Guide to Ukraine Real-Estate Property Law
Ukraine real-estate property law refers to the law of acquisition, ownership, protection, and disposition of real-estate assets in Ukraine. Government of Ukraine has taken important steps in recent years to further protect property rights and facilitate safety of real-estate deals in Ukraine.
This guide provides an overview of the real-estate property law in Ukraine and consists of the following sections:
- Historical Background
- Real-Estate Classification
- Real-Estate Ownership
- Origin and Registration of Property Rights
- Real-Estate Law – Key Highlights
- Real-estate Taxation
Brief history of real-estate law in Ukraine
After the collapse of Soviet Union and Ukraine’s independence in 1992, Ukrainian Government amended Law of Ukraine “On Property” and introduced private ownership. Before that, at the times of the Soviet Union, private property was not allowed and people had right of use for residential property based on their registration address.
Since then, Ukrainian private real-estate property law has gone through a series of steady improvements that include:
- from multiple paper registers (register of ownership for dwellings, register of ownership for land plots, for mortgage, for liens and for tax pledge) to a single unified electronic register called State Registry of Real-Estate Property Rights and Their Encumbrances (hereinafter – Real-Estate Register). The new Real-Estate Register is accessible online and includes all the necessary information on property rights and liens on real-estate objects.
- streamlining of the title registration process where now a notary while notarizing the deal can simultaneously perform necessary checks and register title for the buyer at the same time;
- from monopoly of state authorized bodies for registration of property rights / liens to distributed network of authorized bodies (including private notaries);
- from time-consuming registration procedures to more efficient procedures with fixed time-bound periods for property rights registration (up to 5 working days) and others.
The Ukrainian Constitution guarantees ownership rights for land and the inviolability of private ownership, which means that an owner may not be deprived of his ownership rights other than by a court decision. Principles and rules of international law and international treaties of Ukraine are generally recognized (subject to ratification by Ukrainian Parliament or other authorized state body) and form an integral part of Ukrainian legal framework. Ukraine is a party to a number of bilateral inter-state agreements on promotion and mutual protection of foreign investments which guarantee the observance of foreign investors’ rights relating to investment in real estate property in Ukraine.
In Ukrainian law, real-estate property is classified into two main groups:
- non agricultural types of land
- Other immovable property (buildings, premises, apartments, residential houses etc). These objects are broadly divided into:
- residential property; and
- non-residential property
Land plots in addition to Real-estate register, are also registered in the Unified Sate Cadastral Register with allocation to each of the cadastral number.
Local individuals and legal entities (100% locally owned) can freely own any type of real-estate object in Ukraine including land.
Foreigners individuals and foreign legal entities are also allowed to freely own real-estate property in Ukraine BUT with the following limitations: :
- prohibition to own agricultural land by foreign individuals and companies, registered overseas, and legal entities, registered in Ukraine but which have foreign share capital;
- foreign citizens may own only non-agricultural land plots and only within city, town or village; beyond residential units foreigners may own land if they own building, located on such land plot;
- legal entities, registered overseas, and legal entities, registered in Ukraine but which have foreign share capital, may own only non-agricultural land plots and only within city, town or village in case of purchase of buildings for business activity or if land plot is purchased for construction of such building; beyond residential units such legal entities may buy land plots if they simultaneously buy building, located on such land plot;
- Legal entities, which are registered in Ukraine, but which have 100 % foreign share capital, are not allowed to own any type of land (due to law gap);
- Complex procedure of approval of sale of state or municipal land plots to legal entities, registered overseas and Ukrainian companies with foreign capital.
Legal entities registered overseas, can buy state or municipal land plots only upon prior registration of permanent establishment on the territory of Ukraine. Sale of state or municipal land plots to legal entities, registered overseas and Ukrainian companies with foreign capital is made by:
- for state land plots:
- privatization authorities (subject to approval by the Cabinet of Ministers of Ukraine) if there is a real-estate object located on the land plot which is subject to privatization;
- in other cases – sale is done by the Cabinet of Ministers of Ukraine subject to approval by Ukrainian Parliament
- for municipal land plots: sale is made by municipal authorities subject to approval by the Cabinet of Ministers of Ukraine.
Note that there are no limitations to lease of the above-mentioned land by non-residents of Ukraine.
