Investor Guide to Europe 2014
| 105
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. Right of
ownership arises upon state registration.
•
Private property may be owned solely or jointly. A 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 the owners.
•
As a general rule, foreign companies anud individuals have
the same regime regarding acquisition and ownership to real
estate as the Ukrainian ones, subject to certain exceptions.
•
Foreign companies 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 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.
•
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.
•
Change of a permitted land use (re-designation) is only
possible following the land allotment process which requires
approvals from state or municipal authorities and a number of
governmental agencies.
•
With regard to agricultural land designated for commercial
agriculture and for individual farming: there is currently mora-
torium prohibiting sale and re-designation of such land.
RIGHTS of uSE
Î
Commercial leases
•
Lease agreements must be concluded in 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 a lease agreement, however, with certain exceptions, parties
are free to determine conditions on their own.
Î
Land lease
•
Legal entities and private individuals are entitled to lease pri-
vate-, municipal- or state-owned land plots.
•
Lease of state- or municipal-owned land plot should be based
on the decision of the relevant authority, empowered to dis-
pose of such land plot .
•
Acquisition of a lease of a state- or municipal- owned unde-
veloped 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 a lease agreement cannot exceed 50 years. The right
of land lease is subject to state registration.
Î
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 a 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 construc-
tion the land user is entitled to obtain right of ownership to the
constructed buildings and facilities located on such land plot.
•
Currently, due to lack of regulation, emphyteusis and superfi-
cies are close to having no practical implementation.
EnCuMBRanCES
Î
Easement
(servitude)
•
Easement (a right to use others’ property), may be established
with regard to a 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 court decision and is subject to state registration.
•
Easements may be established for a fixed or indefinite term.
•
In practice, easements are used as alternative to land lease,
for the purpose of access to and use of parts of industrial sites,
mining sites, sea ports, etc.
Î
Mortgage
•
Mortgage is a type of security over property, whereby the mor-
tgagee has the right to retain or sell the mortgagor’s property
if the mortgagor fails to perform the secured obligation.
•
Mortgage agreement is subject to notarization; mortgage, as
encumbrance, is subject to state registration.
•
Real estate and underlying land plot are subject to mortgaging
together if they are owned by the same proprietor.
•
A notice period for the foreclosure process is 30 days, this
period may not be waived contractually.
aCQuISITIon PRoCESS:
KEY STaGES
Î
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 autho-
rities.
•
State- or municipal-owned, undeveloped land plots are subject
PRoPERTY LaW
