Real Estate 2016

1 Real Estate Law

1.1 Please briefly describe the main laws that govern real estate in your jurisdiction. Laws relating to leases of business premises should be listed in response to question 10.1. Those relating to zoning and environmental should be listed in response to question 11.1.

In Kazakhstan the legislation regulating real estate issues is composed of the following acts:

Constitution of the Republic of Kazakhstan dated 30 August 1995; Civil Code of the Republic of Kazakhstan (the General Part) No. 269-XII dated 27 December 1994; Civil Code of the Republic of Kazakhstan (the Special Part) No. 409-I dated 1 July 1999; Civil Procedure Code of the Republic of Kazakhstan No. 411-I dated 13 July 1999 (that will cease to be in force as from 1 January 2016); Civil Procedure Code of the Republic of Kazakhstan No. 377-V dated 31 October 2015 (to be effective as from 1 January 2016); Land Code of the Republic of Kazakhstan No. 442-II dated 20 June 2003; Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget No. 99-IV dated 10 December 2008; Law of the Republic of Kazakhstan No. 310-III On State Registration of Rights for Immovable Property dated 26 July 2007; and Law of the Republic of Kazakhstan No. 242-II On Architectural, Town-Planning and Construction Activity in the Republic of Kazakhstan dated 16 July 2001. 1.2 What is the impact (if any) on real estate of local common law in your jurisdiction?

The legal system of the Republic of Kazakhstan belongs to the Roman-Germanic (continental) legal system, where the sources of law are represented by legal acts. Court decisions do not fall under the definition of normative legal acts, and therefore are not applicable in the form of legislation.

Nevertheless, based on the study of specific cases, the Supreme Court of Kazakhstan adopts regulatory decisions, that judges use as commendatory guides in their practice.

1.3 Are international laws relevant to real estate in your jurisdiction? Please ignore EU legislation enacted locally in EU countries.

The Constitution of the Republic of Kazakhstan recognises principles of international law; it also stipulates that international treaties ratified by Kazakhstan have priority over the local legislative acts. However, real estate issues are governed by local legislative acts, unless a specific international treaty is ratified by Kazakhstan on a specific real estate matter.

2 Ownership

2.1 Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?

The general rule prescribed by the Land Code establishes that foreigners, stateless persons and foreign legal entities shall enjoy the same rights and obligations as citizens and legal entities of Kazakhstan in all relations on land.

Foreigners, stateless persons and foreign legal entities may have in their private ownership land plots allocated for construction of, or combined with, production and non-production, as well as residential buildings and their complexes, including lands designated for maintenance of buildings in accordance with their purpose.

Provision of land located in the border areas and borderland of Kazakhstan in private ownership for foreigners, stateless persons and foreign legal entities is not allowed.

Foreigners, as well as legal entities with more than 50% share holding by foreign individuals or legal entities, may possess land plots provided for agriculture, afforestation, subsidiary agriculture only on the right of temporary use of land under lease for a period not exceeding twenty-five years.

Foreigners, stateless persons and foreign legal entities are not entitled to hold a permanent land use right.

3 Real Estate Rights

3.1 What are the types of rights over land recognised in your jurisdiction? Are any of them purely contractual between the parties?

Kazakhstan recognises the following rights for land:

- ownership right, that is divided into:

state ownership right; and private ownership right; - land use right, that is divided into:

right of permanent or temporary use (including the rights of economic and operational management); alienable or inalienable right of use; and right of use acquired for consideration or free of any consideration. A person or entity holding ownership right over a land plot is entitled to perform any transaction on its disposal without change of its designated use type.

The right of use over land may also be transferred to other persons or entities, with certain exceptions, including exception for temporary consideration-free land use right that may not be transferred on a contractual basis. Other exceptions are provided for land plots with particular designated use types.

3.2 Are there any scenarios where the right to a real estate diverges from the right to a building constructed thereon?

Ownership right over buildings (constructions and structures) entails the ownership right to a land plot where such buildings are located. The right of (permanent or temporary) use over building entails the right of (permanent or temporary) use of the land plot occupied by the specified object.

These rights are inseparable.

4 System of Registration

4.1 Is all land in your jurisdiction required to be registered? What land (or rights) are unregistered?

Any origin, change or suspension of rights (including encumbrance of rights) for real estate are subject to obligatory state registration in a state cadaster. Exception from this rule is transfer of right to use real estate (e.g. lease agreement) for a term of less than one year.

4.2 Is there a state guarantee of title? What does it guarantee?

The Constitution of the Republic of Kazakhstan guarantees to its citizens the right to own any legally acquired property. Law shall guarantee property, including the right of its inheritance. No one may be deprived of his property, unless otherwise stipulated by a court decision. Compulsory expropriation of property for public needs in extraordinary cases stipulated by law may be exercised on condition of its equivalent compensation only.

Everyone in Kazakhstan shall have the right to freedom of entrepreneurial activity, and free use of their property for any legal entrepreneurial activity.

4.3 What rights in land are compulsory registrable? What (if any) is the consequence of non-registration?

The following rights to real estate are subject to compulsory registration with state registry: (1) the right of ownership; (2) the right of economic management; (3) the right of operational management; (4) land use rights for a period not less than one year; and (5) perpetual use in favour of the dominant land plot or other property for a period of not less than one year.

Other rights may be registered at the request of owners.

The following rights of encumbrance for real estate are also subject to compulsory state registration: (1) the right of use for a period not less than one year, including rent, free use, easements, right of life maintenance of a dependant; (2) the right of trust management, including the guardianship, legal relations in inheritance, bankruptcy and the like; (3) pledge; (4) arrest; (5) restrictions on the use and disposal of real estate, or to perform certain tasks imposed by state bodies within their competence; and (6) other encumbrance of real estate rights stipulated by the laws of the Republic of Kazakhstan, with the exception of pre-emptive interest.

Failure to meet the six-month term for registration of rights for real estate may entail a fine equal to 10 monthly-calculated indexes (MCI) for individuals and 20 MCI for legal entities. (MCI is a coefficient established for each year, and for the year 2015, 1 MCI equals 1982 Tenge).

The rights for real estate that are subject to compulsory state registration are deemed to be transferred from the moment of their state registration. Thus, failure to register the right for a land plot or other type of real estate may result in loss of the right for such property.

4.4 What rights in land are not required to be registered?

The rights for immovable property that are not subject to compulsory state registration in the legal cadaster are:

1) encumbrances, being as general rules and prohibitions established by the legislative acts;

2) the rights (encumbrances of rights) that arise on the basis of regulations, including the right of location on land plots and transit passages not closed for public access, public easements;

3) the right to use real estate for less than one year, including the right to lease, gratuitous use, perpetual use;

4) the actual possession of real estate by persons not holding the ownership right, before the moment of recognition of the ownership right of the actual owner by prescription; and

5) the right to use residential premises owned by the state housing stock, or the right to use the residential premises leased by local executive bodies in the private housing stock.

4.5 Where there are both unregistered and registered land or rights is there a...