Ukraine’s real estate sector remains a cornerstone of economic activity, offering significant opportunities for investors and lenders despite ongoing geopolitical challenges and wartime disruptions. As of November 2025, the market shows resilience, with property values rising steadily in key urban centres and growing interest in suburban, logistics, and warehousing assets. The legal framework is firmly rooted in civil law principles, emphasizing state registration of rights and equal treatment for domestic and foreign owners (with limited exceptions for agricultural land). Foreign investment continues to flow, supported by Ukraine’s EU accession path and international financial backing.

The primary legislation governing real estate ownership and transactions includes the Land Code of Ukraine, which regulates land use and ownership; the Civil Code of Ukraine, outlining general property rights and obligations; and the Law on State Registration of Real Rights to Immovable Property and Their Encumbrances, which establishes the centralized electronic State Register as the foundation for proving and publicizing ownership. These laws ensure transparency through mandatory registration, with ownership records accessible for public inspection (with some war-time exceptions), fostering investor confidence.

Although the Civil Code introduced limited common law-inspired mechanisms – such as fiduciary management and conditional ownership transfers intended to simulate trust-like structures – these provisions remain largely inoperative in practice. Ukraine’s civil law tradition does not recognize the split between legal and beneficial ownership. Courts consistently uphold only registered title, and tax authorities treat fiduciary arrangements as taxable transfers. As a result, while the legislation gestures toward international models, investors must rely on corporate vehicles, pledges, or escrow structures to achieve similar outcomes.

Since December 2024, several developments have influenced the landscape for real estate investors and lenders, though none have fundamentally altered core structures. Key changes include simplified land tax procedures to avoid double taxation during transfers, a draft law on foreign investment screening that may affect cross-border deals in sensitive sectors, and strengthened anti-corruption and due diligence requirements. Looking ahead, EU integration reforms are expected to bring tighter energy performance standards and zoning alignment, alongside potential easing of agricultural land ownership caps for legal entities and new public-private partnership frameworks.

This overview addresses the full scope of the query, covering:

• Ownership and Restrictions. Proven via State Register, publicly accessible; no general foreign ownership bans except for agricultural land. Land and buildings are legally separable; various proprietary interests exist.
• Transaction Structures and Processes. Commercial assets often held through LLCs; due diligence centres on title and encumbrances (tax and environmental issues typically outside standard scope). Transfers require notarization and registration; liability passes upon registration. Share deals are common for portfolios; occupational leases transfer automatically with freehold sales.
• Rights, Burdens, and Trusts. Easements, covenants, and mortgages are registrable. Trust structures are not recognized; fiduciary mechanisms exist in law but fail in practice due to civil law incompatibility. UBO disclosure is mandatory under AML rules.
• Taxes and Leases. Ownership subject to land tax; transfers attract state duty and income tax. Commercial leases are flexible but subject to wartime rent controls; landlords have standard remedies including termination and damages.
• Planning, Environment, and Expropriation. Use and zoning governed by local plans; environmental liability is strict. Energy performance certificates required for new or large buildings, with minimum standards expected for rentals. Expropriation is possible for public needs with compensation.
• Security Interest. Mortgages are registrable and enforceable through court proceedings, public auction, or out-of-court settlement as agreed in the mortgage contract; registration involves state duties and notary fees, which are material but standard. Trust-like security structures are not viable; investors rely on pledges, escrow accounts, or corporate guarantees instead.

This framework reflects an investor-friendly regime, balanced by the need for careful due diligence amid evolving regulation.

The Constitution of Ukraine establishes the fundamental principles of real estate ownership and secures property rights. It guarantees everyone the right to own, use and dispose of real estate freely. The Constitution underscores the equality of all subjects of property rights before the law and guarantees the protection of property rights by the state. The right of private property is inviolable, and the Constitution prohibits arbitrary deprivation of ownership. As an exception, real estate objects may be compulsorily alienated due to public necessity, subject to prior and full compensation for their value. However, during martial law and a state of emergency, full compensation may be provided after the alienation.

As of 2025, ongoing martial law allows for the restriction of property rights as established in the Constitution. The real estate could be alienated by the decision of military command according to the procedure defined by the Law of Ukraine No. 4765-VI “On the Transfer, Compulsory Alienation or Expropriation of Property Under the Legal Regime of Martial Law or a State of Emergency”.

The Civil Code of Ukraine and the Land Code of Ukraine establish general principles for ownership, use and disposal of real estate, set requirements for real estate agreements. The Civil Code of Ukraine governs acquisition, transfer, encumbrance, and termination of property rights, as well as defines remedies for their protection. The Law of Ukraine № 4292-IX “On Amendments to the Civil Code of Ukraine on Strengthening the Protection of the Rights of a Bona Fide Purchaser”, adopted in March 2025, enhances the protection of bona fide purchasers in disputes with state authorities and local government bodies regarding the vindication of property acquired from state or municipal ownership. Law No. 4292-IX established a limitation period for the vindication of real estate and introduced a compensation mechanism for a bona fide purchaser if the claim of a state authority or local government body is satisfied.

The Land Code of Ukraine defines the legal status of lands of different categories, sets forms of land ownership, and grounds for acquisition and termination of property rights to land.

The Law of Ukraine No. 1952-IV “On State Registration of Real Rights to Real Estate and Their Encumbrances” mandates the state registration of property rights and encumbrances, ensuring their legal effectiveness only upon entry into the State Register of Property Rights to Real Estate. Amendments effective from March 2024 enhanced the compliance checks of acquirers or owners of agricultural land, introducing new requirements to the procedure of state registration of property rights.

Essential terms of land lease agreements, rights and obligations of landlord and tenant, peculiarities of lease of the agricultural land are established by the Law of Ukraine No. 161-XIV “On Land Lease”.

The Law of Ukraine No. 2145-IX “On Amendments to Certain Legislative Acts of Ukraine Regarding the Establishment of Conditions for Ensuring Food Security Under Martial Law”, effective as of April 2022, provides a simplified procedure for leasing state or municipal agricultural land for the period of martial law. It allows the leasing of state and municipal agricultural land for up to one year without an auction and requires a land lease agreement to be executed in e-form and signed by e-signature.

The Law of Ukraine No. 157-IX “On the Lease of State and Municipal Property” addresses the lease of state and municipal property and imposes additional measures, such as the requirement to conclude lease agreements through electronic auctions. Resolution of the Cabinet of Ministers of Ukraine No. 634, effective as of June 2022, sets the specifics of leasing state and municipal property during martial law. It provides reliefs and allowances, depending on the type of property and its location.

The Law of Ukraine No. 3038-VI “On Regulation of City Planning Activity” governs the planning and development of territories, permitting procedures and grounds for transferring land plots from state or municipal property for urban development needs. Law No. 3038-VI also contains temporary martial law provisions, which allow simplified procedures for the construction of facilities necessary for reconstruction, temporary accommodation of internally displaced persons or displaced businesses, allowing deviations from general zoning and planning rules.

The grounds for the creation of a mortgage, the conditions for transferring property to a mortgage, the specifics of mortgages on certain subjects, as well as property rights relating to the subject of a mortgage, are regulated by the Law of Ukraine No. 898-IV “On Mortgage”.

The Law of Ukraine No. 2518-IX “On Guaranteeing Real Rights to Real Estate to be Constructed in the Future”, effective as of September 2022, is aimed at protecting the rights of buyers of properties under construction. Law No. 2518-IX introduces a “special property right”, provides mechanisms for its protection, defines methods of raising funds for construction, and establishes requirements for online disclosure of information about construction projects.

Additionally, Ukraine is introducing reforms to outdated housing legislation. As of October 2025, the parliament approved as a basis the draft Law No. 12377 “On the Basic Principles of Housing Policy”, which addresses social and public housing. The draft Law No. 12377 introduces the Unified Information and Analytical Housing System, which is the central source of information about housing, affordable housing operators, construction and housing cooperatives. In addition, it creates conditions for public and private partnership and provides an effective credit and mortgage policy.

The Law No. 2923-IX “On Reimbursement of Damage or Loss of Certain Categories of Real Estate Objects Due to Military Actions, Acts of Terrorism, Sabotage Caused by Military Aggression of the Russian Federation Against Ukraine, and State Register of Property Damaged or Destroyed Due to Military Actions, Acts of Terrorism, Sabotage Caused by Military Aggression of the Russian Federation Against Ukraine” regulates reimbursement of damage done to residential real estate. Ukrainian citizens, associations of co-owners of multi-apartment buildings, apartment building managers, and housing construction cooperatives may be eligible to receive compensation under Law No. 2923-IX. One of the ways of compensation is a “housing certificate”, which can be used to finance the purchase of residential real estate (including investing in/financing its construction) and the land plot on which it is located. The Ukrainian government adopted the Procedure for assessing damage done to Ukraine due to the military aggression of the Russian Federation (resolution No. 326). The procedure establishes a unified and internationally agreed-upon valuation standard for assessing actual losses, lost profits and the need to restore damaged and/or destroyed property, which serves as the basis for future financing of recovery. The procedure classifies damage and losses by category for submission to the Register of Damage Caused by the Aggression of the Russian Federation against Ukraine, created through the Resolution of the Committee of Ministers of the Council of Europe.

Despite the ongoing full-scale war, Ukraine continues to reinforce its legal and institutional foundations for reconstruction and long-term progress. The country’s latest legislative reforms show not only resilience but also a strategic vision: to attract responsible international capital while safeguarding national interests and aligning with European standards.

Since late 2024, several key laws have come into force, and others are under preparation, that materially impact real estate investors, lenders, and infrastructure developers. Together, these reforms form a coherent legal framework for recovery, ensuring that every investment in Ukraine contributes to both economic growth and national resilience.

i. Enhanced Protection for Bona Fide Purchasers

Traditionally, the Law significantly limits the grounds on which an owner can reclaim property from a bona fide purchaser – an individual who acquired the property under a fee-based contract without knowing, or having the means to know, that the seller lacked the right to alienate it.

Vindication is only permitted if the property was:

1. Lost by the owner or the person entrusted with its possession;
2. Stolen from the owner; or
3. Otherwise, left in the possession of the owner (or the person entrusted with it) against their will.

Crucially, property cannot be reclaimed from a bona fide purchaser if it was sold or transferred in accordance with established procedures for enforcing court decisions or sold at an electronic auction for the privatisation of state or communal property.

However, until recently, a significant issue persisted with lawsuits filed by the prosecutor’s office seeking to reclaim municipal and state property that had been privatised in violation of legal procedures. Since no limitation period applied to such claims, investors who acquired assets previously owned by the state or municipalities remained perpetually exposed to the risk of restitution actions – particularly in cases involving land near rivers, lakes, coastal areas, forests, or within historic and protected zones.

The Law of Ukraine “On Amendments to the Civil Code of Ukraine Regarding Strengthening the Protection of the Rights of Bona Fide Purchasers” (No. 4292-IX) was adopted by the Verkhovna Rada of Ukraine on 12 March 2025. It came into force on 9 April 2025. This legislation introduces essential changes to the Civil Code of Ukraine (CCU) to reinforce the rights of individuals who acquire property in good faith.

New provisions were introduced to establish a 10-year limitation period for State or Municipal Property.

The Law establishes a specific 10-year limitation period (statute of repose) for claims by the State or local communities seeking to reclaim or assert rights over real estate that has been transferred into private ownership.

The State or local community cannot reclaim this property from a bona fide purchaser if:

• More than ten years have passed since the state registration of ownership by the first purchaser.
• The 10-year period also applies from the date of transfer to the first purchaser for property for which state registration was not required at that time.

This 10-year period does not apply to certain strategic assets, including critical infrastructure, state property of strategic importance, defence lands/objects, and cultural heritage sites that were not subject to privatisation.

Mandatory Compensation for Real Estate Property

In cases where a state authority or local self-government (or the prosecutor) successfully reclaims real estate property for the benefit of the State or community, the Law mandates a mechanism for compensation to the bona fide purchaser.

A court may only issue a decision on reclamation on the condition that the claimant (state body or prosecutor) pre-deposits the value of the property into the court’s deposit account. The value is determined by an appraisal effective on the date the claim was filed. If the court satisfies the claim, the funds are transferred to the bona fide purchaser.

Retroactive Application

The provisions concerning the conditions and procedures for compensation, as well as the calculation of the 10-year limitation period, have retroactive effect. This applies to cases where a first-instance court decision on reclamation from a bona fide purchaser had not yet been issued when the Law came into force.

ii. New Public-Private Partnership

Since the onset of the war, a substantial share of Ukraine’s critical infrastructure, along with large parts of its residential and non-residential building stock, has been destroyed by the aggressor. As demonstrated by previous post-World War II reconstruction efforts, rebuilding a country on such a scale is impossible without close cooperation between the public and private sectors.

On 19 June 2025, Ukraine’s parliament adopted a Public-Private Partnership (PPP) law that introduces a new legal and financial framework to modernise investment mechanisms and align the country’s PPP framework with European Union (EU) directives.

For international investors, this law establishes clearer legal structures, enhances project security, introduces new investment segments, and mandates high standards of transparency, as well as environmental, social, and governance (ESG) compliance.

