Real estate received as compensation to pay off debt obligations is not taken into account in the income of the assignee

According to the civil legislation of Russia, an obligation is a relationship between one person (debtor) and another person (creditor), in which the debtor undertakes to perform certain actions in favor of the creditor. The general concept of obligation is enshrined in Art. 307 of the Civil Code of the Russian Federation. The Civil Code of the Russian Federation names the grounds for the emergence of legal relations - under an agreement, transaction, as a result of causing harm, etc. In our article we will talk about the grounds for termination of an obligation and dwell in more detail on the legal nature of the so-called “compensation”.

Grounds for termination of obligations

In accordance with Art. 407 of the Civil Code of the Russian Federation and other provisions of the law, legal grounds entailing termination of obligations are:

• a party’s demand, if termination of this demand is possible by contract or law;
• by agreement of the parties;
• on other grounds provided for by law, other legal acts or agreement.

As can be seen from the last paragraph, this rule does not provide specific reasons, which means there are many options. According to the position of the Supreme Court of the Russian Federation, set out in the Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 11, 2020 No. 6, the list of grounds is not exhaustive, and the parties can provide any ground for termination, even if it has never been previously applied by other participants in civil law relations and not was enshrined in any legal acts.

Analyzing the legislation, we can identify several grounds, enshrined in individual articles of the Civil Code of the Russian Federation, on which the obligation can be terminated:

1. Fulfillment of an obligation (Article 408 of the Civil Code of the Russian Federation). It means nothing more than the fulfillment of the conditions stipulated by the contract in full.
2. Debt forgiveness (Article 415 of the Civil Code of the Russian Federation), that is, the release of the debtor from an obligation with the consent of the creditor.
3. Novation (Article 414 of the Civil Code of the Russian Federation), that is, the drawing up of a new agreement (obligation) between the same parties.
4. Impossibility of performance (Article 416 of the Civil Code of the Russian Federation) – the occurrence of such circumstances due to which it is impossible to fulfill the terms of the contract.
5. offset (Article 410 of the Civil Code of the Russian Federation) - is made at the request of a party when a counterclaim, homogeneous in nature, is declared.

These are the most common grounds on which obligations are usually terminated. Let's take a closer look at one more thing.

Compensation can terminate both the entire obligation and part

Compensation can be used to terminate both the entire original obligation and part of it. This should be expressly stated in the terms of the compensation agreement.

For example, the debtor owes the creditor 1,000,000 rubles. Under the compensation agreement, the debtor provides the creditor with a car worth 500,000 rubles. If the compensation agreement does not indicate that by providing this car the initial obligation is terminated only in the amount of 500,000 rubles, then the obligation will be considered to be terminated completely.

These circumstances were noted in paragraph 4 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 21, 2005 N 102 “Review of the practice of application by arbitration courts of Article 409 of the Civil Code of the Russian Federation,” where the following was stated:

If the parties to the compensation agreement have not specifically indicated whether the obligation is terminated in full or in part of the debt, and the court cannot establish the will of the parties by using the methods defined in Article 431 of the Code, then in the case where the value of the compensation provided is less than the debt of the debtor, it is necessary to proceed from that the obligation is terminated completely.

Clause 3 of the mentioned information letter of the Supreme Arbitration Court of the Russian Federation No. 102 also states that “within the meaning of Article 409 of the Civil Code of the Russian Federation, unless otherwise follows from the compensation agreement, with the provision of compensation, all obligations under the contract, including the obligation to pay a penalty, cease.”

The fact that compensation can terminate an obligation both in part and in full is explained in paragraph 2 of the Resolution of the Plenum of the Armed Forces of the Russian Federation dated June 11, 2020 No. 6:

“Within the meaning of Articles 407 and 409 of the Civil Code of the Russian Federation, the parties have the right to terminate the initial obligation by providing compensation, both in full and in part, in relation to the main and (or) additional requirements.

If the terms of the agreement are unclear and it is impossible to establish whether the will of the parties was aimed at terminating the obligation in whole or in any part, the interpretation of the agreement is carried out in favor of the fact that the original obligation is terminated in full, as well as additional requirements for it, including the obligation to pay a penalty, are terminated.”

Termination of obligations by providing compensation

In the civil law sense, “compensation” means the provision of funds or property on account of an obligation - this concept is reflected in Art. 409 of the Civil Code of the Russian Federation. Compensation can terminate obligations, both basic and additional, both completely and partially.

