Commercial Disclosures and Due Diligence in Russia

Governed primarily by Chapter 34 of the Civil Code of the Russian Federation (effective 1 March 1996), commercial real estate leasing in Russia (for warehouses, retail, or offices) requires high-precision due diligence. The burden of checking documents is shifted almost entirely onto the tenant, but landlords retain strict statutory liability for undisclosed defects under Article 612 and undisclosed third-party rights under Article 613. Disputes arising from these disclosures are handled by the Arbitration Courts of the Russian Federation.

1. Checking Title Cleanliness (Bans on Registration Actions)

The main risk for any business in Russia is that commercial lease agreements for 1 year or more must be mandatorily registered in the state Rosreestr (Federal Law No. 218-FZ). Per Federal Law No. 487-FZ, effective March 1, 2025, legal entities are required to submit all registration applications and documents to Rosreestr exclusively in electronic form using an enhanced qualified electronic signature (QES).

For Rosreestr to approve and stamp a long-term contract (crucial for obtaining an alcohol sales license or pharmaceutical permits), the tenant's legal team must verify the status via an "Extended EGRN Extract." Business lawyers must uncover:

• Is the property mortgaged? Under Art. 613 CC RF, the landlord must disclose all third-party rights. Written consent from the pledgee bank is required under the mortgage agreement, otherwise the lease can be invalidated.
• Are there any arrests by bailiffs (FSSP)? If the building is arrested for the owner's debts, Rosreestr will suspend the registration of the lease, preventing the tenant from securing essential operating licenses.

2. Permitted Use (VRI) and Property Status

In Russia, land and buildings are strictly divided into "Types of Permitted Use" (VRI) under Articles 7 and 42 of the Land Code. Operating a business in a building not designated for that specific activity in the EGRN is a violation of land law and can lead to administrative fines, "misuse" penalties, and demolition orders for illegal alterations.

A Unique Russian Trap: Apartments (Aпартаменты).

Many modern office complexes in Russia have the legal status of "Apartments". Legally classified as "non-residential multifunctional premises," they do not provide the protections of the Housing Code.

• The Result: The landlord is not obliged to provide apartment tenants with social guarantees (no permanent residency, different utility tariffs). Any lease in an "Apartment" is strictly a commercial transaction governed by the Civil Code.

3. License Approvals and Fire Safety (EMERCOM)

In Russian commercial leasing, the owner typically transfers "bare concrete walls." All specific approvals from supervisory authorities (Rospotrebnadzor, EMERCOM) fall on the tenant.

Statutory Disclosure regarding Fire Safety: While tenants handle their specific fit-out, the landlord must disclose any structural fire safety violations or EMERCOM prescriptions affecting the whole building. Failure to disclose that a building is "unfit for occupation" due to safety violations is a material breach of Art. 611 CC RF.

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