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Russians need certificates of sanity to sell their homes

Moscow

ELENA Kotova's one-room apartment on the outskirts of Moscow had started to feel cramped. Her son was almost four years old.

She and her husband had solid jobs - she as an economist, and he as a manager of a construction company. It was time to buy a new home.

"We just need the space," she said. They found a two-bedroom apartment and secured a mortgage as well as a buyer for their former home.

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As the closing day approached, the couple had one task to complete. Each would need a certificate of sanity from a psychologist.

"They will look at our psychological state," she explained. "If everything is normal, they will give us the document."

Ms Kotova, and tens of thousands of other Russians who are required to produce such a document to sell property, have no history of mental illness.

The certificate, which must be signed and stamped by a doctor, is a legal defence against a pervasive problem in Moscow real estate deals: rampant fraud and weak courts.

In one scheme, agents collude with property owners to sell homes and then race to petition judges that the sale should be invalidated because the seller was temporarily insane.

Buyers lose their cash, sellers keep the homes, and sales agents - and judges who may be in on the scheme - pocket millions of roubles.

Buyers may sue to reclaim their money, but the asset that may be the most lucrative for recompense is the apartment, and that is out of reach. Laws routinely protect homeowners in this kind of dispute.

This fraud is prevalent enough that nearly all of the about 140,000 transactions annually in Moscow have required sellers to show certificates of sanity in recent years, real estate agents said.

If home buying is stressful in most major cities, residents of Moscow grapple with a dizzying range of potential missteps.

Russians who may want to move for job opportunities hesitate because of the difficulties in buying and selling homes. Banks struggle to estimate the risk in a market with weak property rights.

Sanctions are roundly blamed in the media for Russia's economic woes, but economists point to corruption and bureaucracy - with demand for sanity certificates one example - as a notable drag. NYTIMES