Artificial Land Plots to Gain Definite Status

A new law is to provide the legal regime governing artificially created land plots in federally-owned bodies of water, bringing more certainty to urban and infrastructure development market.

Federal Law No. 246-FZ, which was officially published on July 22, 2011, governs the creation of artificial land plots in federally-owned bodies of water for the construction of buildings or other structures and/or for all-round development of such sites in other ways. The highlights of the statute, effective from August 2, 2011, follow below.

 

 

An artificial land plot created in a body of water in federal ownership is a property covering the whole or any part of such body and brought about by the deposition of soil or otherwise. Once put into operation the man-made property is deemed to constitute a land plot.

Relevant projects may be initiated by government agencies, local authorities, individuals, and legal entities.

Obtaining authorization to create an artificial land plot

Step one in the creation of an artificial land plot is to draft and obtain approval for authorization for its formation. The draft should include data about the planned whereabouts and use of the projected artificial land plot.

Following a decision to proceed with the establishment of an artificial land plot at the expense of individuals or legal entities, a public auction is arranged for the right to enter into a contract for the creation of the property. The bidding must be open to all willing participants.

Concession agreement

An artificial land plot may constitute the subject matter of a concession agreement where it is created during the construction or expansion of a seaport.

Contract for the creation of an artificial land plot

Under the contract for the creation of an artificial land plot, which is executed upon the results of a relevant auction, one party undertakes – using its own resources and at its own expense and/or with the enlistment of other persons and/or resources – to perform the required works, including (if the contract so provides) the construction of capital structures on the resulting artificial land plot in accordance with the approved area plans and designs. The other party (i.e. a government agency or a local authority), for its part, agrees to cause the approved area plans, as prepared by the first party, to be promptly approved.

Area plans for an artificial land plot

The requisite area plans are to be prepared before the creation of the artificial land plot itself but on the basis of the contract made upon the outcome of the respective auction. The designs needed for the artificial land plot do not have to include any urban development plan but are subject to ecological and town-planning expert examination.

Clearance to proceed with the construction of an artificial land plot

The clearance required to undertake the works involved in

the creation of an artificial land plot must be obtained in the manner prescribed in the Urban Development Code of the Russian Federation subject to the applicable special requirements made in Law No. 246-FZ.

Permit to commence the operation of an artificial land plot

An artificial land plot is deemed to constitute a land plot as from the issue date of an operation permit (on the basis of the document submissions listed in Law No. 246-FZ).

Title to an artificial land plot

By general rule, an artificial land plot is owned by the person having created it at its own expense. In a number of cases however, (for example, during the expansion of a seaport on the basis of a concession agreement) an artificial land plot may only belong to the Russian Federation.

Classification of an artificial land plot as land in populated localities

If the authorization for the creation of an artificial land plot provides for that property to serve as land in populated localities, the permit to commence its operation provides grounds for the respective changes to be made to the master development plan of the populated localities concerned and to the territorial layout plan of the corresponding municipality, to the extent concerning the limits of the populated localities in question, without any public hearings being required.

Changes to other regulatory legal acts under Law No. 246-FZ

Law No. 246-FZ makes changes to a number of other regulatory legal acts. Federal Law No. 122-FZ "On the State Registration of Rights to Real Estate and Related Transactions", dated July 21, 1997, for example, gains new provisions to the effect that where a permit to commence the operation of an artificial land plot also represents a go-ahead for the commissioning of the capital structures built on that property, the state registration of title to such capital structures proceeds simultaneously with that of ownership rights to the artificial land plot itself.

Time frame of Law No. 246-FZ

The rules established in Law No. 246-FZ and governing the commencement of the operation, maintenance, and use of artificial land plots also apply to those decisions to create artificial land plots or construction permits which predate the effective date of the statute, meaning that Law No. 246-FZ is retroactive with respect to such land plots already in the process of being set up.

 

For further information please contact in St.Petersburg Maxim Kalinin, partner, or Olga Anikina, associate, on +7 812 303 9000, or in the Moscow office Konstantine Kouzine, partner, on +7 495 787 2700.

Baker & McKenzie

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