Often sellers "drop" it to reduce the taxable base. For the buyer, this situation carries risks. In the event of litigation, he may be recognized as dishonest, and the transaction - invalid.
In this case, the buyer is obliged to return the property, receiving as compensation only the amount specified in the contract, which is often significantly lower than the actual market price.
Transactions with frequent transfers of property rights numbers (south korean tv series) over a short period of time may also be invalidated. If the property is repeatedly transferred from one owner to another over a short period of time, this may raise suspicions and claims from third parties. Buyers should pay attention to the length of ownership of the property by the current owner in order to minimize risks.
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Application of the consequences of invalidity of transactions
Claims of this type are often filed with the aim of restoring the violated right. The process of its restoration is carried out by applying the consequences of recognizing the transaction as invalid, which is determined by the general rules established in Article 167 of the Civil Code of the Russian Federation:
Legal consequences of invalidity . The transaction does not generate legal consequences. The exception is those related to its status, that is, that it is considered invalid from the moment of its execution.
Return of what was received under the agreement . Each party is obliged to return to the other everything received under the transaction. If it is impossible to return what was received in kind (for example, property, work performed, services rendered, etc.), its value must be reimbursed, unless otherwise provided by law.
Application of the consequences of invalidity of transactions
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Let's give some examples . If the contract of sale of the apartment is declared invalid, the buyer is obliged to return it to the seller, and the latter is obliged to return the money received. When only one unfulfilled condition of the agreement is invalid, then it is simply not applied.
If a consumer has agreed to a loan with the mandatory purchase of insurance and later applies to the court to have this condition declared invalid, that body may approve the return of the money paid for the insurance.
Some voidable transactions have special consequences established by law:
Agreements contrary to the principles of law and order and morality . If both parties to an invalid transaction knew of its illegality, everything they received under the agreement is confiscated to the state. When only one participant was aware of this, he is obliged to return what he received to the bona fide participant, and the property accepted by him is confiscated.
Sham transactions . These are made to conceal another agreement and are governed by the laws that the parties were trying to circumvent. For example, if a contract conceals another transaction with a different value, a court may order the parties to compensate the difference in price based on the actual terms.
Invalidity of a part of the transaction (Article 180 of the Civil Code of the Russian Federation) . Then the relevant consequences apply only to this share. For example, a contract for the sale and purchase of a car may include a condition that the purchaser, upon discovery of significant defects, may only demand repairs. It will be recognized as null and void, but this will not invalidate the entire transaction. In this case, the feature applies only to this specific condition.
These rules ensure fairness and law and order, protecting the interests of bona fide participants in transactions and preventing abuse.
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Cases of impossibility of applying the consequences of invalidity of a transaction
The right to have a transaction declared invalid is usually indisputable for the person who has suffered from the violation of his powers. However, there is a rule established in paragraph 5 of Article 166 of the Civil Code of the Russian Federation, which deprives a person of this right who acts in bad faith after the conclusion of an agreement.
In particular, if his actions or statements after the transaction confirmed its validity, then his subsequent demand to recognize it as invalid may be ignored by the court.
In practice, this means that if one party to an agreement knew that it was invalid but continued to act as if it were legal, then in a court case its position may be rejected.
For example, the Supreme Court of the Russian Federation refused to recognize a mortgage agreement as invalid for a plaintiff who himself took steps to register this transaction with the state, confirming its validity to other persons.
This rule also applies in cases where a party should have known about the deficiencies in the agreement if it had acted with due diligence.
For example, if a person leased a plot of land and a building for commercial purposes but failed to check that the site was suitable for those purposes and it was later discovered that its business use was prohibited, a court would likely reject a claim to invalidate the lease.
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