federation dated January 29, 1992 No. 66 “On accelerating the privatization of state and municipal enterprises” ( lost force from March 29, 2003
) approved a package of regulations, including, in particular, temporary provisions on the sale of property at auction and by competition.

V. Kulikov, highlighting three stages (milestones) of privatization, connects them with the ratio of the number of state and privatized enterprises.

There are other approaches to determining the stages of privatization. For example, in the expert opinion of the Institute of Economics of the Russian Academy of Sciences, small privatization is highlighted at the first stage, which was planned to be carried out by the end of 1992. The second stage includes voucher privatization and privatization of large enterprises and should be completed by mid-1994.

We will focus on the classic division of the privatization process, dividing it into two stages - voucher and cash privatization, dividing the latter into cash privatization after 1994 and privatization after 2001.

On August 14, 1992, Boris Yeltsin signed Decree of the President of the Russian Federation dated August 14, 1992 No. 914 “On the implementation of the system of privatization checks in the Russian Federation” ( actually lost force due to the completion of the check stage of privatization

).
Thus began mass privatization: from October to December, everyone was given free vouchers, the first securities of post-Soviet Russia - 144 million in total, which in theory gave every citizen the right to receive their share of the third of the national wealth that was subject to voucher privatization. According to the same Decree, the nation could use them in practice from December 1992 to December 1993 (in October 1993, the validity of the vouchers was extended for another six months). The energetic Decree was the final chord of a powerful political campaign. It should be the starting point for Russian capitalism, or the “struggle for the survival of privatization,” as Anatoly Chubais, its main protagonist, dubbed this first stage. The fundamental choice was made in July 1991, when the Supreme Council adopted the Laws on Privatization (RF Law of 07/03/1991 No. 1531-1 - no longer in force on 08/02/1997
) and on registered privatization accounts (RSFSR Law of 07/03/1991 No. 1529- 1 -
no longer in force since December 25, 1993
). A year later, in July 1992, the Supreme Council approved the Privatization Program - that compromise option that largely predetermined the current appearance of post-reform Russia.

The main goals of the first (check) stage of privatization were: 1) massive denationalization of the Russian economy, redistribution and consolidation of private property rights in Russian society with a minimum of social conflicts; 2) formation of a layer of private owners, promoting the creation of a socially oriented market economy; 3) providing conditions for increasing the efficiency of functioning of Russian enterprises; 4) creation of the necessary legislative and organizational conditions and mechanisms for the transfer of property rights from one person to another; 5) assistance in the process of stabilization of the financial situation in the Russian Federation; 6) creating a competitive environment and providing conditions for demonopolization of the national economy; 7) expanding the investment base of Russian enterprises and attracting foreign investment into the Russian economy.

Evgeny Yasin, an absolute authority for those who carried out voucher privatization, identifies four groups of subjects whose interests could not be ignored: labor collectives, directors, new entrepreneurs and the rest of the population. The resulting version, writes Yasin, “had hope for everyone, and so voucher privatization passed through parliament, so it was successfully completed by mid-1994.” The population received vouchers. Entrepreneurs - their free turnover. It is obvious, however, that the corps of directors, in the early 90s a major political force that actually managed property, received the largest bonus. The most common, so-called second privatization model (three quarters of all transactions) gave the enterprise's workforce the right to buy out 51% of its shares (an unprecedented benefit that was not used during privatization in other countries with transition economies). The director was usually hiding under the guise of the “team”.

“By creating an artificial bias in favor of the director corps and destroying the conditions of equal competition, we slowed down the selection of effective owners, but otherwise the whole privatization could have stopped,” says Pyotr Mostovoy, one of the organizers of privatization, who then worked as deputy head of the State Property Committee, in an interview with the Journal. He sees the preparation of Russian privatization as a road “between two extremes” - a radical option that involved dividing everything between everyone, and “people's privatization,” the meaning of which is to give enterprises to their employees for free. This was advocated by Larisa Piyasheva, as Chubais put it, the main advocate of “vulgar liberalism.”

At the same time, Western options for selling enterprises for money were rejected as too labor-intensive and slow. It was also argued that investors were not ready for such investments. However, today this point of view has been partly revised. “This is not one hundred percent true,” says Pyotr Mostovoy. According to him, Western investors “had both the desire and the opportunity, but these aspirations, of course, were aimed at potentially more efficient sectors of the economy.” But such “radical privatization, following the example of a number of Latin American countries,” continues Mostovoy, “caused political objections: in a country that had recently been a great power, this path was unrealistic - due to the psychology of the population and power in a broad sense.”