Reconstruction Focus and Strategic Sectors

The law extends beyond traditional infrastructure development to explicitly address the urgent needs of wartime recovery. It introduces simplified and accelerated procedures for PPP projects in sectors directly affected by military aggression – including energy, transport, healthcare, and housing – applicable during martial law and for seven years thereafter.

Sector	Key Features
Infrastructure Recovery	Fast-track mechanisms for the reconstruction of destroyed facilities and networks.
Housing and Social Infrastructure	Inclusion of residential, modular, and temporary housing projects with shorter contract terms.
Transport and Digital	Regulation of digital infrastructure, communications, and cybersecurity; introduction of toll road and availability payment models.

Balancing Investment Freedom and National Oversight

Unlike earlier frameworks, the new PPP law establishes a hybrid financing model that combines state, municipal, donor, and private capital – essential in wartime conditions when public funds are constrained. It also introduces robust control mechanisms to ensure that strategic assets remain under Ukrainian jurisdiction, while still providing international investors with explicit legal guarantees and stability.

Key Investor Protections

• Direct Agreements between public partners, private partners, and creditors ensure continuity in case of default and allow lenders to step in.
• The Legislative Stability Clause ensures that the regulatory regime in effect at the time of signing remains in force throughout the PPP duration.
• Waiver of Sovereign Immunity makes international arbitration enforceable, a major signal to foreign financial institutions.
• Protected Project Accounts prevent the seizure of funds outside judicial procedures.

European Standards and ESG Integration

The Law explicitly aligns Ukraine’s PPP mechanisms with EU directives, embedding the UNECE PPP and Infrastructure Evaluation and Rating System (PIERS), and mandating compliance with key ILO conventions and environmental treaties. It ensures transparency through EU-style procurement documents (ESPD) and requires all PPP awards to be published in the Official Journal of the EU.

iii. System of Real Estate Objects for Housing Internally Displaced Persons

With over five million internally displaced Ukrainians, housing provision has become both a humanitarian priority and a significant investment opportunity. In November 2024, the Verkhovna Rada passed Law No. 4080-IX, establishing the System of Real Estate Objects for Providing Housing for Internally Displaced Persons (IDPs). This system aims to create a transparent digital register of properties suitable for reconstruction or new build for displaced families. It serves as a single access point for investors, charities, municipal and national authorities, and internally displaced persons, supporting a more efficient and transparent development of the national housing fund.

The system enables:

1. IDPs to apply for housing transparently through a unified online platform;
2. Municipalities and donors to coordinate housing projects effectively;
3. Foreign investors to co-finance or contribute to reconstruction efforts under full state oversight and public reporting.

This mechanism introduces an accountable, data-driven framework for socially responsible investment – aligning humanitarian goals with private-sector participation in Ukraine’s recovery.

iv. Adjustment of the “Military Tax” on Real Estate Sales

Starting December 2024, the military tax rate on real estate sales increased from 1.5% to 5%, applied to individuals selling property owned for less than three years or conducting multiple sales annually.

While this reform raises short-term transaction costs, it reflects a wartime fiscal necessity – channelling private revenues into national defence and recovery funds.

Despite this increase, the real estate market has shown price growth and investor resilience in 2025. Moreover, there is no direct correlation between the rising prices and the increased military tax rate.

v. Draft Law No. 14062: National Security Screening of Foreign Investments

To safeguard national sovereignty while maintaining an open investment door, Ukraine is considering introducing an FDI Screening Law – an instrument already employed by many EU and G7 countries.

This framework will require mandatory review of foreign investments in sensitive sectors to ensure they do not threaten national security or critical infrastructure.

Strategic Sectors Under Review	Triggering Thresholds
Critical Infrastructure (energy, transport, digital)	Acquisition of >25% voting rights or control functions
Strategic Minerals	Ownership of assets >10% of company’s book value
Defence and Dual-Use Goods	Ability to appoint management or block decisions

For foreign investors, this measure offers clarity and predictability. Rather than arbitrary restrictions, it institutionalises a transparent, rule-based mechanism that balances openness with strategic oversight.

Conclusion:

Ukraine’s current legislative trajectory reflects a unique reality: the country is simultaneously at war and rebuilding. Each reform – from enhanced protection for bona fide purchasers, the PPP Law, to the IDP Housing System, the FDI Screening Bill, and fiscal adjustments – is designed not only to attract capital but also to align investment with national resilience and European integration.

For foreign investors, Ukraine is not merely a future market – it is a present opportunity to participate in the most significant reconstruction effort in modern Europe, grounded in transparent law, partnership, and the determination of a nation defending both its territory and its economic future.

 

Ownership rights and other real rights to real estate, including land plots, encumbrances on these rights, acquisition, transfer and termination of the rights to real estate must be registered in the official state registry – the State Register of Real Rights to Real Estate (Real Estate Register), maintained by the Ministry of Justice.

Property rights to real estate, unfinished construction projects, real estate to be constructed in the future and encumbrances thereon, arise, change and terminate from the moment of state registration.

Registration of ownership rights to real estate is the official recognition of ownership rights by the state.

Acquisition of ownership rights to real estate is based on several legal facts: the basis for the acquisition of ownership rights (agreement or other legal action, etc.), the decision on state registration of rights, and the corresponding registration entry in the Real Estate Register.

Ownership of real estate in Ukraine is proved through:

• an information certificate (extract) from the Real Estate Register; and
• an original title document (sale-purchase agreement, gift-granting agreement, inheritance certificate, privatisation/registration certificate, ownership certificate, etc).

Rights to real estate and encumbrances are registered by a state registrar, a notary or Centres for Administrative Services.

The procedure of state registration of rights to real estate and the grounds for refusal thereof are established by the Law No. 1952-IV “On State Registration of Real Rights to Real Estate and Their Encumbrances” and the “Procedure of State Registration of Real Rights to Real Estate and their Encumbrances”, approved by Resolution of the Cabinet of Ministers of Ukraine No. 1127.

Refusal to register property rights, evading registration, or refusal to provide information can be challenged in the Ministry of Justice or a court.

Entries in the Real Estate Register are available for public inspection and accessible online for a fee. Anyone can get information about a real estate object based on a registration number, taxpayer identification number or owner’s name. Online access requires a digital signature. However, Law No. 4576-IX, which comes into force on 18 November 2025, restricts access to the Real Estate Register in electronic form for the period of martial law and for one year after its end. These restrictions are related to ensuring national security and defence. Information about rights to real estate and encumbrances thereon, in terms of the address of real estate owned by legal entities, will include only information about the region and does not include information about the cadastral number of the land plot owned by the legal entity.

A state registrar, a notary and Centres for Administrative Services can provide a full extract in paper form.

Foreign individuals and legal entities generally have equal rights to own residential and commercial real estate to those of Ukrainian nationals and legal entities. It should be noted that various areas of private and public law in Ukraine use the term “foreign legal entity”, as well as other legal terms with similar meanings, the specific application of which depends on the scope of legal norms. The Land Code refers to “foreign legal entities” as legal entities established and registered in accordance with the legislation of a foreign state.

Foreign investors who intend to purchase such properties need to meet certain legal requirements, such as the required form of a contract, obtaining a Ukrainian tax identification number and opening a Ukrainian bank account. Ownership rights must be registered in the State Register of Real Rights to Real Estate.

In 2021, Law No.552-IX introduced changes to the Land Code, which partially opened the land market by lifting the moratorium on the sale of agricultural land to Ukrainian individuals and legal entities.

However, the Land Code of Ukraine sets specific restrictions on foreign ownership of certain types of land to secure national interests. In particular, foreign individuals and legal entities are prohibited from owning agricultural land.

Indirect ownership through acquiring shares, stocks, stakes, or membership in Ukrainian legal entities (except in the charter capital of banks) that own agricultural land is prohibited as well. However, indirect ownership of agricultural land may be allowed in future, if approved by the national referendum (which is not expected as of November 2025).

Even if approved by a referendum, certain restrictions on ownership of agricultural land will remain. This concerns the purchase of agricultural land located near state borders by legal entities whose participants or ultimate beneficial owners are foreign nationals. Legal entities whose participants or beneficial owners are citizens of a state recognised by Ukraine as an aggressor or occupying state are prohibited from purchasing agricultural land as well, even if approved by a referendum. The same applies to individuals and legal entities subject to sanctions.

Non-agricultural land within urban areas

Foreign individuals can acquire ownership of non-agricultural land within urban areas regardless they own real estate located on it. Foreign legal entities can acquire ownership of non-agricultural land within urban areas if they purchase real estate located on it or plan to construct facilities for business activity in Ukraine.

Non-agricultural land outside urban areas

Foreign individuals can acquire ownership of non-agricultural land outside urban areas if they own real estate located on it. Foreign legal entities can acquire ownership of non-agricultural land outside urban areas if they purchase real estate located on it.

Foreign individuals may acquire ownership of non-agricultural land through inheritance. Inherited agricultural land must be disposed of within one year.

Land plots may be leased to foreigners for a term of up to 50 years.

The first thing to be clearly recognized is that the concept of “proprietary interest” originates from legal systems belonging to the Anglo-American legal tradition. Classically, English law distinguishes between legal and equitable interests in real estate. However, the proprietary relations regulation related to real estate in Ukrainian legislation is strikingly different, since Ukrainian private law is based on the continental (or Romano-Germanic) legal tradition. Overall, proprietary rights consist of ownership right and proprietary rights to another’s property or limited property rights.

The ownership right is unitary and absolute right as it originated from Roman law concept dominium. In contrast to the Anglo-American legal tradition, ownership can only exist for one person in relation to one object. Consequently, it cannot be the case that two or more persons have parallel ownership rights to the same real estate within the same scope. If there are two or more owners of one object, they are considered to be co-owners and therefore cannot simultaneously use and dispose of the entire object without the consent of the other co-owners.

So, the ownership right is considered to be the most complete right of a person in relation to a property, including real estate. It consists of the classic inseparable “triad” of property rights: the right of possession, the right of use, and the right of disposal.

The right of possession is the right of actual, physical, and economic control of a person over a property, which consists in the possibility of a person to directly keep the thing in question with them. When it comes to real estate, it could be rather complicated to establish possession, as a person often cannot physically demonstrate their control over the entire property and encompass it. However, in this case, according to Ukrainian legislation and judicial practice the following presumption should be used: if a person is registered as the owner of the property in the state register, this person is considered its possessor. Thus, no additional evidence is required.

The right of use is the right to exploit the property and to receive benefits from it – the benefits or revenues it brings. It enables a person to satisfy their interests through the useful qualities of the property, rather than simply having actual control over it. The lease right is right to use property, which arise on the basis of the agreement as a contractual right. It should be noted that if the lease right term under the agreement exceeds 3 years, such right shall be registered in the state register.

The right of disposal is the right to determine the legal fate of property by performing actual or legal actions with respect to it. A wide range of actions may constitute forms of disposal of property, including but not limited to: alienation of property (sale, donation, etc.); transfer of property by inheritance; transfer of property into possession and/or use (leasing property, establishing easement, emphyteusis, superficies, etc.); renunciation of property (an action aimed at terminating ownership without the intention of transferring the property to another person); destruction of property; alteration or transformation of property; etc.

Within the limited proprietary rights group each type of proprietary right is an independent unit, for which a separate legal regime of control over property is prescribed in the law. Civil Code of Ukraine (hereinafter – CCU) classifies the following as rights in rem to another person’s property: the right of possession (Articles 397-400 of the CCU), servitude (Articles 401-406 of the CCU), emphyteusis (Articles 407-412 of the CCU), and superficies (Articles 413-417 of the CCU). At the same, Law of Ukraine dated July 1, 2004 No. 1952-IV “On State Registration of Corporeal Rights to Real Estate and Their Encumbrances” contains a more detailed list of proprietary rights and includes: 1) special property rights to an unfinished construction project, a future real estate object; 2) proprietary rights to real estate derived from ownership right: right of use (servitude); right to use land for agricultural purposes (emphyteusis); the right to build on a land plot (superficies); the right of economic management; the right of operational management; the right of permanent use and the right to lease (sublease) a land plot; the right to use (rent, lease) a building or other capital structure (or a separate part thereof) arising on the basis of a contract for the rental (lease) of a building or other capital structure (or a separate part thereof) concluded for a term of not less than three years; the right of trust ownership of real estate, unfinished construction, or future real estate received for management; usufruct of state property; usufruct of municipal property; the right to manage state property; other property rights in accordance with the law.

The servitude in Ukrainian law is the right to use another person’s property and may be established in relation to a land plot, natural resources or other immovable property in order to satisfy the needs of other persons that cannot be satisfied in any other way. Thus, this concept is similar to the easement in common law, but originally has broader meaning. The legal basis for establishing servitude is a contract, law, will, or court decision. However, the moment of its establishment is the state registration of such a limited proprietary right.

The emphyteusis is the limited right to use another person’s land plot for agricultural purposes and could be established by an agreement between the owner of the land plot and an individual or legal entity. It should be highlighted that the term of the agreement on granting the emphyteusis cannot exceed 50 years.

At the same time, the superficies is the right to use another person’s land plot for the construction of industrial, domestic, social, cultural, residential, and other structures and buildings. Unlike the emphyteusis, this limited proprietary right arises not only on the basis of an agreement, but also on the basis of a will. Furthermore, for superficies the 50-year term limit applies only to land plots owned by the state or municipality.

