Ukraine Property Ownership

Contrary to widespread misconception, ownership records are kept in meticulous order in state archives. Although the exact nature of "state archives" is unclear, real property transfers should be archived in the Bureau of Technical Inventory and/or the Zhek (literally translated as "residential exploitation board") of the administrative unit (city, settlement, oblast, rayon) in which the property is located. The archive in these entities is known as a Cadastre. Again it is unclear at what level of administrative unit these entities exist. It is believed that instruments creating estates, interests, rights, encumbrances, and liens are not completely standardized. Research revealed that there are consistent forms for sale-purchase contracts. Documents securing properties as collateral or evidencing liens are filed with the rayon Notary Public. But although notarized, many documents are not legally valid and do not suitably document interests in real estate.

Ukraine Transaction Information

Transaction data for property in each administrative unit is accessed in the Cadastre of either the Bureau of Technical Inventory and/or the Zhek. There are no commercial sources for real estate transaction data.

Ukraine Trade Associations

Vladislav Orlov, Executive Director
Ukrainian Realtors Association
011-380-44-293-1516

Ukraine Land Rights

Currently land rights in Ukraine are being restructured and Ukrainian land laws are not fully developed, especially concerning private ownership.

State land can be leased. State lessors may be rural, settlement, city, and rayon Radas (it is believed that Radas is the general term for government offices of an administrative unit). Use of state-owned land in Ukraine is typically temporary but in some instances may be perpetual (period of use is not established). Temporary uses of state land can be leased for up to 49 years and may have one additional 49 year option. Lease contracts with the State must be negotiated with the appropriate Rada and registered with the entities described in section 8.9. Private ownership rights include three elements: the right to own, the right to use, and the right to dispose. This bundle of rights is subject to state authority over land use, taxation, and forms of eminent domain and police power. Private interests in land improvements carry the same bundle of rights that travel with land.

Ukraine Forms of Ownership

Land: At this time, ownership of land exists in the following forms: state, collective, and private. It is reported that until recently, all land in Ukraine was owned by some entity of the state (federal, city, settlement, oblast, rayon, and rural Radas). The term "ownership" appears only in the latest Land Code where previously the term "perpetual inheritance control" was used instead, which had the same meaning - use with limiting restrictions. In accordance with the latest Land Code, use of land which is not limited by previously established features of the Code is viewed as permanent. Although private land ownership is growing, current ownership patterns reflect prior Land Codes. Per prior codes, Ukrainian citizens could be granted perpetual use of up to 0.1 hectare in cities, 0.15 hectare in municipal districts, and 0.25 hectare in villages for uses cited in section 8.17. With evolution of a market economy, Ukraine is developing a land privatization program. Under this program, individuals and legal entities of Ukraine who do not own shares of a state-owned property have a right to privatization of land parcels. Privatization is carried out by appropriate state administrations and executive committees of local Radas by sale of such land parcels. Privatization can occur form sale of parcels or from the sale of leasehold rights that may convert to private ownership with future revisions of the Land Code which are expected. Land parcels are transferred to collective and private ownership by councils of peoples’ deputies in the area in which the parcels are located. Ownership or right to perpetual use of land is certified by state acts issued and registered with local councils of peoples’ deputies (Bureau of Technical Inventory). Ownership interest begins after a survey of the subject parcel is completed and after a certificate of sale is received upon registration.

Buildings: The same three forms of ownership exist for buildings in Ukraine: state, collective, and private. But relative to land, there is a higher proportion of buildings and improvements that are in private ownership. Privatization has been most progressive in residential real property where ownership interests in apartments is vested in historical occupants upon registration of a privatization agreement.

Foreign ownership: Foreign entities cannot directly own real property in Ukraine. Such entities must register as Joint Stock interests (closed or open), Limited Liability Corporations, or Partnerships with Ukrainian interests.

