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Land Reform

As of October 11, 2019, five draft bills were registered in the Verkhovna Rada in pursuance of lifting the moratorium on land sales and launching land reform:

  1. No. 21941, submitted by the agrarian committee of the Verkhovna Rada and deputies of the party “Servant of the People”, a comprehensive draft bill on land reform, which is the basis for consideration by Parliament

  2. No. 21952, filed by the Agrarian Committee of the Verkhovna Rada and deputies of the party “Servant of the People” on electronic auctions

  3. No. 21783, filed by the Cabinet of Ministers of Ukraine on the regulation of land market turnover

  4. No. 11014, submitted by deputy V. Novinsky, on the prohibition of alienation of agricultural land until the conduct and establishment of the results of the All-Ukrainian referendum regarding the sale of agricultural land.

Y. Tymoshenko filed the draft bill No. 21835 similar to the draft bill No. 1101 of V. Novinsky on holding a referendum, however, on 01.10.2019 Y. Tymoshenko withdrew her draft bill.

The scandalous draft bill No. 85816 dated July 9, 2018 , “On Amending the Law of Ukraine on Land Lease”, which was aimed at giving lessors the right to terminate lease agreements unilaterally without the tenant’s consent after lifting the moratorium, was also revoked.

At present, it is not known which particular draft bill will be ultimately adopted, since the texts of the documents will be discussed by deputies of various political parties, agrarians, and experts. In this consultation we will focus on two main, from our point of view, draft bills.

The main provisions of the draft bill No. 2178 filed by the Cabinet of Ministers of Ukraine.

1. Buyers of agricultural land can be:

– citizens of Ukraine

– legal entities of Ukraine

– territorial communities

– the state.

2. The limitation of land ownership concentration: not more than 0.5% within Ukraine and 15% within the region.

3. The National Security and Defense Council of Ukraine may impose restrictions on the acquisition of land by persons associated with the aggressor country of Russia.

4. Persons are granted the right to redeem land provided to them for permanent use or on the basis of a lifetime inherited right of ownership with installments for 5 years at a price equal to the normative monetary value.

Complex draft bill No. 2194 submitted by the agrarian committee of the Verkhovna Rada and deputies of the party “Servant of the people”, which is the basis for consideration by Parliament.

In this consultation we will stop on its main provisions:

– the right to acquire land in ownership and use

 preemptive right for the alienation of land

– the land concentration

– the disposal of land

– the control functions

– reduction of state regulation (deregulation) in the field of land management

1. The right to acquire land in ownership and use.

The list of buyers of land, including agricultural land, includes stateless persons, non-residents of Ukraine, individuals and legal entities, with some restrictions for foreign legal entities. Thus, the Cabinet of Ministers of Ukraine is empowered to prohibit the acquisition of agricultural land plots located closer than 30 km to the state border of Ukraine for legal entities, the ultimate beneficial owner (controller) of which is a foreigner or stateless person.

Also, the restriction on leasing agricultural land for personal farming to foreign legal entities is excluded.

The draft bill is proposed to give land exclusively to persons of the first and second degrees of kinship (spouses, parents, children, brothers, sisters, grandfather, grandmother, great-grandfather, great-grandmother, grandchildren, great-grandchildren, aunts, uncles).

Citizens who conscientiously, openly and continuously use a land plot for 15 years, but do not have documents proving that they have rights to this land plot, may apply to the relevant authorities with a request to transfer it to ownership or to provide it in use. The acquisition by citizens of the right to a land plot under the period of use is carried out in the manner of free privatization of land plots by citizens within the limits defined by Article 121 of the Land Code (for maintaining a private farm – not more than 2.0 hectares; for horticulture – not more than 0.12 hectares; for the construction and maintenance of a residential building, household buildings and structures (personal plot) in villages – not more than 0.25 hectares, in villages – not more than 0.15 ha, in cities – not more than 0.10 ha); for summer cottage construction – not more than 0.10 ha; for the construction of garages – not more than 0.01 ha).

It is proposed to transfer state ownership of lands outside populated areas (except for lands where state property objects are located) to territorial communities.

2. Preemptive right to alienation of land.

It should be noted that the draft bill No. 2194 strengthens the rights of tenants, consolidates and develops a pre-emptive right to land.

In the event of alienation of land under a contract of sale or another agreement, the land owner is obliged to offer this land to a person who has a preemptive right.

