Legislation in question: Article 19 of the Federal Law “On the Implementation of the Housing Code of the Russian Federation”
Legal issue: Constitutionality of remaining of the right to use residential premises at a housing co-op with persons who had original title to it, when such residential premises were sold at a public auction as a remedy to rectify default in repayment of a mortgage.
Ratio decidendi: The regulation in question contradicts the Constitution due to the fact that it does not constitute an appropriate guarantee for protection of rights of the parties in the civil circulation acting prudently and in good faith, as long as it allows to preserve encumbrances during transfer of a residential property title in case of a sale of such property at a public auction as a means to rectify default in repayment of the mortgage, provided that the requirement of State registration of encumbrances has not been legally enforced. Federal legislature has to develop an appropriate legal framework, allowing for the maximum transparency of information on all the third party rights to the titles of all alienated properties.