1. If the seller did not disclose the existing lease agreement, the buyer can claim both damages for the breach of contractual warranty that the good was not ‘the subject matter of property disputes and other transactions’ and the recovery of income from the seller under the vindication claim.

2. The lessee is not liable for the breach of the seller’s warranty because of privity of the contract and cannot be deemed as ‘good faith purchaser’, even if the lessee’s tax reports are used for the quantification of the recoverable income under the vindication claim and material damages for the warranty breach.

3. During the term of the lease the lessee has the right to servitude over the land plot of the leased property to enter the building. However, the lessee does not have a civil law remedy to demand the claimant not to obstruct the use of the building’s facilities on the land plot.

4. Pure loss of the buyer, including interest payments of the credit extended to the buyer, cannot be claimed from the seller due the privity of contract between the bank and the seller. For other causes such loss shall have causal link between the seller’s committed action or inaction and resulting consequences, including payment of interest to the bank.

5. The lessee cannot ask the court to invalidate the contract of sale with the buyer because of the mere existence of the prior lease agreement.

The Supreme court’s position

23 September 2021 the claimant and the respondent concluded the immovable property purchase and sale agreement.

[The Collegium has cited Art 236 and 486 II CC.]. The respondent did not inform the claimant that the disputed property was being used by the co-respondent under a lease agreement dd 26 June 2021 prior to the conclusion of the purchase and sale agreement. At the time of the deciding the case in the court of appeal [instance], i.e., as of 30 January 2023, the term of the lease agreement had expired. It was confirmed that the claimant was using the facility completely independently. Therefore, in this case, the court came to correct conclusion to refuse this part of the claim considering it has lost its significance and that no dispute exists regarding the acceptance and transfer of the facility.

[The Collegium has cited Art 230 II CC.] In this case, the court of appeal [instance] found the claimant’s claim for the recovery of income received solidarily from the respondents for the period of 110 days (10 December 2021-1 April 2022) to be partially justified. In particular, it was noted that the co-respondent received income of 2,983,209,958.84 soums according to tax reports for 110 days. Therefore, the court of appeal [instance] did not consider the information that the co-respondent received income of 190,148,000 soums for 110 days as admissible evidence. In Clause 7 of the purchase and sale agreement, the seller (respondent) guaranteed that the non-residential premises were not the subject matter of property disputes and other transactions, and in the event of legal consequences, the seller assumed property liability in the manner prescribed by law and indemnify of all expenses. Accordingly, the court of [appeal] came to a well-founded conclusion to recover 2,983,209,958.84 soums from the respondent in favour of the claimant.

At the same time, the claim for the recovery of the above-mentioned part of the material damage from the co-respondent is unfounded. Since the co-respondent did not assume any obligations to the claimant. He entered into a relationship with the respondent based on a lease agreement, and the co-respondent’s obligation was to pay the rent for the use of the [disputed] property. Therefore, the claim for the recovery of property damage from the co-respondent is rejected.

Additionally, the claimant purchased the [disputed] property with a loan from a bank. Based on this loan agreement, the claimant had paid the interest on the loan and requested that this amount be recovered from the respondents as damages. [The Collegium has cited Art 14 CC on the general definition of damages and Clause 7 of the contract on sale of immovable property.] In this case, at the time of notarisation of the purchase and sale agreement, the claimant was not informed that part of the premises was leased to the co-respondent. The respondent and the co-respondent are not considered parties to the loan agreement. Also, the respondents did not assume the obligation to pay interest on the loan received by the claimant from the Bank. At the same time, it has not been proven based on relevant evidence and legislation that the respondents had to pay the loan interest, and that the interest was paid as a result of the respondents’ failure to transfer the [disputed] property on time, that is, that there is a causal connection between the committed action or inaction and the resulting consequences. Accordingly, the court of appeal rightfully rejected on recovery of damages in favour of the claimant.

It is found that the co-respondent moved out the [disputed] building owned by the claimant days before the expiration of the lease term. Therefore, having considered the co-respondent’s demand to impose on the claimant the obligation not to obstruct the use of the building’s facilities on the land plot, the court of first instance came to a well-founded conclusion to refuse it, considering that it does not fall within the scope of the method of protection of the right provided for in Art 11 CC.

[The Collegium has cited Art 173 CC on the general definition of the servitude and Art 16 of Law of 19 November 1991 No 427-XII on the rule that the lease follows the ownership of the thing.] Accordingly, the court of first instance found it necessary to satisfy the co-respondent’s claim for the establishment of the right to use the land plot (servitude) to enter the building under the lease agreement, considering it justified. [The Collegium has cited Art 549 CC on the rule that the lease follows the ownership of the thing.] The lower courts reasonably refused to satisfy this claim, considering that the lease agreement of 26 July 2021 expired on 31 August 2022, and that the co-respondent has now voluntarily left the disputed building, and therefore there is no dispute regarding the claim for the establishment of servitude, and this claim has lost its significance.

The co-respondent claimed that a 1,500 sq. m. part of the non-residential building was leased to the additional defendant for a monthly rent of 25,000,000 soums, that the co-respondent’s right to use the building was violated as a result of the respondent’s sale of the building to the claimant without terminating this lease agreement, that in general, the co-respondent personally did all the furnishing work, and that in practice, the co-respondent also verbally agreed to use the stairs, corridors, lobby, kitchen, toilet, gym, dressing room, swimming pool and other facilities, and requested that the purchase and sale agreement be declared invalid.

[The Collegium has cited Art 116 CC.] The co-respondent is not a party to the disputed purchase and sale agreement. Moreover, the legal requirements were not violated in the execution of this agreement. In this case, the Collegium agrees that the court of first instance correctly refused to satisfy the co-respondent’s claim to declare the purchase and sale agreement invalid.