For example, the transfer of a certain amount can cover only the “body” of the loan or only the interest for a certain period; the rest of the obligation continues to be fulfilled on the original terms. In another option, one amount can pay off the entire debt.

At its core, compensation is a kind of transaction that provides for payment for refusal to fulfill an obligation to one degree or another. Such a transaction is formalized in a separate agreement.

For example , according to the agreement, the creditor has the right to interest on the loan, and the debtor transfers the car to him in exchange for the amount he is obliged to pay. Thus, the performance is replaced by another item at the discretion of the debtor, but in agreement with the creditor. The lender's consent is mandatory, since a unilateral decision on the type and amount of compensation contradicts the basic provisions of civil law on the protection of interests (maybe the creditor does not need the car and he does not agree with this choice of execution method).

Usually, by providing compensation, contractual obligations (most often a loan) are terminated, but this method of termination is also acceptable in non-contractual relations. For example, on a demand for recovery due to unjust enrichment or on the return of what was received due to the invalidity of a transaction. In such situations, compensation is possible if the interests of third parties are not violated.

Violations of third-party interests are unacceptable in any type of compensation, otherwise there is grounds for invalidating the agreement. In civil and arbitration practice, such court decisions are not uncommon. For example, the statements of the plaintiffs, shareholders, challenging the provision of compensation in the form of 90% of all assets to one of the co-founders, were satisfied by the court. At the same time, the decision indicated that when providing compensation, the rights of other shareholders were violated.

The replacement of the subject of the obligation can be absolutely anything if both parties agree with it. Instead of one product, you can transfer another product with an additional payment, or two other goods, as well as real estate, etc. There are countless examples of compensation in civil law.

Question: Can work or services be used as compensation?

Yes, this possibility was directly explained by the Supreme Court of the Russian Federation in paragraph 2 of the above-mentioned Resolution of the Plenum.

For example , under an agreement for the supply of goods, instead of delivery, money is paid or the goods are delivered partially with a commensurate surcharge; under an agreement for the purchase and sale of real estate in installments, the last payments are replaced by repairs to the premises; under a loan agreement for the amount of the unpaid debt with interest, equipment is transferred to the lender, etc.

While providing the parties with fairly extensive opportunities to independently decide on the proportionality of compensation, one should not forget about the legal nature of the main obligation. The agreement should not contradict it based on legal meaning and reasonableness. For example, an agreement on compensation in exchange for alimony cannot be recognized as legal if it involves the provision of a certain amount in exchange for the obligation to support and raise a child. Here, the legal nature of a non-property obligation is inextricably linked with the identity of the alimony recipient, therefore it cannot be stopped by paying a single amount.

Compensation should be distinguished from innovation - we wrote above about it as an independent method of terminating an obligation. The difference is that in novation, termination occurs in connection with the conclusion of a new obligation, while an agreement on compensation does not give rise to a new obligation, but only changes the conditions of the previous one .

Question: Is compensation always proportionate to the volume of the original obligation?

As a rule, the creditor agrees to accept “at least something” of value, so most often it is far from proportionate. This discrepancy is especially obvious in cases of bankruptcy of individuals - the credit institution agrees to a compromise to accept the compensation and accept the proposal of the bankruptcy trustee, so as not to delay the already lengthy procedure. The procedure is complicated by the mandatory approval of the proposal by a meeting of all creditors, among whom there may be those who will not approve the transaction.

By providing compensation, both contractual and non-contractual obligations can be terminated

If the compensation agreement does not violate the rights and interests of third parties or public interests, the provision of compensation may also terminate the obligation to return what was received under an invalid transaction, which arose by virtue of Article 167 of the Civil Code of the Russian Federation (clause 6 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 21, 2005 . N 102 “Review of the practice of application by arbitration courts of Article 409 of the Civil Code of the Russian Federation”).

The fact that compensation can also terminate non-contractual obligations is indicated in paragraph 2 of the Resolution of the Plenum of the Armed Forces of the Russian Federation dated June 11, 2020 No. 6, which states:

“By providing compensation, not only contractual obligations can be terminated, but also, for example, obligations from unjust enrichment and obligations to return what was received on the basis of an invalid transaction, if this does not violate the rights and legally protected interests of third parties, public interests or does not contradict the essence of the original obligation (clauses 2 and 3 of Article 307.1 of the Civil Code of the Russian Federation).”

In the literature there are different points of view on the issue of the possibility of termination of alimony obligations, obligations to provide maintenance, and compensation for damage to life and health.

