The Legal 500

Recently some changes to Ukrainian law have been introduced which have repealed the need to notarise land lease agreements and bring greater transparency in land certification and land allotment procedures. This article briefly describes these changes.

 

Repeal of the need to notarise land lease agreements

 

The necessity to notarise agreements on the lease of a land plot has been rather controversial for several years, mainly due to the ambiguities and discrepancies in provisions of the special law regulating land relations and the general Law On Lease of Land (adopted in 1998), and the Commercial Code of Ukraine (adopted in 2003). Under the provisions the Commercial Code of Ukraine the lease of a land plot without concluding a lease agreement in writing, notarisation and registration of the agreement is prohibited. On the contrary, the Law on Lease of Land does not constitute any obligation to notarise a lease of a land plot and states that notarisation of a land lease is merely a right of the parties and a result of their voluntary decision.

 

However, on July 9, 2009 several amendments to a number of legislative acts entered into force. Among others, article 290 of the Commercial Code was abolished. Notarization of a lease of a land plot is no longer required. As a result, land leases may be concluded in a faster, cheaper and easier manner, avoiding the lengthy and costly notarisation process.

Greater transparency in land certification and land allotment procedures

 

The adoption of the Law of Ukraine # 1066-VI, has modified some Ukrainian legislation on documents certifying the rights to a land plot, including the order on allotting and merging land plots of 5 March 2009 (which took effect on 2 May 2009) (Law), which establishes more transparent rules regarding ownership of land plots and the procedure for allotting land, which were previously vague, ambiguous and controversial.

Certification of land ownership

 

The Law has simplified the formalities related to acquiring ownership of land.

 

Under article 328 of the Civil Code, ownership rights may be acquired on any grounds which are not prohibited by law, including on the basis of an agreement.

 

However, under the previous articles 125 and 126 of the Land Code, ownership rights to a land plot are considered registered only after a State Act of registration of the ownership right to the land plot is acquired (State Act). It was forbidden to use the land plot before obtaining a State Act.

 

In practice, this Land Code rule caused great uncertainty for new landowners, in particular because a long period (up to one year) passed between the date of concluding a purchase agreement and the State Act being issued.  Consequently, the new owner was unable to use their land plot during this period.

 

The Law modified the respective articles of the Land Code with the following effect:

 

(a) a duly concluded and registered purchase agreement fully certifies the ownership title to the land plot, and no State Act need be obtained when acquiring a land plot by a purchase agreement;

(b) registration of the ownership title must be done within 14 calendar days of the buyer submitting the relevant documents to the local departments of the Land Registry;

(c) only the purchase agreement and the previous State Act for the land plot, certified by a notary and annexed to the agreement, must be submitted for the state registration of the ownership title to the land plot.

 

Land allotment and merger

 

The Law also regulates the procedure for allotting and merging land plots, that is, the steps to be undertaken and the documents to be prepared to divide one land plot owned by several people into several separate land plots or unify several land plots owned by one person into one land plot.

 

The Law integrates several new provisions into the legislation according to which:

 

(a) the exact list of documents to be submitted for allotting or merging a land plot is stipulated (explanation note, copies of documents certifying ownership title, plans of the land plots, limitations on the land plots, and so on);

(b) to allot or merge a land plot it is necessary to obtain the approval of all users (in particular, lessees) and mortgage holders of the land plot, if any;

(c) the allotment or merger of a land plot does not require technical documents on the issue of the new State Act(s) to be prepared (as opposed to when, for example, the State Act is issued following privatisation of land plots in state ownership);

(d) the allotment or merger of a land plot does not extinguish existing limitations (such as easements) on the plot, unless the limitation relates to part of the land which after allotment is not affected by the limitation (that is, if a limitation only affects one (geographical or topological) part of the previously unified land plot but not other parts, the unaffected land plots after allotment will remain unaffected by the limitation).

 

The Law aims to improve some issues related to land ownership by simplifying the registration procedure.  Although in practice there may be complications, such as if the respective departments of the Land Registry do not follow the requirement to register within 14 days, the adoption of the Law should be considered as a major step towards increased transparency in Ukrainian land law.

 

The Law has finally regulated the issues of land allotment and merger.  Previously, these matters were decided differently in each specific case because of a lack of legislative regulation.

 

Alexander Poels

General Director of PETERKA & PARTNERS' Ukrainian branch

Should you need any further information concerning the matters discussed in this article, please contact PETERKA & PARTNERS LLC

Peterka & partners LLC

Bohdana Khmelnytskoho 17/52-A, 01030 Kyiv, Ukraine

Tel. (+380 44) - 581 11 20
Fax. (+380 44) - 581 11 21
E-mail: office@peterkapartners.com
URL: http://www.peterkapartners.com/