Double deal

INTELLECT-S represents one buyer in property double-sale case, wins and changes case law

INTELLECT-S's attorney Alexander Latyev successfully represented in a series of trials and appeals the later of two unsuspecting good-faith buyers of an apartment at a core-and-shell stage from a double-dealing developer in Yekaterinburg.

The developer had filed its agreement with the later of the buyers with the Russian realty registry, completed the fit-out, and conveyed the property to him.

The prior buyer, until then unaware, whose agreement had never been filed, sued to have the developer to file his agreement for registration. He won the suit, but the realty registry refused the filing, because it had properly registered the subsequent buyer's agreement. Instead of suing the double-dealing developer for damages, the prior buyer, anxious to get the property, sued both the developer and subsequent buyer.

The prior buyer filed the action in April 2011, seeking the invalidation of the subsequent buyer's agreement.

The court obliged, although Alexander Latyev, who represented the subsequent buyer, reasonably argued that the type of agreement (which was co-investment in an incomplete development) was effective as of its official registration, and the prior co-investor's execution priority did not therefore matter.

Moreover, the prior buyer sued the wrong defendants. The case law governing transactions with ready realty, had established that in a double deal with realty, the property goes to the buyer to whom it is first conveyed, even though such buyer's purchase contract was the latest to be entered into; as a result, all other buyers cannot seek its avoidance and can only sue the seller for damages.

The plaintiff's also sought the wrong remedy; his ownership could have been recognized only if it had possessed and occupied the property; it was not the case: the subsequent buyer had the legal and actual possession.

Nevertheless, the trial court granted the action, and the plaintiff, still represented by INTELLECT-S, appealed. The appeals court vacated the judgment and sent the case for retrial which ended in the dismissal of the plaintiff's action in December 2011. The new judgment stood on cassation appeal.

By its opinion in February 2012, the Sverdlovsk region appeals court changed the established case law which until then recognized the prior co-investor's ownership; from then on, the law favors the prior actual possessor, quite like in a double sale.

Constructing, Due Diligence Lands & Real Estates, Real Estate, Real Estate Disputes

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