It seems that vouchers, to the extent that they are government securities, require constant and careful guardianship on the part of the issuer, which is the state, which did not happen, for example, in Russia. The state can and should have the right to redeem vouchers at the request of investors, including in order to increase liquidity. In this case, a more complete stock market mechanism begins to operate in the sphere of voucher circulation. In July 1994 (completion of the voucher stage of privatization), it became clear that the bulk of the population not associated with privatized enterprises preferred to either sell their vouchers or invest them in voucher investment funds (CHIFs), minimizing their own profits.

The declared social justice of voucher privatization also stands up to criticism. The mechanism of the voucher market practically excludes low-paid segments of the population from the opportunity to take part in the privatization of enterprises, and workers, as a rule, are influenced by elite groups and act in their interests. E. Gaidar openly admitted this, agreeing with the definition of Russian privatization as nomenklatura and noting that “there was no other privatization anywhere at all, and there could not have been: everywhere and always the redistribution of property took place in the interests of the ruling elite.”

Moreover, in conditions of a sharp drop in production and economic restructuring, when it is not expected that old enterprises should be preserved, even de facto ownership rights do not bring the expected dividends, which is not surprising, since in reality the privatization checks did not represent new capital - vouchers, as securities, were temporary in nature and were redeemed after privatization. One cannot expect enterprises to be willing to pay dividends to new owners who have not brought new assets with them. For example, in St. Petersburg for one voucher with a nominal value of 10,000 rubles. it was possible to purchase shares for an average of 500 rubles. with a maximum annual dividend of 1000 rubles, which is equivalent to the cost of one trip on public transport. In CHIF "General" dividends in 1994 amounted to 39 rubles. per 1000-ruble share at a bank discount rate of more than 100%.

The second stage of privatization is monetary, the official beginning of which is dated July 1, 1994.

The monetary stage of privatization should ensure the fulfillment of three strategic objectives:

1) to form investors who own significant blocks of shares, which will increase their interest in long-term investments;

2) provide privatized enterprises with the cash necessary for their structural restructuring;

3) contribute to solving fiscal problems, i.e. replenishment of the revenue side of the state budget.

A special feature of the monetary stage is its focus on transitioning from a system of free distribution of property to its actual sale during a relatively slow privatization. In the interests of attracting strategic investors who are focused on the control and management of the enterprise, it was planned to put up relatively large blocks of shares - at least 15 - 25% of the authorized capital of the enterprise - at cash auctions and investment competitions.

Initially, at the new stage it was planned to use the following privatization methods:

• direct open sale of shares (in full or with the state retaining a share) of state-owned enterprises. This mechanism was chosen, for example, in Egypt, Hungary and Jamaica. It requires the prior corporatization of state-owned enterprises. Its significant disadvantage is the fact that in conditions of an underdeveloped stock market, the open sale of shares is an expensive and technically difficult matter, when there is a danger of social discontent with privatization;

• auction sale of shares to the public. It was used in Mexico, Hungary and partially, for example, during the privatization of Eastern Tobacco in Egypt;

• liquidation of the enterprise and sale of its property in order to pay off the debt. This extreme method was used in Poland when selling off industrial enterprises;

• disaggregation of large industrial conglomerates with their subsequent sale in parts. The division of previous organizational structures followed by privatization often occurred in Russia;

• transfer of the enterprise into the hands of the workforce. The most famous example is programs like “ESOP” in the USA;

• rental and subcontracting of public property by the private sector.

If the stage of primary privatization in Russia in 1992 - 1994. entailed a rapid increase in critical mass, the situation in privatization in the second half of 1994 - early 1996 can be assessed as almost complete inhibition and uncertainty, when spontaneous processes sharply intensified and the endless stream of declarations had no economic basis.

In general, there was no privatization boom in the first two years of monetary privatization. Enterprises still cannot consider privatization as a source of large investments. This is explained by the fact that the main purpose of the 1995 privatization was to finance the budget deficit. But there is no compromise between investment capital and budget revenues. Initially, the amount of federal budget revenues from privatization was determined at 8.7 trillion rubles, but later, taking into account real indicators, Federal Law No. 212-FZ of December 27, 1995 was reduced to 5 trillion rubles. To assess the effectiveness of the privatization model throughout almost the entire 1995, the following example should be given: in 1995, 7.3 trillion rubles were collected into the budget from privatization in Russia, and 80% of this amount was received in the last two months, when in practice the method of loans-for-shares auctions was used. The resulting annual income of 1.1 trillion rubles from standard sales methods (15% of total income) indicates the extremely low effectiveness of mass auctions and competitions for replenishing the budget.

