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Ukraine's opening land market: How to buy or sell a land share?

Author : Iryna Shostak

Source : 112 Ukraine

July 1, the moratorium on the sale of agricultural land in Ukraine terminates. This means that everyone can legally buy or sell land plots. But in order for the purchase/sale procedure to be successful for both parties, you need to know a few basic points.
09:19, 29 June 2021

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Is it legal to buy/sell a land share

On July 1, Law 552-IX on the launch of the land market comes into force. According to him, agricultural land can be sold to all individuals - citizens of Ukraine, without exception. But in the amount of no more than 100 hectares per customer.

In 2024, other players will enter the market - legal entities, and the concentration threshold will increase to 10 thousand hectares owned by one person or legal entity, except for banks (there are no restrictions on them). Foreigners will be allowed to "play" only if the Ukrainians themselves accept such permission at the referendum.

Due to the scandalous nature of the law, lawyers disagree on whether Ukrainians should carry out transactions for the sale and purchase of shares.

There is a risk that the Constitutional Court will find document 552-IX contrary to the Basic Law. For example lawyer Rostyslav Kravets assures that in this case all market participants will be held liable, and the transactions may be challenged in courts.

The head of the Land Law Committee of the Ukrainian Bar Association Viktor Kobylyansky and lawyer Maksym Mohylnytsky have a different opinion on this matter. Experts are confident that if the Constitutional Court recognizes the law as unconstitutional, this will not affect the transactions already concluded, because, according to the lawyers, the court's decision applies only to future transactions.

"People will not suffer in this case, since all agreements are considered valid until the law is recognized as unconstitutional," Viktor Kobylyansky said in a commentary.

If you have already decided to buy/sell a land share, it will be considered legal only after registration with a notary. An agreement not certified by a notary public, according to the Civil Code of Ukraine, is null and void.

It is the notary who performs the functions of the state registrar and makes the appropriate entry in the state register and issues an extract that the buyer's ownership has arisen.

Also, by concluding a deal with an authorized person, you, both as a seller and as a buyer, will be able to protect yourself from various types of fraud.

Related: Ukraine’s Constitutional Court considers constitutionality of land market

"Unlike other contracts for the sale of real estate, for the sale of land, there is a separate procedure approved by the Cabinet of Ministers. According to this procedure, the purchaser and owner of the land plot are tested for compliance with the requirements of the law, namely Article 130 of the Land Code of Ukraine," managing partner of the JSC. Mohylnytsky and partners Maksym Mohylnytsky says.

If you intend to buy or sell land, we have prepared for you a shortlist of the main points to look out for. Let's start with tips for the buyer.

How to buy a land plot?

In order to become a happy owner of agricultural land, the buyer needs a passport and identification number (TIN). He must also pass a check on the legality of the origin of funds, as well as whether NSDC sanctions have been applied to him, prohibiting the acquisition of agricultural land.

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Based on the results of such a check, the notary will draw up a protocol from which it will be seen whether the purchaser meets the requirements of the law or not.

It is impossible to buy a share for cash - a non-cash payment is required (funds are transferred to the card of the owner of the land plot). Therefore, the parties to the transaction must have bank accounts open.

To save time and nerves, before going to the notary, you need to clarify whether the seller has all the necessary documents in his hands.

Does the land share have a cadastral number? You can check this with the help of the Public Cadastral Map of Ukraine, indicating the exact location of the site or "punching" it using the cadastral number provided by the seller.

Due to the absence or incorrect assignment of a cadastral number to the site, a number of technical issues may arise, on which the success of the transaction will depend.

Related: Ukraine's constitutional court asked to repeal land market law

For example, one and the same land on the ground may have different cadastral numbers (if the land is located on the border of the districts and one land plot "overlaps" on another). Or the ground was not properly soldered at all.

"Quite often, state lands were unraveled without appropriate documents. For example, defense lands, lands that are in reserve, they had no right to unravel at all. In the future, all this will be the basis for the cancellation of any sale and purchase transactions," Rostyslav Kravets explains.

It may also happen that the seller has a state act with a cadastral number in his hands, but in fact this is not enough.