Some authors point out that “since the relevant obligations are aimed at ensuring the rights and interests of socially unprotected categories of citizens, and the provision of such obligations is intended to ensure the minimum necessary level for the continued existence of such a citizen as an individual, their termination by means other than fulfillment should be considered unacceptable.” . This position seems correct.

Other authors believe that “the parties to an alimony agreement have the right to freely determine the grounds for termination of the alimony obligation that has arisen between them, which is based on the agreement.”

Compensation agreement

So, termination of the obligation under Art. 409 of the Civil Code of the Russian Federation is possible only with the consent of both parties; a written agreement serves as a guarantee of legality here. It can be drawn up at any stage while the obligation lasts, whether there is a delay in performance or not.

The Supreme Court of the Russian Federation clarified that an agreement on compensation is possible even if the limitation period for the main obligation has already expired (in this case, this can be regarded as recognition of the debt in accordance with Part 2 of Article 206 of the Civil Code of the Russian Federation). If this suits both parties and no one objects, then there is no contradiction to the law.

The unconditional invalidity of an agreement entails its conclusion before the obligation arises. For example, when a compensation agreement was concluded before signing a loan agreement.

The agreement may stipulate that the compensation is transferred within a certain period or immediately at the time of signing. For example, the agreement dated 10/12/2020 stated that the debtor transfers property as compensation until 10/30/2020. In such a situation, the debtor, at his own discretion, has the right to both fulfill the obligation in its original form and fulfill the terms of the agreement. As a general rule, the creditor is obliged to accept the choice of the debtor, but if the agreement provides for the possibility of demanding the fulfillment of a specific condition, then the debtor is obliged to transfer the item on which the creditor insists.

Example . According to the agreement dated November 1, 2020 on compensation between individuals V.V. Petrov. and Ivanov A.A. an agreement was reached on the transfer of the first plot of land as a retreat in the period from 12/01/020 to 12/31/2020. One of the paragraphs reflects that Ivanov A.A. has the right, if the plot is not transferred before December 11, 2020, to choose whether Petrov V.V. transfer it or is obliged to fulfill obligations in their original form (cash payment). If there is no such clause in the agreement, Ivanov A.A. has the right to decide at its own discretion how exactly to fulfill the contractual terms.

How to draw up a compensation agreement

The agreement is drawn up in simple written form, but in some cases - for example, if we are talking about the transfer of real estate or a share in the authorized capital of an LLC - it is subject to state registration. In addition, if the original agreement was notarized (for example, at the request of the parties), then the agreement arising from this obligation must also be certified by a notary.

The agreement should clearly and clearly state all the points that are important for legal relations. For example, you need to correctly indicate the date of transfer of property and the volume of the terminated obligation. If it is not reflected in what part it is terminated and ambiguities arise in this regard, then, as a general rule, the entire loan is considered repaid, including penalties, fines and interest. This rule also applies to those cases when the amount of compensation upon calculation turns out to be much less than the total amount of the obligation.

The timing of provision of property or work, services, etc. is important. – if it does not coincide with the date of the agreement, then a so-called “optional” obligation arises, the fulfillment of which the creditor has no right to demand (it can only insist on the fulfillment of the original one, unless a corresponding separate clause is provided). Therefore, it is necessary to correctly indicate all essential conditions.

The moment of termination of the obligation should be clearly indicated . If compensation is provided in the form of the provision of property or money, this moment will be the direct transfer and simultaneous acceptance by the creditor of what was transferred. If these are works or services, here you should clarify what document will confirm the completion of the work/services performed. Usually this is an act signed by both parties, where the customer also indicates the absence of claims or comments regarding quality. As for the transfer of real estate, here the obligation will be terminated from the moment the ownership rights are transferred, registered with a government agency.

Sample compensation agreement

So, the agreement must be in the same or more strict form as the contract to which it relates, and also contain essential conditions: the terms and procedure for providing compensation, the subject and amount of the obligation that is fulfilled by this subject:

Agreement on compensation by transfer of property (sample)

Arkhangelsk 11/28/2020

Limited Liability Company "Mikfinavtobank", hereinafter referred to as the "Creditor", represented by General Director A.L. Apolonov, acting on the basis of a general power of attorney, on the one hand, and Ivan Sergeevich Petrov, passport series 00 number 00000, residing in the city. Arkhangelsk, st. Lesnaya, 23, apt. 290, hereinafter referred to as the “Debtor”, have entered into this agreement as follows.

