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Purchase of land plot in Ukraine: divide et impera

The key factors making purchase of a land plot for cottage in Ukraine unsafe when there is only one state certificate for the entire territory of cottage complex.

The comment was prepared by Ukrainian Law firm “Pravova Dopomoga”.

Cottage construction in Ukraine starts to grow ones again. Development of “economical” types of construction when a building occupies the biggest part of a land plot is especially popular. There are some risks related to purchase of a plot in this case and these risks should be taken care of in advance.

The thing is that very often seller (constructor) receives (purchases) a plot for construction which area allows to locate couple of cottages easily. As the result this kind of economy helps to lower the price of a cottage. However when looking from legal perspective rather than economical one things do not look so smooth. While obtaining state certificate for the entire plot on his name constructor offers to sell only part of it (in size calculated for one cottage). At the same time allocation of boundaries in most cases is not performed and this may result in future disputes between neighbors.

First of all there can be no sale object in legal sense without allocation of boundaries. Because such object should be represented by a land plot with obligatory allocation of its boundaries. And secondly if boundaries are not allocated at the stage of purchase this may cause some confusion with their distinction by neighboring owners.

The most correct and acceptable way for buyer on how to avoid such mistakes is to wait until seller identifies the property line on the ground, formalizes technical specifications and receives state certificates for each plot. But the seller does not always have wish or resources to do so. On top of that significant demand for “economical” types of cottages makes buyers not to pay attention to such “trifles”. In this regard purchase of land plot for construction of cottage may be formalized in a number of alternative ways.

The first way is to enter into agreement with owner of land and buy “an ideal share” of land ownership. In other words you buy property rights to land in the amount which is proportionate to size of land plot which is being purchased. However in order to obtain all rights to your land it is required to allocate your share in accordance with general procedure.

The next alternative is to enter into superficies agreement. Such agreement will help to allocate boundaries of a plot quite clearly and obtain construction permit, etc. However registration of land even in such case will require general procedure but buyer’s rights will be protected.

In any case implementation of any method listed above will ensure protection of buyer’s rights and will eliminate risks to be fooled or dragged into dispute in Ukraine. At the same time schemes which include entry into preliminary agreement about further sale of registered plot (which often require payment of at least half of price already at the stage of signing) in best case scenario will result in litigation or losing litigation at worst.

Thus, purchase of a land plot for cottage construction in Ukraine is a very troublesome process and requires at least clear understanding of sale agreement subject. A part of a land plot which boundaries were not allocated on site cannot become an object of sale even in preliminary agreement so it would be better if buyers waited for proper registration of land or implement alternative schemes for purchasing Ukrainian real estate.

If you need a legal advice for the particular situation – contact us.

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