Origin and Registration of Property Rights
Origin of Property Rights in Ukraine
Property rights and their encumbrances may arise on the following grounds:
- civil agreements:
- mortgage agreement i.e. right of mortgage
- lease i.e. right to lease
- gift and others
- by law (for example in case of inheritance without will)
- court decisions
- decision of state authorized bodies (for example, in case of free of charge privatization available for Ukrainian citizens)
Based on one of the above-mentioned grounds, the person who acquired property rights, has to file application for registration of his/her rights (e.g. ownership, lease, mortgage, etc.) in the Real-Estate Registry.
Note that property rights arise only after their registration in the Real-Estate Register.
Timeline for Property Title Registration
Up to 5 working days (exception is registration of mortgage and liens on real-estate: it is registered within up to 2 days upon application). Exact time for registration depends on amount of state fee, paid for registration (exception is registration which is performed as a result of notarial deals, where fee is always 0.1 minimal wage).
Property Registration Fee
Depends on term of registration and title:
- ownership title – from 0,1 to 5 minimal wages;
- other property rights – from 0,05 to 2,5 minimal wages;
- liens – from 0,05 minimal wage;
- property rights as a result of notarial deal (for example, real-estate purchase agreement) – 0.1 minimal wage (as a rule, registration of ownership, other property rights and liens is performed on the same day as notarial certification of the deal).
Note:Minimal wage is taken on the 1st of January of the year when the registration takes place. As of 1st of January, 2016 minimal wage is 1,378 UAH i.e. roughly $50 at present exchange rate.
Registration of real-estate property in Ukraine can be performed by one of the the following registrars:
- authorized employees of municipal authorities
- authorized employees of state legal entities who are entitled to perform state registration and have been duly accredited for this purpose
- state executive while executing court decisions
Both notaries and municipal authorities are entitled to perform any kind of registration in the Real-estate Registry, amend such records or terminate them based on supporting documents.
However if title is registered due to executing notarial deal (as an example, sale-purchase, mortgage agreement and others), such title registration can be performed exclusively by the notary who certifies the deal. In this case, such notary will register respective rights in the Real-estate Register together with notarization of the deal or within terms as described above for each type of property right.
Real-Estate Law – Key Highlights
Below we have compiled a list of key features that you should be aware of when dealing with real-estate property in Ukraine:
- Registration rule: all the property rights or liens on real-estate come info force from the moment of their registration in the Real-estate Registry (exception is lease of buildings, houses, premises and apartments if it is concluded for less than 3 years).
- Land plot title follows the real-estate: if real-estate (building / house / construction) is sold, the buyer will simultaneously get the same title for the land plot under the real estate item, as previous owner had before the sale. However rights for land plot are subject to separate registration with the Real-estate Register.
- Spouse joint ownership rule: if otherwise is not prescribed by the marriage agreement, all the property, acquired by one of the spouse, is considered joint property of both spouse. Exceptions are private things, inherited property and property, acquired as gift.
- Protection of rights of children: sale of residential property, owned by child under 18 or where the child’s has registered address requires consent of Child Protection Service of Ukraine.
- Limitation of foreign ownership of land: ownership of certain types of land by foreign individuals, legal entities, registered overseas and legal entities with foreign capital is not allowed (as explained in previous sections).
- Ban on alienation of certain types of agricultural land.
Owners (both locals and foreigners) of real-estate property in Ukraine may be subject to:
- annual property tax
- tax at the time of buying a real-estate property
- tax at the time of selling a real-estate property
Since this topic is outside the scope of real-estate property law, it’s covered in a separate guide titled ‘Guide to Real-Estate Property Tax in Ukraine’.
Ukrainian real-estate law allows foreign individuals and foreign legal entities to own, lease, mortgage and have other property rights and impose liens on real-estate property in Ukraine. However, in order to protect national interests, certain types of land (for example, agricultural land) may not be owned by foreign individuals or companies with foreign capital or registration.
Ukraine now has modern unified system of registration of property rights and bans of real-estate, which allows online access to it for reviewing information. In recent years, the system of registration has been significantly simplified with implementation of strict time limits for registrars to register respective title. At present, in most cases registration is made by private notaries in Ukraine together with notarial certification of the deal.