The Supreme Court of Azerbaijan has issued a significant clarification regarding judicial practice in disputes involving residential properties, land plots, garages, and other real estate. The court addressed cases where property is registered under another person's name using forged documents without the actual owner's knowledge or consent.
According to the Operative Information Center-OMM, the Supreme Court highlighted that such properties are often subsequently sold to third parties based on unlawful entries in the state registry. In these instances, the original owner must first prove in court that the property was seized illegally and without their consent, such as through the use of a forged power of attorney.
If fraud is proven, the initial sale and the resulting registration are deemed legally baseless. However, the complexity increases if the property has been transferred to subsequent buyers. The Supreme Court outlined that an original owner can recover the property in two primary scenarios: if the contracts with third parties are fictitious, intended solely to create the appearance of a "bona fide purchaser," or if the subsequent buyers do not qualify as bona fide purchasers under the law.
The court provided specific criteria for identifying "fictitious" transactions, which include:
- Evidence of close relationships (kinship, friendship, or dependency) between the buyer and seller.
- Transactions conducted at prices significantly below market value without reasonable justification.
- Lack of personal inspection of the property by the buyer or their representatives.
- The property remaining in the possession of the original owner despite the alleged transfer.
- The buyer's financial situation being inconsistent with the ability to purchase the asset.
The Supreme Court emphasized that while these factors are critical, a single piece of evidence is often insufficient to declare a transaction fictitious. Courts must rely on a comprehensive system of circumstantial evidence that excludes alternative explanations. However, in exceptional cases, such as a buyer with extremely limited financial means purchasing high-value property without justification, such facts may be decisive.
Regarding "bona fide purchasers," the law protects individuals who acquire property rights by relying on the state registry, even if the initial registration was baseless. An original owner's claim against a bona fide purchaser will be rejected, leaving the owner with the right to seek damages. Exceptions to this protection include cases involving spousal joint property, instances of "double registration" where a previous owner's rights were not canceled, properties that cannot be privately owned (e.g., protected nature reserves), and assets acquired through gratuitous transactions like gifts.
This clarification serves as a vital legal guideline for lower courts to ensure that the protection of property rights remains consistent with both constitutional guarantees and the principles of economic security in Azerbaijan.
