Transfer of the lease of a preferential plot

The Constitutional Court's recent Judgment No. 37-P of 4 June 2026 is short in substance, but it matters to everyone who works with leases of municipal land.

A person entitled to a preference received a municipal plot for individual housing construction without a tender. Some time later he assigned his rights under the contract to another citizen.

The Kemerovo administration challenged the assignment. The preference, it said, had been granted to a particular person, and transferring it was a circumvention of the tender.

The courts refused the administration, and the case reached the Constitutional Court.

The Constitutional Court's main conclusion is this. The preference is personal in character only at the stage at which the plot is obtained. The right to take land without a tender is indeed tied to the person entitled to it. Once the contract has been made, however, the ordinary civil-law rights of a tenant arise, and as a general rule those rights can be transferred.

The Constitutional Court stated expressly:

• a right of lease is not a right inseparably tied to the person;

• a municipality may not, by contract, prohibit the transfer if federal law does not do so;

• the transfer of the rights is not, in itself, a circumvention of the law or an abuse;

• only the federal legislator may restrict the circulation of such rights.

The problem is not new. For years, municipalities across the country fought what they regarded as a scheme: a person entitled to the preference takes a plot without a competition, and then assigns the lease to a third party. Because of that risk, such rights were treated as "toxic". A buyer feared that the transaction would be unwound.

The Constitutional Court has now removed that risk. A lease granted on a preference is an ordinary transferable asset. Whether you received such a plot yourself, or you are considering buying the rights in it from the person entitled to the preference, the transaction is lawful, and the municipality will not be able to unwind it by relying on the "personal character of the preference".

The judgment does, however, contain one reservation. The Constitutional Court stated separately that the federal legislator may introduce exceptions. The question is therefore not closed for good. If the political will is there, restrictions may appear in a federal law. Until they do, the transfer is permitted. Sergei Pivovarchik, managing partner of Consul Group, comments.

Follow Consul Group on Telegram.