Ukraine Real Estate Info Summary

Title & Contracts in Ukraine

It is believed that transfer of title of land and buildings/improvements use the same process with certain specific procedures considering property type (land, building, residential unit). Buyer and seller record a sale-purchase agreement at one of three places: government notary public, private notary public, commodity exchange. The sale-purchase contract is executed by a witness to the agreement and it is then given a seal from the notarizing entity.

Depending on the property type, the notarized document is then registered at an appropriate government entity. Sale-purchase contracts for land and commercial buildings are registered at the Bureau of Technical Inventory of the administrative unit in which the property is located. The buyer is then issued a "technical characteristic" which is interpreted to be equivalent to title. Contracts for residential real estate are registered at the area Zhek. It is believed that effective transfer of title occurs when sale purchase documents are registered.

Procedurally, the Ukrainian Civil Code requires that real estate transactions be executed before a notary public where one of the parties is a physical entity. Alternatively, the Law "On Commodity Exchanges" permits certain commodity exchanges to execute real property sale-purchase agreements. This was confirmed by DTZ brokerage in Kiev. While both alternatives exist in theory, the frequent difficulties in dealing with state-owned notary publics have forced most sale-purchase agreements to be executed at the commodity exchanges. At this time recording can occur in three places:
Government Notary Public

Disadvantages: Standard sale-purchase agreements recite only basic transfer information and omit integral contract provisions, contingencies, warranties, etc. Unpublished regulations issued to Government Notary Publics create non-uniform barriers to transactions.

Private Notary Public

Advantages: Once licensed, the powers of private notary publics are equal to those of government notary publics with fewer complications of bureaucracy.
Commodity Exchange

Advantages: Transactions can be structured freely to include any provision, contingency, warranty, reservation, etc. that cannot be included in standard government notary sale-purchase documents. Unlike the government notary public, commodity exchanges do not inquire concerning the payment mechanism or currency used making transactions more efficient.

The Law "On Commodity Exchanges," specifically authorizes licensed commodity exchanges to execute real property agreements. To date, no real estate agreements executed through commodity exchanges have been invalidated (unless due to wrongful or criminal transfer). Evidence of title can require numerous documents including, but not limited to: notarized sale-purchase contract, "technical characteristic" issued upon registration of sale-purchase contract from the Bureau of Technical Inventory, certificate from notarizing entity that property has no liens affecting title, waiver of family rights to property, foundation documents (if alleged owner is a legal entity). All documents should display the relevant seals of appropriate state authorities.

Property Taxes:

Lands in Ukraine are used on a paid basis. Land owners and land user annually pay a form of land tax or rental fee based on its Cadastre valuation. Right to use may be suspended under resolution of respective Rada or by court proceeding if there is failure to pay land tax.

Land Use & Control

On a national level, land use is governed by the Land Code of Ukraine, adopted 3/13/92. State owned land may be given by administrative unit councils of peoples’ deputies for permanent use (with or without rent) to: citizens of Ukraine for purpose of farming and development of personal subsidiary business; agricultural enterprises and organizations; public associations; religious organizations; non-agricultural enterprises; institutions and organizations; specialized enterprises for forestry; housing, housing construction, garage and dacha-construction cooperatives; joint ventures, international associations and oganizations with participation of Ukrainian and foreign legal entities and individuals; and Ukrainian enterprises wholly owned by foreign investors.

Land use controls also exist for privately held real property (buildings and improvements) in Ukraine. Building/architectural and planning codes exist for significant cities. Kiev has a master plan.

Ukraine Mortgages & Financing

The Land Code of Ukraine indicates that land my be used as collateral for mortgage. Instruments do exist that hypothecate real property as security of debt. As real estate financing institutions are not developed, mortgages are not commonly available or used.

It is reported that no formal financing exists for small to moderate scale commercial or residential real estate acquisition or construction. Transactions and construction expenditures are conducted in cash. International
institutional financing exists for special projects such as hotels.