A draft on fines for non-purchase of state property after winning an auction was introduced to the State Duma

A bill has been introduced to the State Duma that would introduce fines for the bid winner’s evasion from signing a purchase and sale agreement for state and municipal property with an undeclared value. Relevant document posted in the system of supporting legislative activity.

The authors of the initiative, head of the Federation Council Committee on Economic Policy Andrei Kutepov and deputy head of the State Duma Committee on Property, Land and Property Relations Vladimir Samokish, submitted the document for consideration by the State Duma on November 10.

The bill proposes to amend the law on the privatization of state and municipal property. According to the document, when conducting this type of auction, the authorities do not establish the value of the property, and the winner is the participant who offers the highest amount.

In case of refusal to sign the contract, the winner of the auction must pay the seller a fine in the amount of the initial price of the property within 10 days after the payment deadline. It is defined as 5% of the initial offer price.

Currently, the legislation does not provide for the determination of the initial sale price without announcing the price and penalties if the winning bidder evades signing the contract, it says in the explanatory note. Such measures are also not additionally established by the government.

As a result, properties are sold “at a cost significantly below market value.” The disruption of the tender and the delay in the privatization process, as noted in the note, occurs without “any economic consequences” for the winning bidder, who avoided signing the contract.