According to Ukrainian legislation there are certain limitations of use of state-owned or municipally-owned land for agricultural purposes (emphyteusis) or for construction (superficies). Thus, these proprietary rights cannot be alienated by the land user to other persons, contributed to the authorized capital, or pledged as collateral, except in cases of transfer of real estate ownership (e.g., residential building, other buildings) or in cases where the right of emphyteusis or superficies was acquired by the land user at a land auction.

Particular consideration should be given to trust in Ukrainian legislation. Although it is primarily a concept of Anglo-American law, due to globalisation, trust exists in Ukrainian private law. Thus, the trust is understood as a special type of ownership (Article 316 of the Civil Code of Ukraine). This right may arise on the basis of law or contract. Overall, the general purpose of trust ownership is to manage trust property in the interests of others, to maintain it exclusively for the benefit of others. So, a trustee must manage the property with due care in the interests of others and does not have the right to use it for personal gain. The trust in Ukraine is applied, in particular, in the field of new housing construction investment, as well as in the field of mortgage lending.

In addition, the trust may serve as a type of security for the performance of an obligation. As a type of security for the performance of obligations, trust has features in common with a pledge: the debtor transfers certain property to the creditor, and the creditor may foreclose on the property transferred by the debtor in the event of the debtor’s failure to perform its obligations. At the same time, the main feature of trust compared to a pledge is that the creditor becomes the owner of the property transferred by the debtor, whereas in the case of a pledge, the debtor retains ownership right.

Finally, after reforms of real estate-related legislation in 2022, special proprietary right to a future real estate object was established. Such future real estate objects may include apartments in a residential complex under construction, nonresidential premises to be completed in a new development, parking spaces or auxiliary premises that will form part of the finished building. Such an amendment ensures that each investor’s future property is individually identified and legally protected. When the building is completed and officially commissioned, the special proprietary right automatically transforms into full ownership, and the register should be updated accordingly. Before these reforms, investors who financed construction or purchased such future units had only contractual rights (obligations rights) against the developer. They could not register ownership or any real right until construction was completed and the building was put into operation. This created legal and financial risks, especially in cases of developer insolvency or project delays.

Over several decades the issue of ownership unity of real estate and the buildings on it used to be an unstable issue in Ukrainian private law. Constant legislative changes in approaches to regulating this issue have led to continuous shifts in judicial practice. However, legislative amendments in 2021, as well as elaboration of the principle of legal fate unity by the Supreme Court changed the situation dramatically.

Nowadays in Ukraine, land and the building on it are legally separate objects. According to Article 181 of the Civil Code of Ukraine immovable property (real estate, real property) includes land plots, as well as objects located on a land plot, which cannot be moved without depreciating them or changing their purpose. However, the ownership of these objects according to legislation and judicial practice should belong together. Thus, law by itself encourages the unity of land and building ownership as the general principle, while separate ownership still remains possible. At this point, it is necessary to clarify in a more detailed manner what this means in a practical sense.

Firstly, in the event of acquisition on the basis of a transaction or by inheritance of ownership rights to real estate (a residential building (except for a multi-apartment building), other building or structure), an unfinished construction project located on a privately-owned land plot, the ownership rights to such land plot shall simultaneously transfer from the previous owner of such objects to the acquirer of such objects, without changing its intended purpose.

Secondly, in the event of acquisition of a separate share in the right of co-ownership of a real estate (a residential building (except for a multi-apartment building), other building or structure), an unfinished construction project that was privately owned by its previous owner, the ownership right to the land plot on which such an object is located shall simultaneously pass to the acquirer in proportion to his share in the right of co-ownership of such an object, except in cases where the previous owner owned a share in the right of co- ownership of the land plot in a different amount. If the previous owner used to have a share in the co-ownership of the land plot in a different amount in the co- ownership of the real estate, the object of unfinished construction, the ownership right shall be transferred in such amount.

Thirdly, in the event of acquisition of ownership rights to real estate (a residential building (except for a multi-apartment building), other building or structure), an unfinished construction project located on a leased land plot, used on the basis of emphyteusis or superficies from the previous owner, the acquirer shall simultaneously acquire the right to lease, emphyteusis, or superficies of the land plot on which such an object is located, to the extent and on the terms established for the previous owner of such an object.

Finally, in the event of acquisition of a separate share in the right of co-ownership of real estate (a residential building (except for a multi-apartment building), other building or structure), an unfinished construction project, if such an object is located on a land plot that is used by the previous owner on the basis of a lease, emphyteusis, or superficies, the acquirer has the right to demand amendments to the land lease, emphyteusis, or superficies agreement with the designation of the acquirer as a co-lessee (co-user) of the land plot, and until the amendments are made to the relevant agreement, he is obliged to reimburse the lessee (user) for part of the rent (fee for the use of the land plot) in proportion to his share in the ownership of such an object. The procedure for the use of a leased land plot (land plot used under the right of emphyteusis, superficies) by several lessees (land users) in such a case is determined by an agreement concluded between them or by a court decision.

It is also worth mentioning that the Supreme Court in its practice highlights that the transfer of land rights is not automatic in every situation. For example, if the land plot belongs to state or municipal property, or if it was never properly allocated to the owner of the building, then the acquirer must apply to the competent authority to formalize the land right. In such cases, the principle of legal fate unity does not override the need for proper procedures, prescribed by law.

At the same time, Ukrainian legislation expressly stipulates that documents confirming the acquisition of ownership rights to real estate are by itself proper grounds for state registration of the transfer of ownership or use rights to a land plot to the acquirer. However, the real estate purchase and sale agreement must specify the cadastral number of the land plot to which the right is transferred.

If the real estate is located on a state-owned or municipally-owned land plot that is not in use, the acquirer is obliged within 30 days from the date of state registration of ownership of such an object, to apply to the relevant authority with a request to transfer the land plot to his ownership or use. It is assumed that the relevant authority is obliged to transfer the land plot to the acquirer.

In the situation, where the real estate object is located on a land plot provided for permanent use, the acquirer is obliged, within 30 days from the date of state registration of ownership, to apply to the relevant authority and request the transfer of the land to him for ownership or use, and the authority is obliged, no later than 30 days from the date of state registration of ownership, to terminate the right of permanent use of the land plot on which the real estate object is located and transfer it to the ownership or lease of the owner of the object.

In Ukraine, ownership of commercial real estate is usually carried out through several established legal structures that determine how ownership, control, and financing are organized. The most common structure is the use of a special purpose vehicle, which is typically incorporated as a limited liability company (tovarystvo z obmezhenoiu vidpovidalnistiu) or a joint-stock company (aktsionerne tovarystvo). In this model, the special purpose vehicle becomes the legal owner of the property, while beneficiaries/investors hold shares or participatory interests in the company. This structure is widely used because it provides a convenient mechanism for acquiring, managing, and financing real estate assets. It allows investors to transfer ownership indirectly (by selling or purchasing shares) without the need to re-register the real estate itself. It also limits liability to the assets of the special purpose vehicle, makes it easier to attract bank financing or additional investors.

A second common structure for commercial real estate ownership is the mutual investment institution, such as a mutual investment fund. These funds pool resources from multiple investors to acquire and manage portfolios of real estate or real estate related assets. The fund’s property is managed by an asset management company on behalf of the investors, and profits are distributed according to their units or shares. This form is popular among institutional and collective investors because it allows diversification and professional management, but it requires compliance with additional financial and regulatory standards.

Another possible structure is a joint-activity agreement, under which two or more parties agree to contribute money, property, or expertise toward developing or acquiring real estate without creating a separate legal entity. Such agreements are used for construction and development projects, where one party may provide land and the other provides capital or building expertise. While these arrangements can be flexible, they rely heavily on contractual terms.

At the same time, one of the simplest ways of commercial real estate ownership acquirement is the basic asset transaction. It means that the person directly purchasing the real estate itself and becoming the registered owner in the state register of proprietary rights. This provides full and direct control over the property, but usually entails higher transaction costs, including notarial certification, state fees, and the time required for registration. Additionally, a person may establish commercial real estate ownership structure for itself through share transactions. In a share transaction, the beneficiary purchases shares or participatory interests in the company that already owns the real estate, effectively taking over the property indirectly. This option is efficient because it avoids separate registration of ownership and may carry tax advantages.

Finally, each of these models offers different degrees of control, flexibility, and regulatory complexity. However, if investment agreements as a basis for direct registration of ownership may raise some practical uncertainties, special purpose vehicle and transaction models remain the most well-developed and reliable approaches for commercial real estate ownership in Ukraine.

General Overview

In Ukraine, legal due diligence is a standard and critical step when acquiring real estate. It aims to reveal potential legal, regulatory, and ownership risks that may impact the buyer’s ability to use, manage, or dispose of the asset. Typically, the review encompasses verification of ownership title, history of title transfers, legality of acquisition, the existence of encumbrances (mortgages, arrests, easements, lease rights, or pending litigation), and compliance of the transaction with Ukrainian law. Lawyers also review all available permits, corporate and contractual documents, and the chain of ownership to confirm that the seller’s title is valid and free from defects or third-party claims.

The due diligence process relies heavily on public registries, such as the State Register of Proprietary Rights to Immovable Property, the State Land Cadastre, and the Unified State Register of Court Decisions. The scope of review may differ depending on the type of property – land plot, residential property, or commercial real estate – but always includes verification of ownership rights, legal basis for construction, and compliance with zoning and urban planning rules.

Recognition by the Ukrainian Supreme Court:

“Moreover, today conducting a due diligence review of the subject of a transaction to identify potential risks is a common element of business practice. This procedure may be carried out across a wide range of criteria (general due diligence) or may include only some of them, for example, the legal aspects of a counterparty’s activities (legal due diligence), its financial condition (financial due diligence), etc. Within due diligence, the transaction is examined for compliance with legislation, constitutional documents, and other internal acts of the parties, and a comprehensive understanding of its subject matter is formed.” (Supreme Court, Resolution of 14 April 2025, Case No. 904/2465/21)

Land Plots

When acquiring a land plot, Ukrainian legal due diligence must pay special attention to the land’s designated purpose and functional use. The first is a category of land law, while the second falls under urban planning law. Ukraine still faces a well-known duality in the legal concept of “land designation”, as these two classifications are not always consistent. Although the government has attempted several times to unify them, discrepancies persist – often resulting in situations where the intended land use under land law does not correspond to its functional zoning under urban planning regulations, which in turn blocks the legal use or development of the plot.

The review also includes checking the availability and compliance of urban planning documentation – such as the Detailed Plan of Territory, Zoning Plan, General Plan, and Territorial Spatial Development Plan – since without these documents, practical use or development of the plot may be legally or technically impossible.

Moreover, lawyers verify whether water bodies are present on or adjacent to the land, as coastal protection strips and water protection zones impose strict use limitations. The presence of objects of cultural heritage is another crucial factor, as any use or development of such land in many cases requires prior approval from the Ministry of Culture or local authorities. Additionally, experts assess whether the land constitutes “particularly valuable lands” (e.g., historical, forest, or nature reserve areas). If such lands were unlawfully reallocated in the past, there exists a persistent risk of state reclamation at any time, regardless of how much time has passed since acquisition.

For large-scale agricultural or industrial holdings, the review extends to the spatial configuration of the plots – ensuring their contiguity and integrity, the absence of “checkerboard” issues where third-party plots fall within a contiguous land mass, and the lack of claims or boundary disputes from neighboring users.

Non-Residential Real Estate

For non-residential buildings, the legal due diligence process focuses on:

1. Title and construction documentation, including permits, project documentation, and certificates of commissioning;
2. Utility contracts (electricity, water, heat, gas, telecommunication supply, etc);
3. Court history of ownership, since in prior years property rights were frequently established by court decisions rather than through proper administrative registration.

A key aspect is verifying that the land use rights correspond to the building’s footprint. If the land beneath or around the building is not legally allocated to the owner of the building, construction or expansion will only be permissible within the geometric boundaries of the existing structure, effectively blocking any further development. Nevertheless, the owner will still be obligated to pay land tax, even without formal land rights.

In addition, lawyers are often responsible for identifying issues related to unauthorized construction, such as the absence of valid building permits, commissioning certificates, or inconsistency between the construction and the designated land use. Another frequent problem arises where structures presented as real estate are, in fact, temporary or movable constructions – the so-called MAFs ( mali arkhitekturni formy / small architectural forms). These kiosks, pavilions, or modular structures are not considered immovable property under Ukrainian law, even if they are formally registered in the State Register of Proprietary Rights. Such registration does not guarantee the legality of the object, and courts may still classify it as unauthorized construction, exposing the buyer to the risk of demolition or loss of ownership.

Residential Property

For residential real estate, due diligence must additionally cover personal and family law aspects. Lawyers verify whether any minors are registered (residing) at the property, as their registration severely restricts the sale or mortgage of the dwelling without explicit consent from the guardianship authority. The review also confirms the marital status of the owner, since property acquired during marriage may be subject to spousal joint ownership under Ukrainian law. All registration records of residents are checked to ensure there are no occupants whose rights would survive a transfer of ownership, such as children, incapacitated persons, or individuals with life-long residency rights.

