Someone else's building on your land: how much can be recovered

For Moscow the situation is quite typical: the building belongs to its owner, while the land beneath it belongs to the city and is held on lease. What should you do if someone else is in fact using part of the leased plot?

A dispute reached the Supreme Court in which the tenant claimed payment from that user on the basis of the market rent.

The Supreme Court said that it cannot be calculated that way.

The tenant himself pays the owner for the plot. His loss from someone else's use is therefore a share of his own rent, in proportion to the area occupied, and not the hypothetical income he might have received by letting that land at the market rate.

In that particular case the tenant claimed RUB 1.1 million, and was able to recover only RUB 10,526.

A further argument is that the contract prohibited a sublease without the owner's consent. The tenant therefore could not lawfully make money by handing that land to a third party. Recovering a market rent would have put him in a better position than the one he would have been in had there been no breach.

The ruling does, however, contain a conclusion that matters more to tenants of plots.

The Supreme Court recalled Article 612 of the Civil Code: if a leased plot has defects that hinder its use, including where a third party is in fact using it, the tenant may claim from the landlord a proportionate reduction of the rent, the removal of the defects, or the other remedies that article provides.

• And here a further important practical detail appears.

In that case the third party's building was already on the plot when the contract was made. In the acceptance certificate, however, the tenant signed that the plot had been inspected, that there were no obstacles to its use, and that he had no claims. The Supreme Court drew attention to this separately.

So, when city land is taken over, the certificate is not a formality. If someone else's building stands on the plot, someone else's networks cross it, or part of the land is in fact occupied by third parties, that should be recorded at once.

Otherwise it may later turn out that only a small share of your own rent can be recovered from the person actually using the land, and that you yourself have made it substantially harder to claim a reduction of the payments from the city.

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