1. Subject of the agreement

1.1. The subject of this Agreement is the termination of the Debtor’s obligation to the Lender under the loan agreement dated 12/01/2019 for the amount of the remaining debt in the amount of 300,000 rubles, including interest on the use of the loan and penalties for late payments in the period from 09/01/2020 to 11/01/2020, by providing compensation in the manner and on the terms provided for in this Agreement.

1.2. The parties agree that the amount of the remaining debt as of November 28, 2020 is 300,000 rubles (three hundred thousand rubles), and also that the transfer by the Debtor of the property specified in clause 2.1 of this agreement into the ownership of the Creditor completely terminates the execution of the agreement from 01.12.2019.

2. Conditions and procedure for providing compensation

2.1. On the day of signing this Agreement, the Debtor transfers into the ownership of the Creditor as compensation a 2011 VOLKSWAGEN POLO passenger car, identification number (VIN) KIOF00000000, vehicle passport 0000000, engine number 00000000000 worth 300,000 rubles, owned by the Debtor by right of ownership, not pledged from third parties.

2.2. The obligation under the loan agreement between the Debtor and the Lender dated 12/02/2019 is terminated completely after the signing of the acceptance certificate for the Lender of the property specified in clause 2.1 of this Agreement.

3. Responsibility of the parties

3.1. From the moment of signing the act of acceptance and transfer of property specified in clause 2.1 of this Agreement, the Lender is responsible for its safety and the risk of accidental loss.

3.2. If the Debtor fails to comply with clause 2.1. of this Agreement, for the amount of debt in the amount of 300,000 rubles, a penalty of 0.1% is accrued for each day of delay, while its accrual does not relieve the Debtor from fulfilling the obligation under the loan agreement dated 12/02/2019.

3.3. All disputes regarding the subject and procedure for implementing this Agreement are resolved through negotiations, and if resolution is impossible, in court.

4. Final provisions.

4.1. This Agreement is drawn up in three copies of equal force, one copy each for the Debtor and the Creditor, the third copy remains with the Creditor for submission to the MREO traffic police in the Arkhangelsk region for registration of the vehicle.

Appendix: acceptance certificate.

Addresses and details of the parties, signatures

Repayment of an obligation by transfer of property

If the debtor is unable to pay off the debt with money, he can transfer the property he has to the creditor. This situation occurs quite often, so let’s look at what you need to pay attention to before signing such an agreement.

Most often, some valuable property acts as compensation

The following points are important:

1. In the introductory part, check the correct spelling of the details of the parties to the agreement.
2. The subject must be indicated , i.e. The Borrower transfers to the Lender what is available.
3. What is the cost of the compensation? The compensation amount must be in the same currency as the debt under the contract.
4. Describe the property that will be transferred to the lender. If this is a residential property, check that the full address, area of ​​​​the premises, and number of rooms are indicated. The details of the document that proves ownership (for example, a purchase and sale agreement) must be present.
5. The period when the property will be transferred to the new owner . If the time for paying compensation has passed, the creditor has the right to apply fines and other sanctions provided for in the main contract.
6. Do you agree with how the costs of transferring property are distributed ? For example, who will pay the state fee, etc.
7. The agreement must contain a phrase that the compensation is not the subject of collateral .
8. Property to be transferred must be free from the rights of other people . Be sure to check that the property has not been mortgaged, leased, etc. If, after completing all the documents, it turns out that third parties have the right to claim the property, serious problems may arise.
9. If the parties to the agreement are located in different localities in Russia, it is possible to specify in which court the case will be heard in the event of failure to comply with the terms of the transaction by one of the participants.

Risks of non-fulfillment and invalidation of the compensation agreement

Before the expiration of the period established by the agreement, the creditor cannot demand compensation. Non-fulfillment is considered to be a situation where the debtor did not present it as agreed - then the creditor has the right to demand fulfillment of the obligation in the form in which it originally existed, and he has the right to collect a penalty.

Question: Are there any risks to a compensation agreement by transferring real estate?

The main danger here concerns the debtor’s possible evasion of state registration of the transfer of ownership of the object. The law protects the creditor: he can apply to the court for state registration of a property on the basis of Art. 551 Civil Code of the Russian Federation.

You should carefully check what exactly and what quality the goods transferred as compensation are. If the goods do not correspond to the description in the agreement, the law gives the party the right not to accept it - Art. 460 Civil Code of the Russian Federation. The same rule applies to cases where the debtor is silent about the encumbrance - the agreement may be declared invalid, and due to failure to fulfill the obligation, interest for the delay will be accrued to the maximum, starting from the day the first delay occurred.