While the Ukrainian real estate due diligence process is typically comprehensive, covering title, encumbrances, land rights, zoning, permits, and litigation risks, certain legal matters usually remain outside its standard scope unless specifically requested by the client or dictated by the transaction’s structure. These issues often relate to broader corporate, regulatory, or strategic risks that fall beyond the direct legal status of the property itself.

Corporate, Tax, and Financial Matters

Ordinary real estate due diligence in Ukraine focuses on the property and its legal status, rather than on the financial standing or tax compliance of the seller or project company. For example, verification of tax debts, transfer pricing issues, or hidden liabilities (e.g., unpaid VAT or corporate profit tax) is not typically included unless the transaction involves the acquisition of a legal entity owning the property (a share deal). Similarly, financial statements and accounting records are reviewed only within a financial due diligence, not a legal one.

An important exception applies in the case of land leases, where due diligence must include a review of proper rent payments. Under Ukrainian law, systematic non-payment or underpayment of rent constitutes a material breach of the lease agreement, which may serve as legal grounds for its early termination by the landowner, including by court order. Therefore, the payment history and compliance with lease terms are always verified as part of the legal due diligence of leased land.

Corporate matters such as internal shareholder disputes, cross-border corporate structures, or beneficial ownership chains are usually examined only when relevant to anti-money laundering or sanctions compliance. Otherwise, these fall within the scope of a separate corporate or compliance due diligence.

Environmental and Technical Risks

Legal due diligence in Ukraine does not automatically extend to a technical audit of the building’s physical condition or to environmental risks such as soil contamination, asbestos use, or waste management compliance. While lawyers often highlight potential red flags – e.g., proximity to protected natural zones or industrial sites – the actual evaluation of such risks requires engineering or environmental experts. Similarly, fire safety and energy efficiency assessments are outside the legal scope unless they directly affect the validity of construction permits or occupancy certificates.

Employment, Operational, and Contractual Liabilities

If the acquisition involves an operating asset – such as a shopping centre, logistics complex, or hotel –ordinary legal due diligence does not usually cover employment relationships, ongoing commercial contracts, or tenant arrangements beyond checking whether leases are properly registered and transferable. A more detailed review of labour documentation, collective agreements, or contractual liabilities is typically part of operational or commercial due diligence, conducted in parallel by specialized teams.

Public Law, Sanctions, and Political Risks

Ukrainian legal due diligence focuses primarily on private law risks. As such, public law and geopolitical factors – such as changes in land moratorium policies, expropriation risks in wartime, or potential sanctions exposure of affiliated persons – are not automatically within scope. These aspects are typically assessed separately through sanctions screening or political risk reviews, particularly in transactions involving foreign investors or counterparties from high-risk jurisdictions.

Personal and Family Law Issues (Residential Property)

For residential acquisitions, lawyers typically check registration of minors and marital consent, but they do not investigate deeper inheritance disputes, capacity of owners, or family property settlements, unless there are visible irregularities in title documents. These issues may require notarial or family law expertise, especially where the seller’s ownership arises from inheritance or gift agreements.

Caveat on information contained in state registers

Although Ukrainian legislation expressly provides that information contained in the state registers – including the State Register of Proprietary Rights to Immovable Property – is reliable, accurate, and publicly accessible, in practice the situation is far more complex.

Ukrainian judicial practice, while formally acknowledging the principle of good faith acquisition, applies it with significant reservations. The Commercial Cassation Court of the Supreme Court, in its resolution of 11 March 2025 in case No. 922/647/22, articulated the following position:

“A bona fide acquirer is not obliged to verify the history of the acquisition of real estate or to assess the legality of previous transfers of ownership, and may act in reliance upon such information, in the absence of circumstances which, from the point of view of a reasonable observer, could give rise to doubts as to the reliability of such information. A bona fide acquirer cannot be held liable for violations committed by other persons within procedures specifically designed to prevent fraud in real estate transactions. The construction whereby a bona fide acquirer loses such status contrary to the provisions of Article 388 of the Civil Code of Ukraine, and consequently loses the property and is forced to seek compensation for his losses, is unacceptable and imposes an individual and excessive burden on the bona fide acquirer.”

In theory, this precedent confirms that a buyer who relies on register data should be protected. However, in practice, the courts frequently treat the concept of the “reasonable observer” as a highly subjective and context-dependent category. For certain types of property – particularly land plots of the water fund, protected zones, or cultural heritage sites – the courts impose significantly higher standards of diligence on the buyer. Essentially, they expect the acquirer to personally inspect the land plot, assess its location and features, and identify any legal or physical red flags that would have been apparent to a prudent professional participant in the market.

As a result, although register data enjoy a statutory presumption of reliability, in practice this presumption is rebuttable. Courts may still find that the acquirer failed to act as a “reasonable observer,” thereby denying them the status of a bona fide purchaser. Consequently, legal due diligence in Ukraine must always include a retrospective review of the property’s ownership history – at least up to the start of the limitation period – to identify potential defects or irregularities that could later undermine the buyer’s title.

The transfer of real estate in Ukraine follows a strictly formalized, notarial, and registry-based process designed to ensure transparency and legal certainty in property transactions.

Transaction Procedure

A typical transfer of real estate begins with the pre-contractual stage, during which the buyer conducts due diligence and the parties negotiate the key commercial terms – the subject of sale, price, payment procedure, and timing of transfer. Once agreed, the parties execute a written sale and purchase agreement, which under Ukrainian law must be certified by a notary to be valid.

Notarization is mandatory for all transfers of ownership rights over immovable property, including land, buildings, apartments, and commercial premises. However, there is an exception set out in Part 2 of Article 793 of the Civil Code of Ukraine, which provides that:

“A lease agreement for a building or other capital structure (or part thereof) for a term of three years or more is subject to notarization, except for agreements concerning state or communal property, which are subject to notarization only if concluded for a term exceeding five years.”

A similar rule applies to state registration: such long-term leases must also be entered into the State Register of Proprietary Rights, while shorter leases are recorded only upon the parties’ request.

At the notarial stage, the notary performs mandatory checks, including:

1. verification of the seller’s ownership rights and any encumbrances or arrests recorded in the State Register of Proprietary Rights to Immovable Property;
2. verification of parties’ identities and authority, including powers of attorney;
3. review of tax, anti-money laundering (AML), and sanctions compliance.

The notary acts as a primary subject of financial monitoring under Ukrainian AML legislation and is therefore obliged to verify the source of funds, conduct client identification, and report suspicious transactions to the competent authorities.

In practice, during extended register searches, notaries sometimes identify “hidden” or outdated encumbrances – for instance, arrest orders or court-imposed restrictions that were not visible in the initial summary extract. Such findings may lead to the temporary suspension of the transaction until confirmation of their removal arrives (often in the form of a court ruling or an official notification from the enforcement service).

It is also common for certain properties not to appear in the state register at all, particularly buildings constructed before 2003, when the unified register system was introduced. In such cases, before any sale or transfer can occur, the property must first be formally entered into the register – that is, ownership must be recognized and registered – so that it can legally participate in civil circulation.

Transfer of Ownership and Passing of Risk

Ownership of real estate in Ukraine passes only upon registration of the buyer’s title in the State Register of Proprietary Rights – the so-called “book ownership” (“knyzhkove volodinnia”) principle. The moment of registration is thus the key legal point at which the buyer becomes the lawful owner.

The Civil Code of Ukraine distinguishes between two related rules governing risk:

1. Article 323: “The risk of accidental destruction or accidental damage (spoilage) of property shall be borne by its owner, unless otherwise provided by the contract or by law.”
2. Article 668: “The risk of accidental destruction or accidental damage of goods passes to the buyer from the moment of transfer to him, unless otherwise provided by the contract or by law.”

Since the transfer of immovable property occurs upon registration of ownership, it is precisely at this moment that the risk of accidental destruction or damage passes to the buyer. From that point onward, the buyer bears all risks associated with the property, including maintenance costs, insurance obligations, and potential tax liabilities.

While the parties may contractually agree to different interim arrangements (for example, in case of deferred payment or handover), such provisions affect only their internal relationship and do not alter the legal moment of ownership transfer, which remains tied to state registration.

In Ukraine, real estate transfers can be structured either as direct asset transfers or as share transfers, and both models are widely used depending on the commercial, tax, and regulatory context of the transaction. However, while asset transfers remain the traditional and most transparent approach, share transfers (i.e., the sale of a company that owns the real estate) are increasingly common in medium and large-scale projects, especially those involving investment or development assets.

Asset Transfers

The asset transfer structure – a direct sale and purchase of real estate – is the standard form for most transactions involving private individuals, small businesses, and straightforward property ownership. The transaction requires notarization and state registration of the buyer’s title in the State Register of Proprietary Rights to Immovable Property, after which ownership passes to the buyer. This model provides maximum legal transparency, as the buyer acquires the property directly and eliminates any legacy corporate or financial risks of the seller.

However, it is also subject to higher taxation and procedural formality. The transaction may trigger land tax reassessment, VAT implications (in case of commercial property or developers), and state duties. For this reason, asset transfers are often preferred for smaller or one-off transactions, while more complex investment structures typically use share deals.

Share Transfers

In a share transfer (also called a corporate transfer), the buyer acquires the ownership of the legal entity (usually a limited liability company or joint-stock company) that holds title to the property. In this model, the property itself remains registered in the company’s name, while control over it changes through the acquisition of corporate rights.

This structure is commonly used in real estate investment, development, and M&A transactions, particularly for:

• Office centers, logistics hubs, and industrial parks, where multiple assets are owned through a single corporate vehicle;
• Hotel, retail, and residential development projects, where the property is part of an ongoing business;
• Foreign investment structures, where buyers prefer to acquire shares in a special purpose vehicle (SPV) incorporated in Ukraine or abroad.

The advantages of a share transfer include:

1. Simplified transfer mechanics – no notarization or re-registration of property rights is required, since the property owner remains unchanged;
2. Potential tax efficiency, as the transaction may fall outside the scope of VAT and real estate transfer duties;
3. Continuity of contracts and permits, which remain valid since the legal entity is the same.

However, share transfers carry greater legal and due diligence risks, as the buyer inherits all liabilities of the target company – including tax arrears, environmental obligations, and potential litigation. Therefore, a share deal in Ukraine typically involves a comprehensive due diligence review covering corporate, financial, tax, and compliance matters, often supported by representations, warranties, and indemnities in the share purchase agreement.

Under Ukrainian law, when ownership of land or another immovable property passes to a new owner, the benefit and burden of existing occupational leases automatically transfer to the buyer, unless otherwise agreed. This rule applies equally to rights of use and lease income, which follow the ownership of the underlying asset as a matter of law.

Statutory Basis

The general principle derives from Article 770 of the Civil Code of Ukraine, which provides that:

“In the event of a change in ownership of the leased property, the rights and obligations of the lessor under the lease agreement pass to the new owner.”

The parties may, however, stipulate in the lease that the contract will terminate upon the transfer of ownership – though such clauses are rare in commercial practice.

This concept is reinforced by the “right of following” (pravo sliduvannia) recognised by the Supreme Court. In its Resolution of 18 October 2024 in case No. 190/130/22 (proceeding No. 61-8337св24), the Court confirmed that:

“In lease relations, the lessee has the right to absolute protection from third-party interference with the leased property, and to preservation of the lease’s validity upon transfer of ownership of the leased property to another person (the right of following).”

Thus, leases and other proprietary rights linked to immovable property “follow” the property upon its transfer, ensuring continuity of use and legal protection for the tenant.

Transfer of Rent and the Creditor’s Rights

While Article 770 of the Civil Code of Ukraine establishes that upon transfer of ownership the rights and obligations of the lessor automatically pass to the new owner, the mechanism of transferring monetary claims (including rent arrears) is clarified by Article 514 of the Civil Code of Ukraine, which provides that:

“To the new creditor pass the rights of the original creditor in the obligation to the extent and under the conditions that existed at the moment of transfer of these rights, unless otherwise provided by the contract or by law.”

Accordingly, all rights of the previous landlord, including the right to claim outstanding rent or other payments under the lease, transfer to the new owner together with the property. This ensures the continuity of obligations and prevents the situation where a lease relationship would “freeze” at the moment of transfer. The new owner therefore has the full right to:

• demand payment of rent accrued both before and after the transfer of ownership;
• enforce all contractual obligations of the tenant, including remedies for improper use of the property, late payment, or other breaches; and
• terminate the lease on the grounds provided in the original agreement or by law.

The previous landlord ceases to be a party to the lease once the ownership is transferred, and all corresponding rights and obligations vest in the new owner by operation of law.

Registration and Enforceability of Leases

Under Article 793(2) of the Civil Code of Ukraine, a lease of a building or other capital structure (or part thereof) for a term of three years or more must be notarized and registered in the State Register of Proprietary Rights to Immovable Property. The same rule applies to leases of state or communal property exceeding five years.

However, the “right of following” under Article 770 CCU applies to all leases, regardless of whether they are registered. This means that even short-term or unregistered leases remain binding upon the new owner, who assumes the role of the lessor by law. Registration enhances publicity and third-party enforceability but is not a prerequisite for the continuation of the lease relationship in the event of ownership transfer.

