In accordance with the Civil Code of the Republic of Kazakhstan, "Transactions means actions of citizens and legal entities aimed at the establishment, modification or termination of the civil rights and obligations".
Real estate includes land, buildings, structures, perennial plants and other property, closely linked to land, i.e. objects, the moving of which is impossible without disproportionate damage to the purpose for which they are intended. Apartments and other accommodations, as well as non-residential premises, which form part of a condominium, are recognized as independent objects (types of) property, if they are in an individual (separate) ownership.
The most common real estate transactions in the Republic of Kazakhstan are as follows: sale, transfer of property as a gift, and lease.
It is important to note that:
- Transactions, essence of which does not comply with the laws of the Republic of Kazakhstan, are recognized as void;
- Real estate transactions shall be concluded in writing; in some cases, they shall be notarized and registered with the state bodies;
- The law provides for a list of grounds for the invalidity of transactions, regardless of the object of transaction;
- Fraudulent transaction which is made only for fiction, without intent to cause legal consequences, shall be recognized as invalid.
There is an illegal practice in Kazakhstan when the same vendor repeatedly sells the same real estate to the different buyers. Therefore, before entering into the transaction, it is necessary to make sure that the immovable property is not encumbered by any third party rights, and the seller is the real owner of the real estate.
You should also pay attention to the authority of the seller’s representative; such authority must be explicitly stated in the power of attorney. If the seller is a legal entity, you should also look through the Charter and other available corporate records to check for the availability or the lack of additional restrictive measures set by the founders of the company, the Board of Directors, or the executive staff of the company.
According to the Law "On State Registration of Rights to Real Estate", the following rights, transactions and encumbrances with regard to the immovable property (including their origin, modification, and termination) are subject to the registration with the state bodies:
- The right of economic management;
- The right of operational management;
- Land use rights for a period of no less than one year;
- Easement in favor of the dominant land or other immovable property for a period of no less than one year.
- The right to use for a period of no less than one year, including rent, free use, easements, right of lifelong support of a dependent;
- The right of trust management, including that in the guardianship, in hereditary legal relationship, in the bankruptcy, etc.;
- Restrictions (prohibitions) on the use and/or disposal of real estate, and/or to perform certain works, imposed by the state bodies within their competence;
- Other encumbrances on real estate rights, provided for in the laws of the Republic of Kazakhstan, with the exception of the preemptive interests.
Any data on registered transactions, title and encumbrances on real estate is contained in the uniform legal cadastre.
Thus, a person can check for the availability of any rights or encumbrances with regard to the property by checking data contained in the legal cadastre.
Data on the registered rights to the immovable property cannot be given to any person. These limitations are provided for in the Law of the Republic of Kazakhstan "On State Registration of Rights to the Immovable Property." Data about the property, and general data about the rights of individuals or legal entities to the property, as well as copies of the documents on alienation of the property, registered by the relevant registration authority, are issued on the request of:
- The owner (authorized representative);
- Upon reasonable request of the advocates, law enforcement bodies, courts on criminal, civil, or administrative cases proceedings;
- Upon reasonable request of the bailiffs on enforcement documents in process;
- Upon reasonable request of the tax agencies or other state bodies in accordance with their competence set by the laws of the Republic of Kazakhstan;
- The notaries;
- The heirs;
- The Authorized body in the field of rehabilitation or bankruptcy as part of the audit;
- The interim, bankruptcy and rehabilitation managers as part of the procedures for rehabilitation or bankruptcy;
- The liquidation Commission (Liquidator) for the legal entity that passes through forced liquidation;
- The guardianship authorities.
Let us focus separately on the Due Diligence of real estate transactions. It does not matter what kind of transaction it involves (sale, lease, or something else). We recommend that you rely on professionals who specialize in this field. They know specific features of these transactions, since it is needed to collect, analyze and take into account a lot of information, which at first glance may seem minor, even for notary.
In the common understanding the notary does not perform legal Due Diligence. The notary checks the documents insofar as required by applicable laws of the Republic of Kazakhstan and sometimes notarizes such transactions.
What professionals do when they perform legal Due Diligence:
- Help solve key issues such as whether it is worth to strike a bargain at all or not, and if yes, at what price;
- Gather information. It can be obtained primarily on the site of the object, i.e. the object of the Due Diligence can be an entity - a company that can provide source information. Such information can be also obtained from the owner of the facility. Additionally, the Internet, printed sources etc. are used as additional source if information;
- Analyze information in terms of issues related to the ownership and title, explore legal and administrative aspects, for example, the availability of permits such as licenses, patents, etc for a company to carry out specific types of activities. Particular attention should be given to the obligations associated with the facility. It is possible that regarding relatively large facilities, the issues of political or constitutional/legal nature can arise, as well as any other issues which can affect the nature of the risks associated with the acquisition of the facility, their scale and effect;
- Prepare a report where they specify all the documents used, analysis and research results, risks and conclusions.
Your contributions to ordering the legal Due Diligence will result in the future minimization of risks, or may help you make an opposite decision not to participate in the transaction involving some real estate.
The entire text of the magazine CRE Kazakhstan 2(2) 2014 in electronic form (in Russian) is available here.
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