The risk should also include hidden inadequate quality of the transferred goods, non-compliance with the properties reflected in the agreement. The general rules of protection, including judicial protection, of the interests of the party “work” here. For example, on the basis of Art. 475 of the Civil Code of the Russian Federation - return, reduction in the price of goods, elimination of defects, etc. When it is proven that a party deliberately kept silent about the hidden properties of the object that was to be transferred, and the creditor suffered losses in connection with this, the agreement may be declared invalid.

Thus, first of all, the creditor is at risk - he benefits from the compensation to a lesser extent than the debtor. Lawyers of banks concluding settlement agreements with debtors on compensation under loan agreements have long developed tactics for working with overdue debts, assessing the risks of insolvency, etc. They use various formulas and algorithms that fairly accurately predict the feasibility or inexpediency of a compromise in the form of an agreement.

Compensation. Essence (example)

For example, Ivanov owes Petrov 1,000,000 rubles under a loan agreement. Ivanov has no money, but the repayment period under the loan agreement has expired. Petrov has the right to file a lawsuit against Ivanov and obtain a court decision on collection, which will result in the initiation of enforcement proceedings, seizure and foreclosure of the debtor’s property.

However, such consequences can be avoided. Ivanov and Petrov have the right to enter into a compensation agreement, which stipulates that the obligations from the loan agreement are terminated by the provision of compensation to Petrov by Ivanov (i.e. property, including property rights, which include obligatory, corporate and exclusive rights).

Compensation for the debtor is a kind of payment for refusal to fulfill an assumed obligation, and for the creditor it is compensation received in return for the fulfillment of the obligation promised by the debtor.

Compensation is a modern analogue of the classic basis for termination of an obligation - provision instead of performance (datio in solutum).

Recommendations: what to pay attention to

Loan agreements are concluded not only between the debtor and the bank, but also between people. If in such a situation the debtor refuses to pay the amount, but offers his property in exchange, we recommend that before concluding a compensation agreement:

• carefully analyze the value of the transferred property to ensure it corresponds to the amount of debt. You need to understand whether the price of the transferred item covers most of the loan and interest. You can contact the appraisal bureau (available in every city) to confirm or refute the value declared by the debtor. By the way, one should be wary not only if the compensation price is too low, but also if it is excessively high, many times higher than the price of the debt.
• You must always personally inspect the property that is transferred to you as compensation. If this is a car or an apartment, then you should find out whether these objects are under encumbrance, pledged, or whether there are any legal proceedings related to them due to claims from third parties.
• on the website of the regional arbitration court, use the electronic file and full name of the debtor to find out if there is a bankruptcy lawsuit. This way you can avoid the unpleasant surprise that the property promised to you has long been in the bankruptcy estate and you cannot claim it. Here you can also find out about other creditors, their claims and seized property. By virtue of the law, almost all transactions and written alienation agreements concluded during the bankruptcy period are potentially invalid, including the compensation agreement.
• find out if there are any applicants-heirs or spouses for the property that is being offered to you for transfer. For example, if the debtor has not paid the principal for a long time, but today he called and reported the good news about an inheritance in the form of a small dacha, which he can transfer to you as part of the loan agreement, you should definitely find out information about other heirs. It is worth trying to offer the debtor to sell the property and give you the money. Do not forget about the mandatory consent to the alienation of property from the spouse if it was acquired during the marriage.
• if a person acts under a power of attorney, which indicates the right to sign a compensation agreement, one should make sure that such a power of attorney is authentic and that its term has not expired. A guarantee of security can be a personal conversation with the principal, from whom you should clarify all the questions of interest, and also clarify whether the power of attorney has been revoked.
• there is no need to “postpone” the date of granting compensation too far. Over a long period of time, there is a high probability of the occurrence of force majeure circumstances, changes in the financial capabilities of the debtor, etc. It happens that the transfer of exactly the property that was stipulated in the agreement occurs, but on the day of execution it has depreciated so much that it hardly covers part of the price of the original obligation, not counting additional expenses. It is necessary to adhere to reasonable deadlines, with a mandatory assessment of the real possibility of transferring the material object to you. If this does not happen within the agreed period, you should not delay in filing a lawsuit.

Links to legislative acts

1. Civil Code of the Russian Federation Article 409. Compensation
2. Clause 2 “Compensation” of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 11, 2020 No. 6 “On some issues of application of the provisions of the Civil Code of the Russian Federation on termination of obligations”