This approach has been expressly confirmed by the Supreme Court, which in its Resolution of 7 June 2022 in case No. 727/13110/18 (proceeding No. 61-7323св21) held that:

“According to Article 770 of the Civil Code of Ukraine, in the event of a change in ownership of a leased item, the rights and obligations of the lessor pass to the new owner. Considering that the fact of violation of the lessee’s right to possess and use the leased property from 24 November 2018 (during the term of the lease agreement) was established by the courts of previous instances and was not disputed by the new owner, the court of first instance reasonably concluded that, as of 24 November 2018, performance of the lease agreement dated 1 January 2008 was unlawfully suspended by the new owner, thereby violating the lessee’s right to use the leased property.”

Thus, the Supreme Court reaffirmed that the new owner inherits not only the formal title but also all contractual and legal obligations of the former lessor, and cannot unilaterally suspend or terminate the lease simply because ownership has changed. This judgment reinforces the principle that the right of following applies universally to lease relationships in Ukraine, ensuring continuity and protection of tenants’ rights even in the absence of lease registration.

Therefore, in legal due diligence, the buyer should verify not only registered leases but also actual possession and use of the property by tenants, since unregistered lease agreements may continue to operate validly and bind the purchaser under the “right of following.”

Ukrainian law recognizes a wide range of rights, interests, and encumbrances (burdens) that can exist over real estate, including both ownership rights and proprietary rights derived from ownership. These rights may belong to owners, users, tenants, lenders, or the state, and are generally protected through state registration in the State Register of Proprietary Rights to Immovable Property and Their Encumbrances, which provides publicity and legal certainty.

Ownership Rights and Derived Proprietary Rights

The main legal framework is set out in Article 4(1) of the Law of Ukraine “On State Registration of Proprietary Rights to Immovable Property and Their Encumbrances.”

Under this provision, the following proprietary rights derived from ownership may be registered and thus protected against third parties:

• Right of use (servitude);
• Right of agricultural use of land (emphyteusis);
• Right to develop land (superficies);
• Right of economic management;
• Right of operational management;
• Right of permanent use and the right of lease (sublease) of land plots;
• Right of use (lease) of a building or other capital structure (or its part) arising from a lease concluded for a term of not less than three years;
• Right of trust ownership over immovable property, unfinished construction, or future real estate;
• Usufruct of state or communal property;
• Right of administration of state property;
• other proprietary rights provided by law.

All of these rights are real (in rem) rights, meaning they are effective erga omnes – they follow the property and remain binding on any subsequent owner (the “right of following”).

It is also important to note that certain older proprietary rights – specifically, the right of economic management (hospodarske vidannia) and the right of operational management (operatyvne upravlinnia) – are in the process of phasing out. These rights were creations of the Soviet-style dual ownership system, preserved in the Economic Code of Ukraine (2003), which allowed state and communal enterprises to possess and use property without owning it outright.

With the planned repeal of the Economic Code of Ukraine, these rights will cease to exist except during a transitional period, during which existing enterprises may continue to operate under them until new legislation comes into effect. They will be gradually replaced by modern proprietary rights, including usufruct – a civil law concept already recognized under the Law on State Registration of Proprietary Rights as a derivative real right allowing a person to use and derive income from another’s property while preserving its substance.

The introduction of usufruct aims to harmonize Ukrainian property law with European civil law systems, replacing outdated economic and operational management models with clearer, private-law-based mechanisms that align ownership, use, and responsibility within a unified system of real rights.

Lease and Sublease Rights

Lease and sublease rights are the most widespread rights over real estate in Ukraine. Leases for a term of three years or more (and subleases of similar duration) must be notarized and registered to have binding effect on third parties.

However, even short-term or unregistered leases are protected under Article 770 of the Civil Code of Ukraine, as they automatically transfer to the new owner upon sale of the property. This was confirmed by the Supreme Court (Resolution of 7 June 2022, Case No. 727/13110/18, Proceeding No. 61-7323св21), which held that new owners cannot suspend or terminate existing leases merely due to change of ownership, reaffirming the universal applicability of the right of following.

Easements, Emphyteusis, and Superficies

Another three traditional derived rights under Ukrainian civil and land law are:

1. Easement (servitude) – a limited right of one landowner or user to use another’s land for a specific purpose (e.g., passage, utilities, access to water, or maintenance). Servitudes can be permanent or temporary, and once registered, they are binding on all future owners of the servient land.
2. Emphyteusis – the right to use another’s land for agricultural purposes. This right is often long-term and can be transferred, inherited, or mortgaged, provided it is registered.
3. Superficies – the right to use another’s land for construction or development. It allows a person to own buildings or structures erected on land that belongs to someone else (for instance, municipal or state land).

These rights are common in agricultural, infrastructure, and development projects, providing long-term use without transferring ownership of the underlying land.

Security Interests: Mortgages and Pledges

Real estate may also be subject to mortgage rights, which serve as security for the performance of financial obligations, typically under loan agreements. Mortgages are governed by the Law of Ukraine “On Mortgage” and must be notarized and registered in the State Register to be enforceable.

The mortgagee (creditor) has the right to foreclose on the property in case of default, either through court proceedings, notarial writs of execution, or out-of-court agreements. The existence of a registered mortgage restricts the owner’s ability to sell or otherwise dispose of the property without the mortgagee’s consent.

Similarly, trust ownership may be used as a modern security instrument, where title is temporarily transferred to a trustee to secure performance of obligations.

This concept was introduced into Ukrainian law relatively recently – with the adoption of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Stimulation of Investment Activity” in 2019, which amended the Civil Code of Ukraine to add trust ownership as a distinct legal mechanism. It was intended to bring Ukrainian practice closer to common law trust-based structures and modern security instruments used in international finance.

However, in practice, trust ownership has not become a widespread or reliable tool. There are several reasons for this:

1. Conceptual ambiguity. It is not fully clear whether trust ownership constitutes a form of ownership (with full proprietary powers) or merely a security right similar to a mortgage. The Civil Code treats it as a proprietary right, but at the same time, it functions economically as collateral. This duality creates uncertainty regarding the rights of the trustee versus the beneficiary and the mechanisms for returning property after obligations are fulfilled.
2. Lack of judicial and notarial practice. Because the concept is new and rarely applied, there is very limited court jurisprudence or registration practice, making enforcement unpredictable.
3. Overlap with existing instruments. Ukrainian law already provides well-developed mechanisms for securing obligations through mortgages, pledges, and financial sureties, which are more familiar and tested in courts and among lenders. As a result, most transactions continue to rely on traditional security tools rather than trust ownership.

Thus, while trust ownership was intended to provide flexibility and legal innovation, in practice it remains largely theoretical, used only in a small number of pilot or high-structure transactions, particularly in financial or corporate settings.

Public Law Restrictions and Burdens

Certain public law encumbrances also attach to real estate by virtue of law, including:

• Protective zones (for utilities, transport, energy, and communications infrastructure);
• Coastal protection strips and water protection zones;
• Cultural heritage zones, where use and development require prior approval from the Ministry of Culture;
• Land use zoning and planning restrictions, established under the Law of Ukraine “On Regulation of Urban Development Activities.”

Although not contractual in nature, these restrictions are legally binding and must be disclosed and observed in all real estate transactions. Some may also be reflected in cadastral data or urban planning documentation.

Protection and Enforcement

All holders of real rights, including those derived from ownership (servitudes, leases, emphyteusis, superficies, and others), enjoy the same level of protection under Article 396 of the Civil Code of Ukraine, which provides that:

“A person who has a proprietary right over another’s property has the right to protect this right, including against the owner of the property, in accordance with the provisions of Chapter 29 of this Code.”

This means that even non-owners, such as tenants, superficiaries, or mortgagees, can defend their rights against the owner and any third parties who interfere with lawful possession or use.

The key legal remedies available under Chapter 29 of the Civil Code include:

1. Vindicatory claim – for recovery of property from unlawful possession.
2. Negatory claim – for elimination of obstacles to the use or enjoyment of property without deprivation of possession.
3. Declaratory claim – for recognition of an existing right, such as ownership or another real right, often used to correct registration errors or confirm lawful possession.

These remedies provide comprehensive judicial protection to any holder of a real (in rem) right, ensuring that all proprietary interests – including those derived from ownership – are defensible both against third parties and even the owner, reinforcing the robustness of Ukraine’s property rights system.

Ukraine does not recognise the classical split between legal and beneficial ownership typical of common law trust structures. The Ukrainian legal system is based on continental (civil law) principles, which operate on the concept of a single, unified ownership right. Under Ukrainian law, ownership encompasses three inseparable elements – possession, use, and disposal – and these cannot be divided between different persons in the way common law allows for legal and equitable ownership.

Absence of Trust and Beneficial Ownership Concepts

Ukrainian civil law does not provide for trusts or beneficial interests as recognized in English or other common law jurisdictions. There is no legal mechanism by which one person (a trustee) can hold legal title to real estate for the benefit of another (a beneficiary). All property rights must be based on a direct legal title, and any relationship of control or benefit between parties is typically established through contractual arrangements, such as:

• Agency agreements or fiduciary mandates, where one person manages property on behalf of another;
• Management agreements, regulated by the Civil Code of Ukraine (Articles 1029–1045), under which a manager may act in the interests of the owner but without acquiring ownership;
• Joint activity agreements or corporate holding structures, which allocate economic benefits through shareholding rather than property rights.

These instruments can mimic some features of trust arrangements, but they do not create a bifurcation between legal and beneficial title.

“Trust Ownership”: a Limited Approximation

Since 2019, Ukrainian law formally recognizes trust ownership (dovircha vlasnist) – introduced as a potential security and management mechanism – but it is not equivalent to common law trust ownership. In this structure, ownership of property may be transferred to a “trustee” (e.g., a creditor or manager) for a specific purpose, such as securing an obligation. However, it remains a type of real ownership right, not a separate equitable interest.

“Trust ownership” in Ukraine functions less as a form of dual ownership and more as a mechanism of securing obligations – essentially, a mortgage with temporary title transfer.

In this model, the creditor (trustee) formally acquires ownership of the property, but only for the duration of the secured obligation and solely for the purpose of ensuring its repayment or performance. Once the obligation is fulfilled, ownership must be returned to the debtor (the original owner). This makes trust ownership economically and functionally similar to a mortgage, but with the additional feature of title transfer, rather than a mere encumbrance.

Because of this structure, many scholars and practitioners view trust ownership not as a true “trust” in the common law sense, but rather as a security instrument with an absolute transfer of legal title and a fiduciary duty to reconvey. Its hybrid nature – part ownership, part collateral – explains why the instrument has seen limited use: it introduces complex issues of ownership re-transfer, enforcement, and third-party protection, which Ukrainian civil law and registration systems are not yet fully equipped to handle.

In sum, trust ownership remains largely undeveloped:

1. It lacks clear differentiation between ownership and security functions.
2. There is no established judicial or notarial practice confirming how beneficial interests would be protected or restored.
3. It is unclear how it interacts with insolvency, creditors’ claims, and registration systems.

Thus, while Ukrainian law has introduced terminology resembling “trust ownership,” it does not amount to a true split between legal and beneficial title as understood in common law.

Beneficial Ownership for AML Purposes

Ukraine does recognize the concept of a “beneficial owner” (kintsevyi benefitsiarnyi vlasnyk) in the context of anti-money laundering (AML) and corporate transparency regulations. This concept, however, is regulatory, not proprietary. It identifies the natural person who ultimately controls or benefits from a legal entity, but it does not create any ownership or property rights in real estate or other assets.

Public disclosure of ultimate beneficial owners (UBOs) is required under Ukrainian law, though not specifically tied to individual real estate assets. Instead, the obligation applies to legal entities that own or control real estate. In other words, when a company holds real property in Ukraine, information about its ultimate beneficial owners must be disclosed and kept up to date in public state registers, ensuring transparency of ownership and control.

Legal Framework

The disclosure obligation arises from the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction” (the AML Law), and from the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Formations.”

Under these laws:

1. Every Ukrainian legal entity is required to identify, record, and disclose its ultimate beneficial owner(s) (UBOs) – i.e., the natural person(s) who ultimately own or control the entity, directly or indirectly;
2. This information is filed with the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations, which is publicly accessible online;
3. UBO data includes the full name, citizenship, country of residence, type and extent of control or ownership, and may also reference foreign holding chains if the controlling entity is abroad.

The information must be updated annually and promptly corrected in case of any change of ownership or control.

Application to Real Estate Ownership

Because Ukrainian real estate registers record only the direct legal owner, they do not contain UBO data themselves. However, if the owner is a company, the notary or registrar handling a real estate transaction is legally obliged to verify the company’s UBO information in the Unified State Register before proceeding with the transaction.

This means that while individual UBO data is not displayed in the property register, it is publicly available through the corporate register and effectively becomes part of the disclosure process for real estate ownership. Notaries, banks, and other professional intermediaries must also conduct their own AML due diligence to confirm that the UBO information is accurate and current.

The Tax Code of Ukraine (TCU) regulates relations arising in the sphere of collecting taxes and fees, establishing an exhaustive list of taxes and fees collected in Ukraine and determining the procedure for their administration. Real estate operations – both ownership and transfer (alienation) – are subject to various taxes, categorised as either local (ownership) or national (income/profit and VAT).

i. Taxes associated with real estate ownership fall under the category of Property Tax, which is established by local councils as a local tax.

