Land plot rental in Ukraine

Article 1 of the Land Code of Ukraine provides that land is the main national treasure that is under a special protection of the state.

Exhaustiveness of this recourse results in necessity of its use optimization.

Use of land plot under rental agreement has its advantages comparing to other types of land use if the purpose of its use is production of goods and obtainment of revenues from conduction of activities on the land plot, construction of residential, industrial, cultural, household and other buildings (after written consent of a landlord) in compliance with the procedure set by the legislation and to acquire ownership of the abovementioned real estate.

The legislation defines rental of land as fixed term possession and use of rental object for payment intended for conduction of entrepreneur or other activities.

Thus, by obtaining a land plot for temporary use under rental agreement a tenant obtains a right to possess and use the land plot unlike ownership which provides a right to dispose along with abovementioned ones.

Right to possess a land plot means ability to hold it in one’s physical or legal possession, within field of actual economic or other influence.

Right to use is a legally provided ability of economic, entrepreneurial, cultural and household use of property and use of its beneficial features.

A plot can be rented basing on entry into rental agreement between an owner – landlord and a person that wants to use his land plot – tenant.

Rental agreement can be entered only in written form. Typical form of agreement is approved by the Resolution of the Cabinet of Ministers of Ukraine.

Procedure of entry into agreement is defined by the Law of Ukraine “On land rental”.

Exclusive list of material terms of the rental agreement is provided by Subsection 2 of Article 14 of the Law “On land rental”.

The terms include:

  • object of rental (location and area of a land plot);
  • term of rental agreement;
  • rent (amount, indexation, forms of payment, terms and procedure of payment and its reviewing);
  • type of land use, terms of use and preservation of land;
  • terms of land plot return to a landlord;
  • any limitations and encumbrances related to use of a land plot (it is specified whether the plot is under lien or any other use limitations like easement, etc.);
  • party (landlord or tenant) which bears risk related to accidental damage or destruction of rental object or its part;
  • liability of parties.

At the same time it is worth mentioning that absence of any of these terms may serve as a ground for the rental agreement state registration denial and may result in recognition of it as void.

Land rental agreement includes such integral parts as:

  • plan or scheme of a land plot;
  • cadastre plan with depicted limitations (encumbrances);
  • act of on-site setting of plot boundaries;
  • act of acceptance of a land plot and project of land plot allocation in case of change of land use type and/or boundaries of a land plot.

As for the parties of rental agreement legislation in general does not set limitations regarding persons that can be tenants of a land plot. However rental of agricultural land plot does have certain limitations. Land plots that have such land use types as personal peasant farm, horticulture lands, vegetable gardening lands, mowing and pasture lands, lands for production of agricultural goods can be rented only by citizens; lands for production of agricultural goods – by agricultural enterprises; for research and educational purposes, propaganda of best experience in the field of agriculture – by agricultural scientific and research establishment and educational establishments, rural technical schools and secondary schools; subsidiary farming activities – non-agricultural enterprises, establishments and organizations, religious organizations and voluntary associations; for one’s own infrastructure – wholesale markets of agricultural goods.

On mutual consent of the parties rental agreement may include other terms like quality condition of lands, procedure of obligations fulfillment by parties , procedure of rental object insuring, procedure of expenses reimbursement related to measures of protection and improvement of rental object, conduction of melioration as well as circumstances that may influence alternation or termination of rental agreement, etc.

Rental agreement is entered into through its signing which confirms agreement of parties about material terms but entry into force will occur only upon its state registration. Fact of the state registration is attested by a seal of registration body with a signature of an authorized person and date of registration on all duplicates of the agreement. One registered duplicate of the agreement is kept with a body which performed registration while others are provided for parties – one duplicate per each.

As of today the procedure of rental agreement registration is de jure regulated by “Procedure of state registration of land rental agreements” approved by the Resolution of the Cabinet of Ministers of Ukraine but factually the procedure of land rental agreements registration is regulated by bylaws of the central body of the executive branch of government in the field of land recourses.

This material was prepared by legal experts of law firm “Pravova Dopomoga”. It is related to service of Legal advice.

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