121 / 132
PROPERTY LAW
Right of ownership
• Ukrainian law defines ownership as the right to possess, use
and dispose of the property.
• Rights to immovable property (including land plots and
other real estate objects) are subject to registration in the
State register of property rights to immovable property
(“Immovable property register”). Right of ownership arises
upon state registration.
• Information about registered ownership rights included into
the Immovable property register is public and open to general
use, and is provided to individuals/legal entities both in paper
and electronic forms.
• Private property may be owned solely or jointly. Sale of a
share in a property by one of joint owners is subject to other
joint owners’ pre-emptive right. Use and operation of a jointly
owned property is subject to agreement between owners.
• As a general rule, foreign companies and individuals have
the same regime regarding acquisition and ownership to real
estate as the Ukrainian ones, subject to certain restrictions.
Foreign companies/individuals are not entitled to acquire
ownership to agricultural land. If inherited, such agricultural
land must be alienated during 1 year.
• Foreign companies may acquire non-agricultural land plots:
(i) within the territory of settlements – in case of acquisition
of buildings located on such land plot and for the purposes of
construction related to business activities, or (ii) outside the
settlements – only in case of acquisition of buildings located
on such land plot.
• Conservatively, ownership to and operation of real estate by
a foreign company requires registration of such company’s
presence in Ukraine. Foreign investors, therefore, are usually
recommended to structure their property businesses by
means of establishing Ukrainian subsidiary companies.
• With regard to agricultural land designated for commercial
agriculture and for individual farming: there is currently
moratorium prohibiting sale and re-designation of such land.
Property in the Autonomous Republic of Crimea
• Ukrainian law requires that transactions regarding property
located in the Autonomous Republic of Crimea and
Sevastopol city should be carried out on the territories of
Ukraine other than Crimean Peninsula.
• Note should be taken that Council of the European Union has
imposed certain restrictions with regard to investment in the
immovable property located in Crimea.
Rights of use
Commercial leases
• Lease agreements must be concluded in a written form. Lease
agreements for a term of 3 and more years are subject to
notarization and the relevant lease right – to state registration.
• If ownership to the leased property passes to another owner,
the rights and obligations of the previous owner under the
lease agreement transfer as well.
• Ukrainian law provides for an extended catalogue of conditions
of the lease agreement, however, with certain exceptions,
parties are free to determine conditions on their own.
Land lease
• Legal entities and private individuals are entitled to lease
private, municipal, or state-owned land plots.
• Lease of a state, or municipal-owned land plot should be
based on the decision of the relevant authority, empowered to
dispose of such land plot.
• Acquisition of the lease of the state, or municipal-owned
land plot should be based on a public auction; this rule does
not apply if the prospective tenant is the owner of a property
situated on such land.
• Term of the land lease agreement cannot exceed 50 years.
The right of land lease is subject to state registration.
Emphyteusis and superficies
• Ukrainian law provides for the right to use the land plot
for agricultural purposes by virtue of an agreement with
owner of such land plot (right of emphyteusis). The right of
emphyteusis is subject to state registration.
• Owner of the land plot is entitled to grant it to a third party
for the construction purposes (right of superficies). This
right derives from a relevant agreement or a testament
and is subject to state registration. Upon completion of the
construction the land user is entitled to obtain the right of
ownership to the constructed buildings and facilities located
on such land plot.
• Currently, due to lack of regulation, emphyteusis and
superficies are close to having no practical implementation.
Encumbrances
Easement (servitude)
• Easement (a right to use others’ property), may be
established with regard to the land plot or real estate for
satisfaction of needs of the third parties. It may have a form
of a right of passage or transit or a right to install and use
engineering infrastructure.
• Easement may be based on an agreement, statute, testament
or a court decision and is subject to state registration.
Easements may be established for a fixed or indefinite term.
• In practice, easements are used as an alternative to land
lease, for the purpose of access to and use of parts of
industrial sites, mining sites, sea ports, etc.
Mortgage
• Mortgage is a type of security over property, whereby the
mortgagee has the right to retain or sell the mortgagor’s
property if the mortgagor fails to perform the secured
obligation. Real estate and underlying land plot are subject to
mortgaging together if they are owned by the same proprietor.
Mortgage agreement is subject to notarization; mortgage, as
encumbrance, is subject to state registration.
• A notice period for the foreclosure process is 30 days; this
period may not be waived contractually.
Acquisition process: key stages
Asset deals
• Purchase of real estate property should be based on a written
agreement which should be notarized. Notarization of the
agreement is subject to 1% notarial fee.
• Foreign companies intending to purchase or lease real estate
have to obtain prior written consent from the local state
authorities.
121
Investors Guide to Europe 2015