The primary taxes levied on property ownership are:

1. Tax on Immovable Property other than a Land Plot:

   Payers: Physical and legal entities, including non-residents, who are owners of residential and/or non-residential real estate objects;
   Tax Base: Determined based on the total area of each separate taxation object.

2. Land Tax:
   This is a mandatory payment that constitutes a component of the Property Tax. Local councils are obligated to establish Land Payment.

Forms:

• Land Tax: Paid by owners of land plots and land shares (parcels), as well as permanent land users of state and communal land.
• Lease Payment: Mandatory payment for the use of state or communal land plots under lease agreements.
• Objects of Taxation: Land plots and land shares (parcels) that are privately owned, as well as state and communal land plots held under the right of permanent use or lease.

ii. Taxation Upon Real Estate Transfer by Individuals

Income received by individuals from the sale (alienation) of real estate is considered income with a source of origin in Ukraine. This income is subject to the Personal Income Tax.

Exemption and Taxable Rates

0% Rate (Exemption): Income derived from the sale (exchange) of one residential building, apartment, or part thereof, including the accompanying land plot, is not subject to taxation.

Conditions: The property must have been owned by the taxpayer for more than three years, unless the property was received as an inheritance (in which case the three-year rule does not apply). This exemption is available only once during the reporting tax year.

Taxable Rates for Residents:

Income from the sale of the second real estate object during the reporting year is taxed at the rate of 5%.

Income from the sale of the third and subsequent real estate objects (other than inherited ones) and income from the sale of an undivided object of unfinished construction is taxed at the rate of 18%.

Tax Base and Agent Duties

Tax Base: The taxable income is determined based on the price specified in the contract, but it must not be lower than the appraised value of the object.

Tax Agent Role: If a legal entity or a self-employed person is a party to the contract of sale, exchange, or other alienation, that entity is considered the tax agent responsible for calculating, withholding, and remitting the PIT to the budget.

iii. Taxation Upon Real Estate Transfer by Legal Entities

Legal entities are subject primarily to Corporate Income Tax (CIT) and Value Added Tax (VAT) upon alienation of real estate.

1. Corporate Income Tax (CIT)
   Tax Base: The profit from the alienation of real estate is included in the financial result before taxation, which is the object of CIT.
   Adjustments for Non-Production Assets: If a legal entity sells or liquidates a non-production fixed asset (e.g., non-residential property), the financial result for taxation must be increased by the residual value of that asset, as determined by accounting standards.
   Transfer Pricing (Controlled Operations): If the transaction is a controlled operation (e.g., with related non-residents), the financial result must be increased by the amount by which the price determined by the “arm’s length principle” exceeds the contractual value of the goods (works, services) sold.
2. Value Added Tax (VAT)
   General Rule: The supply of goods, including real estate, is generally subject to VAT at a rate of 20%.
   Exemption for Housing: Operations involving the supply of residential real estate or objects of unfinished residential construction are exempt from VAT, except for the first supply of such objects.
   Land: Supply (sale) of land plots and land shares is generally exempt from taxation, except for those located under real estate objects and included in their cost.

iv. Special Rules for Non-Residents

Income received by non-residents from sources originating in Ukraine is subject to taxation. This explicitly includes income from the sale of real estate objects located in Ukraine.

Non-Resident Individuals (PIT Rates)

Income derived by non-resident individuals from the sale (exchange) of real estate is taxed according to the rules established for residents, but at the general rate of 18%.

Non-Resident Legal Entities (WHT Rates)

Taxation at Source (WHT/Repatriation Tax): Income received by non-resident legal entities from the sale or alienation of real estate objects is subject to taxation.
Rate: Such income is generally subject to a withholding tax rate of 15% of the income amount (at the expense of such income).
Tax Agent: A resident entity (legal or self-employed) that pays income to a non-resident acts as the tax agent.
Permanent Establishment (PP): If a non-resident conducts activities through a Permanent Establishment (PP) in Ukraine, the profits of the PP are taxed in the general manner. The PP’s profit must be calculated according to the “arm’s length principle”.

International Agreements (Treaties)

If an International Treaty of Ukraine provides rules different from those stipulated by the TCU (e.g., concerning tax relief or exemption), the rules of the international treaty apply.

To benefit from reduced rates or exemptions under a treaty, the non-resident must be the beneficial (actual) owner of the income and must provide a document confirming their tax residency status in the treaty country.

Non-Creditable Foreign Taxes: Taxes paid abroad on capital (capital gains) or property taxes are not credited against the annual tax liability in Ukraine.

The legal foundation for commercial leasing is established in the Civil Code, where a lease agreement (najm or orenda) is defined by several fundamental, characteristic features.

A lease agreement is a transaction under which the lessor (landlord) transfers or undertakes to transfer property to the lessee (tenant) for possession and use for a fee over a specified period.

While the general civil legislation is founded on the fundamental principle of freedom of contract, allowing parties to regulate their relations at their own discretion and even deviate from civil legislation acts, this freedom is subject to strict regulatory controls regarding mandatory provisions, particularly those concerning essential terms of the contract.

Essential Terms of the Contract:

• Subject Matter: The subject of a lease must be an item defined by individual characteristics. Legislation may specify certain types of property that cannot be leased. Furthermore, an enterprise (or part of it) regarded as a unified property complex may be an object of a lease.
• Term: The lease agreement is concluded for a defined term. If the lease term is not specified, the agreement shall be deemed concluded for an indefinite period and may be terminated by either party with three months’ prior written notice.
• Rent/Fee (Plata): The agreement must stipulate a payment. If the fee is not specified, it is set based on the item’s quality and other relevant factors. Unless otherwise specified in the agreement, the lessee is obligated to pay rent for the use of the property on a monthly basis.
• Ancillary Property Rights (Buildings): When leasing a building or other capital structure, the lessee is simultaneously granted the right to use the underlying land plot, including adjacent land, to the extent necessary to achieve the purpose of the lease. If the size of the land plot is not defined in the contract, the lessee is granted the right to use the entire land plot owned by the lessor.

Operation and Maintenance Terms:

• Maintenance and Repair: The lessee is obligated to maintain and use the property in accordance with its purpose and the terms of the agreement. If the lessee uses the property contrary to its purpose or the contract terms, the lessor has the right to demand termination and compensation for damages. The lessee may only change the condition of the leased property with the lessor’s consent.
• Improvements: If the lessee makes improvements to the leased item with the lessor’s consent, the lessee has the right to either reimbursement of the necessary expenses or offsetting those expenses against the rent payments. If improvements are made without consent and cannot be separated without damage, the lessee is not entitled to reimbursement.

Mandatory Legal Requirements:

• Form and Registration (Real Estate): A lease agreement for a building or other capital structure must be made in writing. A lease agreement for a building or other capital structure (or a part of it) for a term of three years or more is subject to notarisation, except for agreements concerning state or municipal property, which require notarisation if the term exceeds five years.
  The right to use immovable property transferred under a lease agreement for a term of three years or more is subject to mandatory state registration.
• Lease of Public Assets: Special features concerning the lease of state and communal property are established by the Law of Ukraine “On Lease of State and Communal Property”. These leases often include specific procedures for conclusion, such as those governed by electronic auctions (public tenders), especially regarding assets of economic entities where the state or communal entity holds a majority stake.
• Land Lease Specifics: Leasing a land plot is governed by specific laws, including the Law of Ukraine “On Land Lease,” which regulates the transfer of land for paid possession and use for a specified term. In essence, while parties to a commercial lease enjoy broad autonomy in setting terms (such as rent adjustments, maintenance obligations, and specific property use), they must ensure that key elements are included — such as the lease object (cadastral number, location, and size of the land plot); the date of conclusion and duration of the lease agreement; the rental fee, specifying its amount, indexation, calculation method and conditions, payment terms, and procedures for revision and liabilities for non-payment.

In Ukraine in the situation, when a tenant breaches a commercial lease a landlord has several commonly-available remedies. Some of these remedies could be enforced directly through the legislative clauses, while others must be enforced through contractual terms and sometimes require litigation. Below are the main remedies and how they typically shall be applied.

Primarily, the landlord may terminate the lease earlier. However, it is necessary to distinguish between extrajudicial and judicial forms of protection. The extrajudicial form of protection means that the landlord has the right to withdraw from the lease agreement and demand the return of the property if the tenant fails to pay the rent for three consecutive months. Thus, the law expressly states that if the landlord withdraws from the lease agreement, the agreement is terminated from the moment the tenant receives the landlord’s notice of termination.

Meanwhile, a rather different mechanism is envisaged for the following situations: 1) the tenant possesses and/or uses the property contrary to the agreement or the purpose of the property; 2) the tenant has transferred the property to the possession and/or use of another person without the landlord’s permission; 3) tenant’s negligent behaviour creates a threat of damage to the item; 4) has not commenced major repairs of the item, if the obligation to carry out major repairs was imposed on the lessee. The landlord has the right not to withdraw from the lease agreement, but to demand its termination. This does not result in automatic termination of the agreement, and therefore means that in the vast majority of cases, further legal action will be required to terminate the agreement and effectively protect the violated rights.

Speaking more broadly about extrajudicial forms of protection, the Civil Code of Ukraine provides for the right of individuals to defend their civil rights against unlawful encroachments. In domestic private law, self-defense is understood to mean the use by an individual of countermeasures that are not prohibited by law and do not contradict the moral principles of society. Article 1169 of the Civil Code establishes the limits of the exercise of the right to self-defense of civil rights: damage caused by a person in exercising their right to self-defense against unlawful encroachments, including in a state of necessary defense, if the limits of such defense were not exceeded, shall not be compensated. If, in exercising the right to self-defense, a person causes damage to another person, this damage shall be compensated by the person who caused it. If such damage is caused by means of self-defense that are not prohibited by law and do not contradict the moral principles of society, it shall be compensated by the person who committed the unlawful act.

Thus, the actions of a person who has violated the limits of self-defense of civil rights can be considered unlawful self-help. Unlawful self-help is a violation of the legal order in the resolution of certain cases and is a manifestation of personal arbitrariness. Unlawful self-help always takes the form of active actions that are carried out in violation of the law but outwardly resemble self-defense. In the case of unlawful self-help, there is a presumption of legality, according to which a person’s actions are considered lawful until they are challenged. In general, this means that landlords in Ukraine are advised to include additional contractual terms in real estate lease agreements that will further protect them from unlawful actions by tenants, but at the same time will be formulated in a way that does not restrict the rights of tenants.

Once the lease is terminated, the landlord can reclaim possession of the premises. At this stage, it may happen that the landlord will not be able to independently restore effective possession. In such a scenario the landlord is recommended to seek judicial enforcement to recover possession of the property. The Grand Chamber of the Supreme Court in decision of 16 July 2025 in case No. 910/2389/23 (proceedings No. 12-14гс25) noted that the existence of contractual legal relations regarding the disputed real estate (which was a land plot in this case) makes it impossible to return it by filing a negatory action with the court. Negatory action should be understood as a claim by the owner of an item to remove obstacles to its use and disposal. Thus, the owner seeking such protection retains real possession of the property and demands that the defendant cease unlawful actions against their property that are not related to a violation of possession.

In many cases, property and contractual legal relationships overlap to some extent. However, it is almost always possible to determine which particular rights, namely existing in property or contractual legal relationships, are being violated. In the case of contractual legal relations, the violation may be committed by the other party to the lease agreement. This applies to various actions with and on the leased real estate, including construction on the land plot. Therefore, all actions of the tenant as a party to the lease agreement that may be carried out with the land plot are fully and completely covered by contractual legal relations. It means that the protection of the landlord’s rights can only be carried out through a contractual claim. So, in the event of the termination of the real estate lease and the tenant’s failure to fulfill its obligation to return the land plot, the appropriate and effective means of protecting the landlord’s violated rights is the tenant’s obligation to return the land plot that was the subject of this agreement.

Additionally, if the tenant uses the premises contrary to the agreed commercial lease, or fails to maintain or repair the real estate as required under the lease, the landlord may also demand:

• restoration of the premises to the required condition;
• payment of compensation for deterioration or damage;
• performance of necessary works at the tenant’s expense if so agreed in the lease.

As commercial leases are contractual relations, they may include contractual mechanisms that protect landlords against potential tenant defaults. A security deposit is the most typical form of financial security in commercial leases. It is an amount that the tenant pays to the landlord at the start of the lease, usually equal from one to three months’ rent. Its main purpose is to secure the tenant’s performance of key obligations: timely payment of lease and operating charges; maintaining the real estate in good condition; proper return of the real estate at lease expiry; compensation for any damage caused by the tenant.

At the same time, from the perspective of Ukrainian civil law, a guarantee payment may be considered as a deposit or collateral. If a commercial real estate lease agreement stipulates that the security deposit is credited toward rent payments and serves as security for those payments, then it is a deposit for rental services. If the tenant breaches its obligations under the lease agreement, the deposit remains with the landlord as a penalty.

If the guarantee payment secures claims that may arise in the future, it is a collateral by its legal nature. As collateral, the guarantee payment will be credited upon the occurrence of the event for which it was provided. For example, if losses occur, it will be credited toward their compensation to the landlord. If the event does not occur, such a guarantee payment must be returned to the commercial real estate tenant.

