Legal regulation of land relations

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1. Land composition and land use.

Land is the main national treasure under the special state protection.

The subjects of land relations comprise of citizens, legal persons, local government, and state authorities.

The objects of land relations comprise of lands within the territory of Ukraine, ground areas and property rights hereto, including land shares property rights.

The land of Ukraine consists of the land within its territory, including islands and land, occupied by bodies of water, which are divided into categories according to its main purpose.

The categories of the land of Ukraine have special legal requirements.

The land of Ukraine, according to its purpose, is divided into the following categories:

a) agricultural;

b) residential and public buildings;

c) nature reserves;

d) health-improving;

e) recreational;

f ) historically and culturally significant;

g) forestry;

h) water resources;

i) industrial, transport, telecommunication, energy, defense and other purposes.

Land of every category, not transferred into ownership and in use of citizens or legal persons, can stay in reserves.

2. Interests in land. Acquisition of land property rights by foreign citizens.

Land property right is a right to possess, use, and dispose of ground areas.

The right of possession means the legally guarantied possibility of an owner to have a property under direct physical and legal authority in the sphere of its actual commercial impact.

The right of usage means the legally guarantied possibility of an owner or its authorized persons to commercially, entrepreneurially, culturally and domestically exploit the property.

The right of disposal means the legally guarantied possibility of an owner to independently decide upon the legal and actual fate of property by its disposal to other persons, changing of its state or purpose etc (for example to sell, to give as a gift, to transfer upon a will).

Foreign and stateless persons may acquire property rights of non-agricultural land within as well as outside settlements, whereon the objects of immovable property, privately owned by the aforementioned persons, are located.

Foreign and stateless persons may acquire property rights to land in the case of:

a) acquisition by contract of sale, rent, gift, exchange or other civil agreements;

b) purchase of land, whereon an object of real estate, privately owned by the aforementioned persons, is located;

c) inheritance.

Agricultural land, inherited by foreign citizens and stateless persons, within the first year are subject to alienation.

Legal entities (established by citizens of Ukraine or legal persons of Ukraine) are entitled to acquire land for commercial usage.

Foreign legal persons are entitled to acquire property rights to non-agricultural land:

a) within settlements in the case of acquiring real estate and for the development of commercial real estate;

b) outside of settlements in the case of acquiring real estate.

Agricultural land, inherited by foreign legal persons, within the first year are subject to alienation.

Foreign states can acquire land ownership to accommodate buildings and installations of diplomatic missions and other equated organizations under international treaties.

The right to lease land is based on a fixed-term concessions contract and usage of land necessary for conducting commercial and other activity by a tenant.

Land can be leased out to citizens and legal persons of Ukraine, foreign and stateless persons, foreign legal persons, international associations and organizations, and foreign states.

Land lease can be short-term – not longer than 5 years, and long-term – not longer than 50 years.

The right to lease the land can be alienated, including sale by auction, transferred as collateral, transferred into inheritance, contributed into an charter capital by land owner for up to 50 years, except for cases provided by the law.

Land lessors are the land owners and their authorized persons.

With the concept of right to lease the land follows four essential terms of the agreement: 1) an object (land); 2) the term of usage; 3) fee for usage; 4) ways of usage (the purpose). However, article 15 of the Law of Ukraine on Land Lease establishes a broader list of conditions, including:

  • The object of lease (location and size of land);
  • Legislation can establish special limitations on leased facilities. For example, it shall be totally prohibited to lease out land located on burial places.
  • The term of lease; the term of the contract clause should clearly state, subject to article 18 of the Law of Ukraine on Land Lease, whereby the lease contract ‘comes into effect after its state registration.’ Evidently, only upon state registration shall the land the lease term commence. Therefore, it is advisable to avoid fixed dates and to tie the lease term to the date of the state registration.
  • Rental payment indicating its amount, adjustment, forms, terms and modes of payment, its revision and responsibility for non-payment;
  • Rental payment can be dealt with in cash, in payment-in-kind, and labor (provision of services to a lessor) form of payment. The parties may stipulate in the rent contract the combination of various forms of rent. The rental payment for the state and municipal land shall be exclusively paid in money terms. The rental payment for land shares is, as a rule, set in cash. At the land (share) owners’ option, the rental payment for the land shares can be established in payment-in-kind.
  • Terms of use and purpose of the land being transferred for rent;
  • Terms of maintenance of leased facility;
  • Conditions and terms of the land lease transfer; The transfer of a lease facility to a lessee shall be conducted within the terms and according to the conditions established in the land lease contract on the basis of an acceptance act.
  • Conditions for the return of the land to a lessor;
  • Current limitation (encumbrances) on the use of the land;
  • Determination of the party responsible for accidental damage and destruction of the leased land facility of part thereof;
  • Responsibility of parties; Should the parties to a land lease contract fail to perform obligations thereof, they shall be subject to responsibility pursuant to the law or a contract; a lessor shall bear responsibility for the shortcomings of leased land, not provided by a lease contract and which prevent the use of land according to a contract. Provided that such deficiencies are discovered, a tenant shall be entitled to demand:
  • reduction of a rental payment or compensation of expenses for elimination of deficiencies;
  • deduction from a rental payment a certain amount of expenses for addressing these shortcomings after prior notification to a landlord hereof;
  • early dissolution of the contract.
  • Should the deficiencies of a leased land be provided by a contract, a landlord shall be not bear responsibility for the consequences hereof.
  • Terms of transfer and mortgage registration of a land tenant in an authorized charter capital.

