Leases of land plots made with the sole participant in an auction that was declared void on that ground are nevertheless contracts made within a competitive procedure, with all the consequences that follow (Ruling of the Supreme Court of 19 June 2023 in case No. A73-20493/2021).
The facts:
Following the auction, the tenant entered into a lease under which the rent was determined from the cadastral value.
After the cadastral value had been challenged in court and set at market value, the tenant asked the landlord to recalculate the rent for the period in which the results of the challenged value applied.
The administration refused to recalculate the rent. The tenant went to court.
The courts of first instance, appeal and cassation upheld the tenant. They considered that there were grounds to recalculate the rent, because one element of the calculation had changed: the cadastral value had been set at a lower figure.
The Supreme Court set aside the decisions of the lower courts, on the following grounds:
(1) Leases of land plots made with the sole participant in an auction that was declared void on that ground are nevertheless contracts made within a competitive procedure.
(2) The price of a land lease made as a result of a competitive procedure cannot be changed by the parties to the contract.
(3) The results of a challenge to the cadastral value of a land plot leased following an auction do not apply when the rent is calculated.
The Supreme Court also drew a conclusion that is obvious as a matter of statute, but necessary in the light of the court practice that had built up:
Once a new cadastral value, approved in the course of the next state cadastral valuation, has been entered in the Unified State Register of Real Estate (EGRN), it is no longer possible either to challenge the cadastral value previously in force or, afterwards, to apply the results of a challenge to that value.
At the Supreme Court's prompting, that used to be possible (Ruling of the Supreme Court of 25 May 2017, No. 16-KG17-23). Despite the statutory prohibition on challenging an archived cadastral value, the courts treated it as possible. The reasoning offered for that position was that the possibility of challenging an archived cadastral value is determined by whether the right to apply the results of such a challenge is preserved.
On the Supreme Court's current position, however, proceedings to challenge cadastral value now have every chance of being conducted according to the statute.
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