This publication provides an overview of legislative initiatives, developments in the real estate and construction sectors, and legal practice.

In particular, the digest includes an analysis of court practice regarding land lease agreements and investment contracts. For example, the decision of the Supreme Court of the Russian Federation in Case No. A41-110984/2024 regarding the allocation of land for a luxury cottage community in Ingushetia without a tender. We have previously commented on the significance of this decision for the practice and implementation of similar projects. In the case, courts of three instances sided with the investor, citing formal compliance with the criteria for a large-scale project. However, the Supreme Court ruled that when evaluating investment projects, compliance with formal criteria is insufficient; the social significance of the project must also be taken into account. The problem, however, lies in the absence of clear criteria for assessing a project’s benefit to the region, and the Supreme Court’s ruling does not articulate a clear approach to developing such criteria.

The Supreme Court is signaling that formal compliance with regional criteria does not guarantee a project’s sustainability if it lacks compelling public value. For investors, this may mean that they need to rethink the structure of such projects. It is not enough to simply “meet” the threshold values—projects must incorporate elements in advance that can be perceived as real compensation for the granted benefit: infrastructure commitments, transfer of assets to public ownership, and participation in addressing social issues. Otherwise, the risk of the project being reclassified—up to and including the transactions being declared null and void—could become quite substantial,” comments Nikita Muraev, a lawyer at KKMP.

Another case, No. A12-9275/2024, concerned the invalidation of a previously issued building permit. The Supreme Court of the Russian Federation overturned the rulings in the case regarding the construction of an agricultural market, establishing two important rules. First, challenging the permitting documentation is an independent means of defense that does not depend on whether ownership of the property is being contested. Second, the original purpose for which the land was granted takes precedence over urban planning procedures: the existence of permits does not legalize construction if the plot was allocated for other purposes. This decision expands the authorities’ ability to challenge even completed projects and requires investors to conduct more thorough due diligence on the underlying land rights.

The Supreme Court has consistently held that it is impermissible to retroactively alter the legal status of a land parcel through a series of administrative decisions. “If a plot was acquired outside the procedure intended for construction, then any subsequent steps aimed at creating and legalizing a capital asset are subject to heightened legal risk,” comments Violetta Drondina, Senior Associate at KKMP.