The year 1995 was also characterized by the use of new privatization methods. Decree of the President of the Russian Federation of May 11, 1995 No. 478 ( lost force from March 29, 2003

) contained an instruction to the Government to develop a procedure for transferring state-owned JSC shares as collateral and trust management to legal entities. The experience of transferring federally administered shares to private institutions into trust was put into practice.

Loans-for-shares auctions constituted the brightest page of the second stage of privatization. And the most scandalous. The idea was proposed in March 1995 by V.O. Potanin. Its essence was as follows: a number of Russian banks, after the auction, provide a loan to the government on the security of its shares in a number of enterprises. At the end of the specified period, the government organizes a competition to sell the pledged shares and either returns the loan from the proceeds, or these shares become the property of creditors. There is nothing wrong with this scheme itself. The question is how exactly it was implemented, in the context, economic and political, in which the “shares-for-shares auction” operation was carried out.

By the end of 1995, the government received about $1 billion from loans-for-shares auctions. The privatization task was completed, financial stabilization took place.

The main results of monetary privatization include:

1) removal of a significant part of state property from the directive control of the state and its involvement in market circulation;

2) formation of the foundations of the real estate market, including the land market for privatization objects. The positive results of monetary privatization also lie in its budgetary effect - in 1997, the planned budget target was exceeded by 2.8 times. This is due to the first applied practice of pre-sale preparation of an enterprise.

Monetary privatization had a positive effect in terms of attracting foreign investors. The very fact of the transition to monetary privatization is a new incentive for many of them due to the emergence of familiar means of payment.

The restructuring concepts proposed in 1997 - 2001, supported by IMF loans and aimed at reforming the strategic economy, produced virtually no results because they did not have an ideological and political basis, were fragmented and lacked a large-scale approach to the problem of reforming the strategic economy.

In November 1998, the government of E.M. Primakov proposed a completely reasonable approach to the problem: transfer of strategically significant property into trust management to specially trained managers. The Statement of the Government of the Russian Federation and the Central Bank of the Russian Federation (November 1998) contained, for example, the following proposals: “The relevant executive authorities must make a decision on bankruptcy, reorganization or transfer of a controlling stake in organizations into state ownership with subsequent transfer to trust management.”

As measures to increase the efficiency of the process of privatization and management of state property, the Ministry of State Property of the Russian Federation, the Russian Federal Property Fund and the Ministry of Economy of the Russian Federation have been instructed to do the following.

By Decree of the Government of the Russian Federation dated 09.09.1999 No. 1024 (with subsequent amendments), the Concept of State Property Management was approved, in which the emphasis was absolutely correctly placed in terms of the relationship between economic management and trust management.

However, having rightly criticized the legal model of economic management, the Russian authorities did not accept the essentially centrist model of transferring strategically significant property into trust management.

In 2001, the Russian government took the path of privatization of the strategic economy.

Active opposition to the privatization of the strategic economy on the part of patriotic political forces did not allow this process to unfold in 1997 - 2001.

Order of the Government of the Russian Federation dated July 10, 2001 No. 910-r “On the Program of Socio-Economic Development of the Russian Federation for the Medium Term (2002-2004)” recognized the need to “continue work to reduce the number of unitary enterprises through reorganization and privatization.

In 2001, the privatization of the strategic economy received a legislative basis.

Further, Federal Law No. 178-FZ of December 21, 2001 was adopted. This Law makes the privatization process more open, transparent and planned, mainly due to a detailed procedure for the formation and approval of a forecast plan (program) for the privatization of federal property for the next financial year.

It also eliminates a subjective approach when choosing privatization methods. According to Federal Law No. 178-FZ dated December 21, 2001, all property is divided into two categories. The first category consists of state unitary enterprises and open joint-stock companies, the book value of fixed assets of which as of the last reporting date exceeds 5 million minimum wages, as well as federal property that meets other criteria established by the Government of the Russian Federation. At the same time, federal property of the first category can be sold in strictly limited ways. The second category consists of all other property that can be sold in all ways provided for by the bill.

Federal Law No. 178-FZ of December 21, 2001 expands the tools (methods) of privatization, which is designed to attract small businesses to privatization. Such methods include the sale of property through a public offering, sale in the absence of competition, sale of shares based on the results of trust management. Moreover, it is assumed that new methods of privatization will be gradually applied, and only in cases where the property was not sold at auction. The sale of shares at stock exchange trading, sale through a public offer, sale of property based on the results of trust management, etc. are regulated.

