Abstract: The article is aimed at revealing the problem of participation of local self–government bodies with the legal status of legal entities - institutions in civil legal relations, as well as at identifying ways to resolve it. At the practical level, the problem is expressed in the uncertainty in which cases local self-government bodies act in civil circulation on their own behalf, and in which cases on behalf of the entire municipality. Certain gaps in civil legislation today allow municipalities to create legal entities not only to establish the legal status of their bodies, but even to separate divisions of such a body. At the theoretical level, the problem is expressed in the choice of the optimal and most effective model of participation of the municipality through its bodies in civil legal relations and management of municipal property. Applying the formal legal method from the standpoint of a dialectical approach, the author examines the raised problem from the point of view of the applicability of the institution's design to local self-government bodies. As a result of his reflections, he comes to the conclusion that local self-government bodies are an integral part of a municipality, and therefore cannot be separated from it by putting on the mask of a legal entity. To do this, the author proposes to amend the civil legislation in terms of limiting the spheres of establishment of institutions to the social and cultural sphere, excluding the sphere of management from Article 123.22 of the Civil Code of the Russian Federation.