Information about the owner can be found on the web portal of the State Geocadastre, but for this you need to go through authorization (several ways to choose from).

From the generated help, you can find out, in particular, about:

  • the normative monetary value of the site (more on this below);
  • registered restriction on the use of the site;
  • subjects of ownership of a land plot.

Information about the owner of the site is for reference, all relevant information is contained in the State Register of Rights.

You can also check the land plot by its cadastral number in the Unified State Register of Court Decisions.

In the same way, you can find out whether the ownership of the land has been contested, whether it is under arrest and whether it has been transferred to a mortgage.

“A large amount of land has been inherited. And disputes may arise that not all heirs have inherited in time or were unlawfully deprived of inheritance, including shares,” Kravets notes.

Related: How Ukrainians are cheated for money in anticipation of land market launch?

Is the land on lease, and if so, when will it expire?

Information about the tenant and the lease terms can also be found on the web portal of the State Geocadastre after authorization.

There is a false perception that if a person sells the land, the lease will expire. The sale of the land does not affect the validity of the contract. Moreover, it is the tenants who receive the primary right to purchase the land plot.

"Since the tenants are legal entities, then, according to the law, they cannot buy land until 2024. However, they are allowed to transfer this preemptive right to another person," explains lawyer Kobylyansky.

Such a message requires contacting a notary to officially notify the tenant of the land plot of the intention to sell. We need to wait for an answer.

Expenses

In order to speed up the process, the buyer can take over part of the preparation of the transaction, in particular, engage in the entry of the land plot into the cadastre.

To do this, you need to contact the department of the State Geocadastre at the location of the land plot and order documentation for establishing the boundaries of the land plot in kind (on the ground). On its basis, the plot is "put into the cadastre" (a number is assigned to it). The cost of such a procedure varies from 800 USD.

According to experts, in practice, in most cases, the procedure falls on the shoulders of the interested buyer - it is beneficial for him to solve everything quickly.

Related: U.S. supports Ukraine in launch of land market; urges to close the gaps in the land legislation

How to sell a land share?

The seller is responsible for a greater amount of work - all the necessary preparation for a successful transaction "lies" on his shoulders.

"A month before the transaction, it is necessary to enter information about the upcoming sale in the State Register of Real Rights to Real Estate. Thus, the persons who have the preemptive right to acquire land will be informed," lawyer Maksym Mohylnytsky says.

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In order to avoid surprises during the transaction, the seller must make sure that he has all the documents necessary for concluding the contract:

  • an extract on the monetary expert assessment of the site and a decision on a particular cost;

Thanks to expert judgment, sellers can avoid fraudulent attempts to "knock down" the price. For example, a buyer can tell "tales" that the owner has bad land, that they won't give much for it, and more. But the very fact of having an extract and concluding an agreement with a notary disarms such fraudsters.

The only thing is that the price should really be adequate for both parties to the contract.

“In 1996, I participated in the distribution of the first certificates for a share in Ukraine. There was no moratorium and it was possible to trade shares freely. We waited for the first agreement with a share for about a year. The villagers weighed everything for a long time and were afraid to sell too cheap. I think there will be a similar situation here," lawyer Viktor Kobylyansky says.

Speaking about the cost of a plot, it is worth noting that sellers, whose plots are leased, need to be even more balanced in their approach to the moment of sale.

Related: Ukraine’s PM: Opening of land market leads to price increase for land twice

Thus, according to Viktor Kobylyansky, land that is leased for the next few years will cost less than land that is due to expire in the near future. It's simple: it is not profitable for the buyer to take a plot for the future because if he buys already "free" land, he will be able to use it immediately.

"I think that sellers are better off waiting until the rent comes to an end. After all, now there is a general tendency for land prices to rise. Therefore, there is no need to rush," adds the head of the Land Law Committee of the Ukrainian Bar Association.

Documentation of land registration in the State Land Cadastre;

Confirmation of registration of the site in the State Register of Real Rights to Real Estate.

***

In addition to the sale, from July 1, the land can be donated, as well as alienated on the basis of other contracts, for example, under a contract for life maintenance or exchange. Any of the contracts on the basis of which the ownership of the land is transferred must be notarized.

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