An important innovation is the privatization of enterprises simultaneously with the land plots on which they are located. This will increase the value and investment attractiveness of enterprises. The privatization of land plots as part of enterprises corresponds to the state policy on the formation of unified real estate objects, as well as on stimulating their effective use and turnover. To this end, land plots will either be immediately included in the authorized capital of newly created joint-stock companies, or sold to existing joint-stock companies at the standard price of land, which will lead to the creation of unified real estate objects.

Almost for the first time, the Federal Law of December 21, 2001 No. 178-FZ on privatization not only regulated the relations arising in connection with the alienation of state and municipal property into private ownership, but also made an attempt to resolve the already traditional conflicts of privatization legislation with general civil law norms , which until recently served as an insurmountable obstacle to the involvement in civil circulation, for example, of shares in the ownership of property belonging to the state or municipal treasury, shares in limited liability companies, shares of closed joint-stock companies, contributions in limited partnerships.

The previously in force Federal Law No. 123-FZ of July 21, 1997 removed these relations from the scope of the legislation on privatization, without giving an answer to the question about the procedure for the sale of state and municipal property in the above cases, as well as, for example, when foreclosure on treasury property pledged. The current Federal Law of December 21, 2001 No. 178-FZ has taken a serious step towards creating a legal mechanism for the alienation of these objects of state and municipal property, taking into account the legitimate, priority interests of other participants in shared ownership and participants in business companies and partnerships, recognized by civil law, which can be attributed to the indisputable merits of this Law.

Based on materials from (“Law and Politics”, 2007)

Also see the following publication: 90s: dispute over payment for purchased property with privatization checks - Read more ➤

PS LIST OF OFFICIAL SOURCES OF OFFICIAL INFORMATION - More details ➤

To whom privatization is not permitted by law

The provisions of the law do not allow participation in privatization only to those persons who have already participated in this procedure and converted state property into ownership. Repeated rights to privatization may only appear in certain cases; you will learn about them by reading this article on our website.

Also, persons who use it under a commercial lease agreement cannot apply for an apartment, even if they are registered in it.

Example. The Dolokhovs lived in a municipal apartment, which they rented from I.N. Rukhlova. She, in turn, was a responsible tenant. By agreement with her, the Dolokhovs registered the apartment. A year later, Rukhlova was going to privatize the apartment, and her tenants demanded that they be given a share, on the basis that they were registered in it. Rukhlova refused, but the Dolokhovs still wrote an application to the municipality for the privatization of the residential premises they were renting. They were refused because they were not family members of the tenant.

In order for a person not to participate in privatization, either a notarial refusal or a court decision is required. If a person is discharged from an apartment before privatization by a court decision, then he loses the right to take ownership of even part of this apartment. We talked about how you can deregister a person, as well as what grounds there are for this, in this article.

There are two more categories of citizens who receive special attention when turning state real estate into private property:

• minors;
• incompetent.

Despite the fact that the state specifically protects their rights in privatization, they personally cannot take part in this procedure - their interests are represented by legal representatives (parents, guardians).

Features of participation in privatization

When carrying out the privatization procedure, each participant gives written consent or refusal of privatization. All adults and children over 14 years of age must give consent.

Attention! If children under 14 years of age are registered in this living space, refusal on their behalf cannot be accepted. Legal representatives, such as guardians or parents, act in their interests. Refusal is possible only if the child is provided with other housing.

Those persons who are temporarily absent will also take part in the privatization procedure.

These are the following categories of citizens:

• Those on shift work.
• Serving a sentence in correctional institutions.
• Those serving in the army.

They may be represented by a trusted person. It operates on the basis of a notarized power of attorney. They can appeal privatization if it was carried out without their participation. But the responsible specialist should not even accept such documents for consideration. If there are incapacitated persons among the registered persons, a guardian acts on their behalf. They cannot take part in privatization on their own.

Rights acquired after privatization

After you have privatized the apartment, you can dispose of it at your own discretion, but within the framework of Russian legislation. So, you acquire the rights:

1. Conclude property transactions with the apartment (you can sell, bequeath, rent, etc.).
2. Add any person to the list of registered persons at your own discretion, without requesting permission from the municipality.
3. It is practically impossible to carry out redevelopment in a municipal apartment legally.
4. Use residential property as collateral if the need arises.

However, it is worth remembering that along with rights come responsibilities, namely:

• payment of annual property tax;
• the obligation to carry out major and current repairs at your own expense.