Other conditions may be included into a contract under agreement of parties.

A lease contract is a consensual (that is it shall be considered as concluded from the moment the parties reached an agreement in appropriate form), payable, bilateral, and fixed-date contract.

The contract is made in a written form (article 14 of the Law of Ukraine on Land Lease). Should the land lease contract provide for a lease of buildings and other permanent structures for the term of more than 3 years, the contract shall be subject to notary certification.

The contract is subject to state registration and only then shall enter into force. At present, the procedure of state registration of land lease agreements is determined by acts of the central executive authorities on land resources.

According to article 15, part 4, of the Law of Ukraine on Land Lease, an integral part of land lease contract comprises of 1) a plan or scheme of land; 2) cadastral number thereof indicating limitations (encumbrances); 3) an act defining the boundaries of the land by area; 4) a land acceptance act, and, an allotment of land project ‘provided it is drafted according to the law’, in the case of land purpose and/or lot lines change. The majority of this documentation cannot be prepared by the parties without assistance; therefore, for its preparation the parties should consult a corresponding land surveying organization by ordering ‘the technical documentation of land management regarding drawing up documents, which certify the right to land’ (article 56 of the Law of Ukraine on Land Management).

The right to lease land comes into effect upon state registration (articles 125, 126 of the Land Code of Ukraine, article 18 of the Law of Ukraine on Land Lease).

Provided it is established in a lease contract or according to a written consent of a lessor, leased land or a part thereof can be sublet without changing its purpose. Should the landlord within one month fail to send a written notification of his/her consent or objection, leased land or a part thereof can be subleased.

Conditions of a land sublease contract must be limited to and not contradict with the conditions of land lease contract.

In case of termination of the property right to a dwelling house, building or installation, owned and used by other person, the property and usage rights to land, where the aforementioned objects are located, shall be terminated.

The property right to a ground area or part thereof shall be without change of its purpose transferred to a person who acquired property rights to a dwelling house, building or installation, located on such a ground area, owned by other person.

Should a dwelling house, building or installation be located on a ground area under usage right, therefore, in case of acquisition of property rights to such objects, the acquirer shall be transferred the land usage right where such objects are located according to the same conditions and size the previous land user was entitled to.

In case of acquisition of property rights to a dwelling house, building or installation by several persons, the interest in land shall be determined proportionally to the parts of property rights in such dwelling house, building or installation.

Should the property right to a dwelling house, building or installation be acquired by natural and legal persons not entitled to own land, they, therefore, shall acquire the right of land usage, where a dwelling house, building or installation is located, and on the land lease conditions.

The condition of a contract, according to which the property right to a dwelling house, building or installation is acquired, is a cadastral number of a ground area which is accordingly transferred as a result of acquisition of the property right to the aforementioned objects.

Conclusion of a contract, according to which the property right to a dwelling house, building or installation is acquired, and an interest in a part of a ground area is, as a result, transferred, shall be conducted after allotment of such a ground area part into a separate ground area and assignment of a cadastral number.

In case of acquisition of property rights to a dwelling house, building or installation (except for a block of flats building) - located on the state or municipal owned land being currently under the right of usage of other person and provided that it is needed in order to divide a ground area – the land area, formed as a result shall, not be smaller than the maximum size of ground areas of corresponding purpose.

A ground area property right and, moreover, land area permanent usage and lease right shall come into existence after the state registration thereof.

A ground area property right shall be certified by the state act, except for cases provided below.

A ground area property right, acquired into ownership from the privately owned land without change of land lot lines and purpose, shall be certified by:

a) a civil contract on disposal of a ground area, concluded according to the procedure provided by the law, in case of acquisition of a ground area property right under such an agreement;

b) a certificate on inheritance right.

A ground area permanent usage right shall be certified by the state act of a ground area permanent usage right.

Forms of documents, certifying the land property and permanent usage rights shall be approved by the Cabinet of Ministers of Ukraine.

The notary which certifies (issues) a document and the state authority which conducts the state registration of the interests in immovable property and limitations (encumbrances) thereof, shall endorse the state act of land property right with a note regarding the transfer of a ground area property right, indicating the document on the basis of which such a transfer was conducted.

In case of acquisition of a ground area property right by several acquirers or in default of a place to endorse the state act of land property right with a note regarding the transfer of a ground area property right, an acquirer and alienator shall be issued the state act of land property right within 30 calendar days from the day of submission to a corresponding authority of documents provided by the law.

The state authority which conducts the state registration of the interests in immovable property and limitations (encumbrances) thereof shall endorse a note regarding the state registration of interests in land on the basis of a document certifying disposal thereof, during 14 calendar days from the day of submission to the aforementioned authority of the specified documents.

In case of change of co-owners of or acquisition of joint ownership of a ground area, the state authority which conducts the state registration of the interests in immovable property and limitations (encumbrances) thereof, in addition, shall include into the state act of land property right changes regarding the co-owners of a ground area.

Disposal of a part of a ground area with its allotment into a separate ground area shall be conducted after obtainment by an owner thereof of the state act certifying the property right of a new ground area.

Provided the state act of land property right certifies property rights to several ground areas, disposal of one of them shall be conducted after issuance of the state act certifying the property right to each of them.

The state act of land property and permanent usage rights shall be issued in relation to one ground area.

The right of permanent usage of several ground areas, provided for construction and service of linear objects (roads, pipe, power and telecommunication lines), shall be certified by a single state act.


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