Finally, Ukrainian legislation expressly provides that if the tenant fails to fulfill their obligation to return the property, the landlord has the right to demand that the tenant pay a penalty in the amount of double the rent for the period of delay. This remedy for ensuring the fulfillment of obligations and additional financial burden is generally a fairly effective tool in practice.

The regulation of real estate use, planning, and zoning constitutes a fundamental aspect of public control over spatial development. Globally, these regulatory structures – often referred to as Spatial Governance and Planning Systems (SGPSs) – define how land rights are exercised in balance with public interests.

i. Conceptual Framework: Spatial Governance and Planning Systems

SGPSs are institutional mechanisms through which public authorities guide and control spatial transformation. In Europe, these systems differ depending on how development rights are managed and whether the state or the market primarily drives change. Scholars identify three general models: the conformative model, where land use is strictly regulated by binding plans and private development must comply with state-determined rules; the performative model, which relies on flexible, discretionary planning with case-by-case decisions; and the neo-performative model, which blends binding zoning with negotiated flexibility, granting rights only after specific projects are assessed. The degree of public control over space thus depends on how each system allocates development rights. Ukraine follows a conformative, top-down model, though market forces increasingly shape its evolution.

ii. Regulatory Mechanisms in the Ukrainian Context

Ukrainian real estate regulation relies on codified law (Land, Water and Civil Codes) and several key statutes governing urban planning, land management, environmental protection, and cultural heritage preservation.

Foundational Legal Constraints

Property rights in Ukraine are constitutionally protected but subject to explicit constraints when necessary to preserve cultural heritage or prevent environmental harm. The Land Code serves as the primary legal instrument for regulating land use, categorising all land based on its intended purpose. This categorisation determines permissible uses and defines environmental or cultural protection regimes applicable to each land type.

Land Categories and Zoning

Ukrainian land is classified by intended purpose into nine main categories:

1. Agricultural lands;
2. Residential and public development lands;
3. Nature reserve and other environmental protection lands;
4. Lands for health improvement;
5. Recreational lands;
6. Lands for historical and cultural purposes;
7. Forestry lands;
8. Water fund lands; and
9. Industrial, transport, communications, energy, defence, and other lands.

These categories form the legal foundation of zoning restrictions, dictating the type of activity permitted on a parcel of land. Within each category, certain conditionally permitted uses may apply.

In settlements, the General Plan (Master Plan) is the primary planning document guiding land use and urban development. Developers and other subjects of urban planning must comply with its provisions when designing and obtaining construction permits. At a more detailed level, a Detailed Plan of Territory (DPT) specifies plot-level regulations and must remain consistent with the General Plan.

a. Special Restrictions and Overlay Zones

Certain land plots are subject to additional statutory restrictions, including: Protective belts (near rivers, roads, or infrastructure); Cultural heritage protection zones; Environmental protection areas; Sanitary and security zones around industrial or defence facilities. These overlay zones impose further limits regardless of base zoning.

Cultural Heritage Zoning
Cultural heritage areas are subject to the strictest zoning controls.
Regulations apply within Historical Areas of Settlements (such as Kyiv or Lviv) and within various Protection Zones – for instance, development regulation zones, protected landscape zones, or archaeological layer zones established around monuments.

Prohibited Activities: Information on the defined boundaries and modes of use of protection zones, buffer zones, historical areas of settlements (including those established in accordance with parts two and five of this article) shall be entered into the State Land Cadastre, the Urban Planning Cadastre as restrictions on land use.

Within these zones, any urban planning, architectural transformation, construction, reclamation, roadwork, or earthworks is governed by scientific and design documentation. Information on the defined boundaries and modes of use of these zones shall be entered into the State Land Cadastre and the Urban Planning Cadastre as restrictions on land use. Before the scientific and design documentation is adopted, the limitations are established by the Law of Ukraine “On the protection of cultural heritage”.

Legal Mandate of Planning Documents: Judicial practice reinforces the binding nature of General Plans even where supplementary documentation is incomplete. In a key Supreme Court case concerning unauthorised reconstruction in Kyiv’s historical area, the Court ruled that the historical area boundaries defined in the Historical and Urban Planning Master Plan (part of the General Plan) are legally binding upon approval. The absence of separate scientific documentation does not nullify the plan’s authority. This precedent underscores that the public interest in cultural preservation prevails over private development interests.

Protective Belts and Water Fund Lands

Use restrictions also apply rigorously to land classified as part of the Water Fund.

Coastal Protection Strips (CPS):These are designated nature protection areas within water protection zones where economic activity is tightly limited.
Restrictions: Prohibited activities typically include ploughing, storing or using fertilisers, and constructing structures, except for specified hydraulic, navigation, or linear public facilities.
Special Permitting: While general water use is free, any special water use—such as abstraction, discharge, or pollutant release—requires a special permit from the central executive body responsible for water management.
Moreover, construction or engineering works on Water Fund lands (e.g., dredging, seabed works, cable-laying) must be approved by relevant regional and central authorities.

b. Recent Developments (2024–2025)

The current wartime context has accelerated institutional modernisation and adaptation in the field of spatial governance:

• Digitalisation of urban planning documentation: Public authorities are now required to publish zoning and planning documents in electronic format, significantly improving transparency and public access to spatial data.
• Special rules under martial law: Certain planning procedures have been simplified to accelerate the implementation of reconstruction and infrastructure projects, particularly in communities affected by hostilities.
• Reconstruction zoning overlays: War-affected territories are introducing new overlay instruments that allow flexible, temporary land uses and fast-track permitting to facilitate the rebuilding of housing and critical infrastructure.

These innovations represent a shift toward a more adaptive, transparent, and responsive planning system capable of balancing national recovery priorities with long-term spatial order.

Conclusion

Zoning and planning restrictions on real estate in Ukraine are anchored in statutory commitments to public safety, environmental protection, and cultural preservation.

They are implemented through: the legal categorisation of land by purpose, mandatory planning instruments (General Plans and DPTs) characteristic of the Conformative model, and a range of special environmental and cultural limits, including protective belts, heritage zones, ecological reserves, and sanitary or security perimeters.

Recent developments – particularly digitalisation, procedural simplification under martial law, and flexible reconstruction zoning – illustrate how Ukraine’s planning system is evolving from a rigid, top-down model toward a resilient, data-driven, and recovery-oriented framework.

Together, these mechanisms form a coherent legal framework that ensures spatial development serves both the public interest and the strategic objectives of national recovery.

Environmental protection is a global challenge, and Ukrainian legislation employs a multi-faceted approach to addressing environmental harms, establishing three primary categories of legal responsibility: civil (tort) liability, administrative liability, and criminal liability.

A foundational principle of Ukrainian environmental law is the cumulative nature of responsibility: the application of disciplinary, administrative, or criminal penalties does not exempt the guilty party from compensating for the damage caused by environmental contamination and the deterioration of natural resources.

i. Civil (Tort) Liability: Compensation for Damage

Civil liability requires the compensation of damages (losses) caused by environmental violations. This framework pertains to non-contractual obligations (torts) and ensures that damage to the environment is compensated in full, regardless of any concurrent criminal or administrative sanctions.

Legal Basis and Mechanism

Governing Legislation: Civil Code of Ukraine (Article 1166) and the Law of Ukraine “On Environmental Protection” (Articles 68–69).

Constitutional Right: Every person has the right to compensation for damage caused by the violation of their right to an environment safe for life and health (Article 50 of the Constitution).

Elements of a Civil Offence:

1. Unlawful conduct (action or inaction violating legal environmental requirements).
2. Damage (loss, property deterioration, or deprivation of personal non-pecuniary right).
3. Causal link between the conduct and the damage.
4. Fault (presumed by law; the offender must prove absence of fault to avoid liability).

ii. Administrative Liability

Administrative responsibility applies to less severe environmental violations and serves as a deterrent to negligence in environmental management.

Legal Basis and Mechanism

• Governing Legislation: Code of Ukraine on Administrative Offences (CAO), Articles 78–91, 91-4, 91-5, 188-5, etc.
• Scope: Applies to both individuals and officials responsible for:
  -Violation of ecological safety norms.
  -Exceeding limits for pollutant emissions or discharges.
  -Unauthorised special use of natural resources.
  -Failure to perform preventive or mitigation measures after environmental incidents.
  -Concealment of environmental contamination or accident data.
• Enforcement: Conducted by the State Environmental Inspectorate of Ukraine and other competent authorities, which may impose administrative fines, suspend activities, or order remediation.

iii. Criminal Liability

Criminal responsibility is reserved for the most serious environmental offences that threaten human life, health, or large-scale environmental integrity.

Legal Basis and Scope

• Governing Legislation: Criminal Code of Ukraine (CCU), Section VIII “Crimes Against the Environment”.
• Key Offenses:
  -Article 236 – Violation of Environmental Safety Rules (punishable if causing death, large-scale contamination, or other grave consequences).
  -Article 239 – Pollution or Spoilage of Land (for contamination creating danger to human health or ecosystems).
  -Articles 239-1 and 239-2 – Illegal appropriation of topsoil or water fund lands.
  -Article 441 – Ecocide: mass destruction of flora/fauna or poisoning of the atmosphere/water, potentially leading to ecological catastrophe.
• Subjects of Liability:
  -Natural Persons: Sane individuals aged 16+ (per general criminal law).
  -Legal Entities: Under Article 96-3 CCU, legal entities may face criminal-legal measures (fines, property confiscation, or liquidation) if their authorised representatives commit environmental crimes in the entity’s interest.

Who Can Be Liable?

Party	Liability Type	Condition	Notes
Polluter / Operator	Civil, administrative, criminal	Caused pollution	Primary liability. Directly responsible for emission, discharge, or contamination.
Current Owner	Civil / administrative	Owns contaminated site	May be liable even if not the polluter; ownership implies control and duty of care under Art. 68 Law “On Environmental Protection”.
Land User / Tenant	Civil / administrative / criminal	Pollution occurred during use	Often shares joint liability with owner or operator; must comply with environmental permits and norms.
Previous Owner	Civil	Pollution occurred during ownership	Liability arises if a causal link to pollution is established (e.g., industrial operations before sale).
State / Municipality	Civil / administrative	Public ownership or involvement of state enterprise	May share responsibility for contamination on public land or due to failures of supervision or remediation.

Cumulative and Overlapping Liability

Under Article 68 of the Law “On Environmental Protection”, multiple forms of liability can coexist. Thus, an enterprise or owner of immovable property (factory, building, waste facility) may simultaneously face:

• Administrative fines from environmental regulators;
• Civil lawsuits for full compensation of environmental and property damage; and
• Criminal prosecution if the contamination created a danger to human life or health.

This cumulative model ensures that neither legal entities nor their executives can escape responsibility by satisfying only one type of sanction.

Practical Implications for Real Estate Investors

• Environmental due diligence is critical before acquiring real estate, particularly industrial, agricultural, or former military sites.
• Buyers should:
  -Request environmental audit reports or contamination assessments;
  -Check the site’s historical uses and any hazardous activity;
  -Review land lease or ownership history;
  -Examine administrative records of environmental violations.
• Contractual allocation of liability (e.g., indemnities or warranties in the sale and purchase agreement) can reduce but not entirely eliminate exposure under Ukrainian law.

Summary

Environmental liability in Ukraine remains comprehensive and enforceable. Those responsible for harm – whether individuals, private companies, or local authorities – face consequences such as administrative penalties, civil obligations to fully compensate for damages, and criminal sanctions in severe cases.

 

Based on the Law of Ukraine “On Energy Efficiency of Buildings”, energy performance assessment and compliance with minimum efficiency standards are legally mandatory for specific categories of structures. This reflects Ukraine’s strategic commitment to reducing energy consumption in the building sector and aligning domestic regulation with the European Union acquis and Energy Community obligations, particularly under Directive 2010/31/EU on the energy performance of buildings.

The primary instrument for evaluating building energy performance is the Energy Efficiency Certificate (EPC). This certificate is issued based on an energy audit, during which a certified energy auditor assesses the design and/or actual characteristics of the building envelope and engineering systems, determines compliance with minimum requirements, and provides technically and economically justified recommendations for improvement.

i. Mandatory Energy Efficiency Certification

Energy Efficiency Certification is legally required in several specific situations:

• New Construction and Major Works: Certification is mandatory for construction objects (new buildings, reconstruction, or major repairs) classified as having medium (CC2) or significant (CC3) consequences (risk class). Certification is carried out at the customer’s request and expense, and the EPC constitutes an integral part of the construction project documentation.
• Public Sector Buildings (State Authorities): State-owned buildings with a heated area exceeding 250 m² that are frequently visited by citizens and house public authorities must undergo certification. An extract from the EPC must be displayed in a publicly accessible area within the building.
• Local Government Buildings (Thermomodernization): Buildings of local self-government bodies with a heated area over 250 m² must undergo certification when implementing thermomodernization projects.
• State-Supported Thermal Upgrades: Buildings undergoing thermomodernization that receive state financial support must achieve an energy efficiency class no lower than the minimum requirements established by law.

For buildings outside the mandatory scope, certification remains voluntary at the owner’s discretion. The issued EPC is valid for ten years, after which it must be renewed if required.

ii. Minimum Energy Performance Requirements

Minimum energy performance requirements are a set of technical and regulatory standards governing the thermal characteristics of the building envelope, the efficiency of engineering systems, and other components, ensuring acceptable indoor conditions while minimising energy consumption throughout the building’s normative service life.

