On October 6, 2016, Ukrainian Parliament amended Ukrainian real-estate law with an aim to further strengthen property rights in Ukraine.
Key Changes Introduced:
- State registration of ownership and other property rights can be performed only within territorial unit where the property is located. Earlier, notaries were allowed to register ownership and property rights on ex-territorial principle.
- Registration authorities while performing registration of property rights or liens will have to additionally check the Unified Register of Permits for Construction and the Unified Register of Court Rulings. This will ensure that documents filed for registration are valid and not falsified.
- Implementation of automatic registration of property rights and liens on real-estate under court rulings: such registration will be performed based on information (court ruling), received from the Unified Register of Court Rulings and without need of filing of application by title holder and will be free of charge.
- In order protect property from unlawful acts, the owner of a real-estate property is entitled to file respective application and register in the State Register of Property Rights on Real-estate and Their Encumbrances (hereinafter – Real-estate Register) a ban on any registration acts with his/her property (registration of such ban is performed within 2 hours from owner’s application); such owner is obliged within 10 working days to provide registration authority a court ruling on ban on registration acts. If such court ruling was not filed, ban in Real-estate Register will be cancelled.
- Implementation of rule that in cases, when someone files application on registration of ownership, other property rights or liens for real-estate, the registration authority notifies the existing owner with no delay.
- After completion of registration of property right or lien, the property right holder is entitled to receive duly signed and sealed extract from the Real-estate Register as well as see such information online through internet access to the Real-estate Register. Earlier, the property right holder could only receive a printout from the Real-estate Register but with no seal and stamp on it.
- Terms and Fee for state registration of ownership, other property rights, and liens have been amended. See more information on current fees and timeline in our article Guide to Real-estate Property Law in Ukraine. It is worth to mention, that on a bigger scale of things, these fees are very nominal.
- Application for registration of property rights as a result of notarial deal (for example sale-purchase agreement) has to be filed together with signing and notarial certification of the deal, registration is made either on the same day or within up to 5 working days. Unlike in other cases of registration of property rights, amount of fee in this case does not depend on registration timeline: fee for registration in this case is fixed – 0.1 minimal wage in Ukraine (i.e. until the end of 2016 registration fee under notarial deal will be UAH 140).
- The Real-estate Register will contain electronic documents and scan copies of all the documents, filed in paper, which were grounds for state registration of title (including title documents). Registration file for each real-estate will be kept in paper and electronic form.
- Extended term for disputing decisions taken by the state registrar (when registrar received documents for registration he decides if he should register property or not) during registration procedure: such decisions can now be disputed within 60 calendar days from the moment when title holder learnt or could learn about it (earlier term for disputing was 30 days).
- Implementation of rules of monitoring and control by Ministry of Justice of Ukraine over property rights registration in Ukraine.
- Increased liability of state registrars and notaries for violation of law within registration of property rights in Real-estate Register, including possible temporary ban or cancellation of access to Real-estate Register, withdrawal of notarial certificate (permit), other penalties, including criminal liability.
Amendments – A Step Forward?
These amendments to Ukrainian real-estate law are another step by Ukrainian Government to bring protection of property to international standards. Such amendments are part of the ongoing real-estate reforms in Ukraine that started in 2013 with implementation of a unified system of registration of ownership, other property rights, and liens on real-estate properties in a single register (Real-estate Register).
It is worth to mention that a number of provisions of the newly introduced amendments contradict with other Ukrainian legislative acts. For example:
- Under the provisions of Civil Code of Ukraine, parties in a respective sale-purchase agreement may agree that ownership will be transferred to the buyer after completion of certain actions (for example, full payment of real-estate price). However, under provisions of the new law, registration of property rights (including ownership) which arise as a result of notarial deal, must be performed in strictly defined terms – up to 5 days (see above). Taking into account that registration of property means transfer of property to the buyer and Ukrainian law requires to conclude all the deals related to alienation of real-estate in notarial form, from now on, parties will not be allowed to indicate other conditions of transfer of title for real-estate under real-estate sale-purchase agreement (such as payment for the property) and will have to invent new mechanisms of risk management in situations of payment on a deferred basis. This situation will be especially painful for foreign investors in Ukraine, who often pay for their investments from overseas and such payment process may last for several days.
- Law of Ukraine “On Mortgage” allows the enforcement of property rights without recourse to court if property is mortgaged and parties agreed so in the respective mortgage agreement (with the respective enforcement clause). Nowadays this mechanism is especially important to Ukrainian banks due to timely and costly court proceedings as well as big number of non-performing loans in economic crisis business environment. However, as mentioned above, starting from 2nd of November, 2016 such unscrupulous debtors may register a ban on any registration acts in Real-estate Register (for ten days with subsequent prolongation) by filing respective application and thus make the job of banks in enforcing their rights more difficult. As a result, in such situations banks will have to defend their rights and recover their losses only through court.
Hopefully, Ukrainian Government will soon make the necessary amendments in respective legislations to remove such conflicts.
In Ukraine’s real-estate market, fraud has been quite common due to weak property laws in the past. Recent reforms in the real-estate law along with these latest amendments are designed to strengthen the property rights and minimize any potential fraudulent actions. As a result of increasing interest from foreign investors in Ukraine’s real-estate market, bringing Ukrainian real-estate laws to international standards is crucial.
With all said and done, when planning your real-estate deal in Ukraine, we strongly recommend that you engage the services of a professional real-estate advisory firm to assist you in making a safe deal and protecting your future investment.