These requirements must be met in several critical construction-related situations:

• Building Commissioning: The energy efficiency class of buildings being accepted for operation must not be lower than the minimum performance standards effective at the start of construction.
• New Works and Renovations: Minimum requirements apply to new construction, reconstruction, and major repairs. The specific standards vary depending on the building’s functional use, height, and the type of construction works performed.
• Thermomodernization: When thermomodernization is carried out, the building’s energy efficiency level must be brought up to at least the minimum required class, reflecting both legal and technical standards.

These minimum requirements are established by the central executive authority responsible for construction policy. They are calculated based on an economically feasible level – i.e., the lowest total cost over the building’s service life, including operational and liquidation costs, initial investment, and potential income from energy generation.

The technical parameters governing energy performance are reviewed and updated at least once every five years to ensure ongoing alignment with EU standards and technological progress.

iii. Exemptions and Special Cases

The provisions on mandatory energy performance assessment and minimum energy requirements do not apply to certain categories of buildings:

• Industrial and agricultural facilities, and buildings related to energy, transport, communications, defence, and warehousing.
• Detached buildings with a heated area under 50 m².
• Individual (manor) residential houses, garden, and country houses (except where state support is received or voluntary certification is sought).
• Buildings are designated as cultural heritage.
• Religious buildings are used for services and ceremonies conducted by religious organisations.

To conclude:
Ukraine mandates energy performance certification for new builds, major renovations, public buildings, and, in some cases, for sale or lease. Minimum performance levels – typically at least Class CC2 and CC3 – apply to new and renovated buildings. Public sector buildings face increasingly stringent standards. The enforcement and registration of EPCs are being strengthened, particularly within reconstruction programs and EU integration processes. Exemptions exist but are narrowly defined and do not undermine the overall regulatory framework.

To begin with, article 41 of the Constitution of Ukraine stipulates that no one may be unlawfully deprived of their property rights, and that private property rights are inviolable. However, in some narrowly defined situations public authorities may expropriate privately owned real estate.

The law defines three main methods of compulsory real estate expropriation:

• with prior full compensation for its value;
• with subsequent full compensation if prior compensation is not possible;
• expropriation without compensation (applies only for state-owned enterprises and for property owned by the Russian Federation and its residents).

Expropriation with prior full compensation is possible in the event of a natural disaster, accident, epidemic, epizootic, or other extraordinary circumstances, for the purpose of public necessity.

Meanwhile, under martial law or a state of emergency, real estate may be expropriated with subsequent full compensation. Such expropriation may be carried out by decision of the military command, agreed upon with the military authority designated by the Ministry of Defense of Ukraine, the Council of Ministers of the Autonomous Republic of Crimea, the regional, district, Kyiv or Sevastopol city state administration, or the executive body of the relevant local council. However, in the case of territories where active hostilities are taking place, the decision on expropriation shall be made without any additional approvals.

Procedurally, in the event of any kind of real estate expropriation proper documentation is mandatory. For this purpose, a specific act shall be drawn up containing information about the owner, a description of the property, and the amount of compensation. Thus, compensation for the value of expropriated real estate should be made on the basis of a document containing the value of the real estate on the date of its appraisal. The real estate valuation usually shall be carried out by independent appraisers. However, in case it is impossible, this procedure is conducted by state or local government authorities upon agreement with the real estate owner. In case of refusal or absence of the owner, such authorities may carry out the valuation independently. It is worth highlighting that the former owner has the right to challenge the real estate valuation later in the court.

In case of ex post compensation, the former owner or his authorized representative may apply for full compensation for expropriated real estate after the martial law has been lifted to the territorial recruitment and social support centre at the place of real estate expropriation. The application shall be accompanied by an act and a document containing an opinion on the value of the real estate. Additionally, all the disputes related to compensation for the value of forcibly expropriated real estate shall be resolved in court.

If the property has been preserved and the former owner wishes to have it back, there is also legal proceedings to return it. The return of property shall be carried out on the basis of court decision, according to which the former owner must return the funds he previously received (in case of prior compensation) minus reasonable fees for the use of this property. After the court decision and funds transfer, the former owner may get real estate back or, if possible, receive other real estate in exchange.

The specific type of expropriation was introduced into Ukrainian legislation in response to Russia’s armed aggression. Thus, in 2022 Ukraine adopted Law No. 2116-IX “On the basic principles of compulsory seizure in Ukraine of property belonging to the Russian Federation and its residents”. This legislative act authorizes expropriation without any compensation of property owned by the Russian Federation and its residents. The following subjects are classified as residents: 1) legal entities (their branches, representative offices) operating in accordance with Ukrainian law on the territory of Ukraine, whose founder (participant, shareholder) or beneficiary is directly or indirectly the Russian Federation; 2) legal entities whose founder (participant, shareholder) or beneficiary is the Russian Federation and/or in which the Russian Federation directly or indirectly has a share in the authorized (share) capital, shares, stakes, other membership (participation in any form) in a legal entity. It shall be highlighted that the law provides no grounds for expropriation of property of individuals, who are citizens of the Russian Federation. The decision on expropriation without compensation is made by the National Security and Defense Council of Ukraine and is enacted by a decree of the President of Ukraine.

Nowadays in Ukraine there is also a mechanism which does not constitute real estate expropriation, but may constitute a certain interference within the exercise of property rights. This refers to the use of enterprises for defense purposes. Such use may consist of the use of production facilities for defense orders, the use of labor resources, changes in working hours, and changes in the conditions of production activities. Theoretically, when production capacities are used for defense orders, privately owned real estate, used for production purposes, may be temporarily suspended from its original purposes or perform them to a lesser extent.

Finally, according to the Criminal Code of Ukraine there is a property confiscation as 1) a sanction; 2) a mechanism for creating conditions that make it impossible to obtain economic benefits from committing a criminal offense; 3) as a criminal law measure against legal entities. However, it is considered to be not public-needs expropriation and possible only by court judgment in criminal proceedings.

In Ukraine, the legal framework governing mortgages is well developed and provides clear and predictable rules for domestic and foreign investors. This framework ensures that real estate can be used effectively as collateral to secure financial obligations and that lenders’ rights are protected through well-defined registration and enforcement mechanisms.

The mortgage regime in Ukraine is regulated by several core legislative acts that form a consistent legal architecture: Law of Ukraine ‘On Mortgage’ No. 898-IV; Civil Code of Ukraine No. 435-IV; Land Code of Ukraine No. 2768-III; Law of Ukraine ‘On State Registration of Real Rights to Immovable Property and Encumbrances Thereof’ No. 1952-IV.

This legislative package establishes the legal basis for creating, registering, and enforcing mortgages and secures the priority of mortgagee rights through mandatory state registration.

Eligible Mortgage Assets

Ukrainian law allows a wide range of assets to be mortgaged. These include land parcels, buildings, structures, and objects inseparably connected with the land. Rights in rem such as emphyteusis (right of agricultural use), superficies (right to build), and leasehold may also be mortgaged. Importantly, the principle of unity applies: if the mortgagor owns both the land and the building, they must be mortgaged together, and any new construction on mortgaged land automatically forms part of the mortgage.

The framework also allows the mortgage of unfinished or future construction, provided the mortgagor can document ownership or the right to acquire ownership in the future. This legal design supports investment financing for development projects at various stages of completion.

Certain categories are excluded from the mortgage, including non-privatizable state property and cultural heritage objects.

Secured Obligations and Coverage

Mortgages may secure both existing and future obligations, typically arising under loan, credit, lease, or sale agreements. The security covers not only the principal debt but also interest, penalties, enforcement costs, insurance and maintenance costs, and damages resulting from breach of obligations.

A key legal principle is that the mortgage “follows the property”: if the property is sold or transferred, the encumbrance remains attached, protecting the mortgagee’s rights regardless of ownership changes.

Registration and Priority

The mortgage becomes legally effective against third parties only upon registration in the State Register of Real Property Rights of Ukraine. This registration determines the priority order of claims. If multiple mortgages are registered, the earliest one prevails.

This simple but strict priority system is one of the most important guarantees for lenders, as it provides clarity and predictability regarding enforcement and recovery.

Enforcement Mechanisms

Ukrainian legislation offers a flexible enforcement system that allows the mortgagee to foreclose on collateral through several pathways in case of default:

• Judicial Foreclosure – Based on a court ruling specifying the debt, collateral, and method of realisation. The property is typically sold through an electronic auction.
• Notarial Executive Endorsement – Allows enforcement without court proceedings. A notary issues an execution writ, and the collateral is sold through auction or agreed sale.
• Out-of-Court Settlement – If agreed contractually, the mortgagee may either (a) acquire ownership of the collateral to cover the debt or (b) sell the property to a third party.

If enforcement occurs through judicial or notarial procedures, the property is typically realised through electronic auctions. The debtor retains the right to halt the process until the sale by paying the overdue debt and related costs.

Formal Requirements and Legal Certainty

For a mortgage to be valid and enforceable, several formalities must be observed:

• The agreement must be in writing and notarised.
• The mortgage must be registered in the State Register of Real Property Rights.
• The secured obligation must be clearly defined.
• Priority among multiple mortgages is established strictly by registration date.

This formalism is not merely procedural; it provides high legal certainty to investors and financial institutions, reducing transaction risks and strengthening creditor protection.

To conclude, the mortgage regime in Ukraine has evolved into a functional and investor-oriented legal instrument.

There are some registration and notarial costs, but they are relatively moderate compared to many EU jurisdictions, and usually do not represent a major transaction cost in commercial real estate financing.

Under Ukrainian law, the creation of a mortgage involves three key steps that may generate costs: notarization of the mortgage agreement; state registration of the mortgage as an encumbrance in the State Register of property rights on the real estate; and payment of administrative fees or service charges.

Notarial fees

Mortgage agreements must be notarised. Notaries charge: a notarial service fee is set by agreement with the notary:

• For commercial real estate transactions, typical fees range from 0.01% to 1% of the estimated value of the mortgage assets, depending on complexity and region.
• In major cities like Kyiv, large transactions often have negotiated flat fees.

State registration fee

Registration of a mortgage in the State Register of property rights on the real estate is mandatory.

The official administrative fee is set by law (as of 2025) and varies from 0.1 to 5 times the subsistence minimum for individuals or legal entities.

Additional costs that may arise: legal support fees; valuation costs; translation or apostille costs (for foreign parties or foreign language documents).

General approach

Ukraine does not recognise a traditional trust structure for mortgage security over real estate. As a civil law jurisdiction, Ukrainian property law is based on the principle of unified ownership – there is no legal distinction between legal and beneficial title, and therefore a classic trust arrangement, where a trustee holds property on behalf of a beneficiary, cannot exist.

That said, Ukrainian law has introduced a similar concept known as trust ownership (dovircha vlasnist), which was added to the Civil Code in 2019 as part of reforms aimed at modernising the system of secured transactions. Trust ownership was designed as a way to strengthen creditors’ rights by allowing the transfer of ownership of real estate to the creditor as security for a debt. The debtor transfers title to the creditor, but only for the duration of the secured obligation. Once the obligation is fulfilled, the creditor is obliged to return ownership to the debtor. If the debtor defaults, the creditor may retain ownership or sell the property to recover the debt.

In theory, this construction resembles a mortgage with title transfer, not a genuine trust. The creditor becomes the legal owner of the property, but this ownership is conditional and fiduciary in nature – the property is held for the specific purpose of securing the obligation. There is no concept of a separate beneficial interest, and there are no equitable principles governing the creditor’s conduct as in Anglo-American trust law. For this reason, Ukrainian trust ownership is best described as a hybrid instrument, blending features of ownership and collateral rather than establishing a dual ownership structure.

Trust structures and mortgage: critical distinction

In principle, mortgage (ipoteka) and trust ownership (dovircha vlasnist) are distinct legal instruments in Ukrainian law, each representing a separate method of securing obligations with fundamentally different legal nature and effects. A mortgage creates an encumbrance over property – the debtor retains ownership, while the creditor acquires a limited real right allowing foreclosure in case of default. Ownership never leaves the debtor; the mortgage merely restricts their ability to dispose of the property and grants the creditor priority to satisfy its claim from the property’s value.

By contrast, trust ownership involves a transfer of ownership itself to the creditor, albeit for a limited purpose – to secure the debtor’s performance. The creditor becomes the formal owner but holds the property in a fiduciary capacity, bound to return it once the obligation is discharged. Thus, while the mortgage is a right over another’s property, trust ownership is temporary ownership for security purposes.

Because these mechanisms are conceptually and legally different, they cannot be combined or substituted for one another. A transaction cannot be simultaneously structured as a mortgage and as trust ownership: the first presupposes that ownership remains with the debtor, while the second requires its transfer to the creditor. Mixing these concepts would create internal contradictions regarding possession, registration, and enforcement, and would almost certainly be deemed invalid or unenforceable under Ukrainian law.

Accordingly, while both serve to secure obligations, they operate under different legal regimes, follow distinct registration procedures, and have separate consequences for ownership and risk allocation. The choice between them must therefore be deliberate and exclusive – either a traditional mortgage governed by the Law “On Mortgage,” or trust ownership as a title-transfer security, but never both at once.