Without the consent of the person having the preemptive right, there can be the following:

– the land plot is alienated only in the case of gifting to relatives of a degree of kinship 1 and 2 and levying a penalty on the subject of mortgage by the bank (at the same time, banks and other financial institutions that have acquired ownership of agricultural land in the manner of levying are required to alienate it at land tenders within a year).

– only land plots located in the same array of agricultural land are exchanged.

The Lessor will be obliged to inform the Lessee of the intention to sell the land to a third party in writing with a valuable letter describing the investment and a notice of delivery of the lessee, indicating its price and other conditions on which the land is for sale.

It is not allowed to add land to the authorized capital without the consent of the person who has the preemptive right.

In the case of the sale of land at an auction, the lessee has priority if the lessee’s offer is equivalent to the offer being the largest of those proposed by the participants in the auction.

The draft bill provides that when certifying land alienation agreements, notaries are required to verify compliance with the preemptive right, in case of sale of the land in violation of this right, the lessee may sue for transfer of the rights and obligations of the buyer to it. At the same time, the plaintiff is obligated to deposit a sum of money to the court’s deposit account, which the buyer must pay under the contract.

It is proposed to fix the boundaries between the land plots with the consent of the owners of these land plots, and the costs of installing adjacent borders are borne by the owners of the land plots in equal parts, unless otherwise provided by agreement between them.

A separation, unification of the land plot, which is pledged, is carried out with the consent of the pledge holder. A separation, unification of the land plot in use is carried out by agreement of land users. A consent to the division of the land, to combining it with another land plot is notarized.

Citizens who hold the right to permanent use, inherited lifetime possession of state and communal property plots intended for farming, as well as lessees who have acquired the right to lease land by renewing the right to permanent use are entitled to redeem these land plots into ownership with installment payment up to 5 years at a price equal to the normative monetary value of such sites, without bidding.

  1. Land concentration.

The area of the land of state or communal property for agricultural purposes, which is put up for sale at auction by one lot, may not exceed 20 hectares.

The size of agricultural land leased to a citizen for gardening is limited to 0.6 hectares.

Monitoring compliance with restrictions on land concentration (not more than 0.5% within Ukraine and 15% within the region) will be carried out by the Antimonopoly Committee. It is planned to introduce a system for collecting and analyzing data, as well as monitoring land relations based on data from the State Register of Property Rights to Real Estate, the State Land Cadastre, and the electronic trading system.

Disposal of land.

The powers of the Verkhovna Rada to coordinate changes in the intended purpose of especially valuable lands, land acquisition for the placement and maintenance of buildings and structures of diplomatic missions and consular offices of foreign states, and missions of international organizations have been canceled.

The agreement with the Cabinet of Ministers of Ukraine on the sale of non-agricultural land of state and communal ownership to foreign legal entities has been canceled.

Rural, township, city councils transfer the land into ownership or lease through land electronic auctions through the “ProZorro.Sales” system. At the same time, as indicated above, one lot puts up rights to land plots with an area of up to 20 hectares at land auctions to enable small and medium-sized enterprises to take part in them.

The decision to change the intended purpose of land plots not related to state or communal ownership will be made by village, town, and city councils. Also local authorities were given the powers to approve plans for detailed planning of the territory outside the settlements.

Banks and other financial institutions that have acquired an ownership right to agricultural land in the recovery order are required to alienate it at land tenders within a year.

Control functions.

It is proposed to deprive the State Geocadastre of its controlling functions, and transfer the function of control over unauthorized occupation of land to village, town and city councils, and over environmental violations – to the State Environmental Inspectorate, and other supervisory functions to regional state administrations.

6. Reduction of state regulation (deregulation) in the field of land management

It is proposed to introduce a check of documentation on land management and land assessment on the principle of “one touch” and “tacit consent”, where this public check shall be combined with control of topological connectivity and the absence of bordering, for which it is proposed to remove from the law the requirements for unnecessary types of approval of documentation (except establishing and changing the boundaries of administrative-territorial units) and cancel the state examination of land management documentation. In cases where mandatory state examination was previously envisaged, it is proposed to introduce voluntary independent quality control of land management with the possibility of reviewing it by certified land surveyors with at least two years of practical experience who have not participated in the preparation of this documentation, as well as expert councils of self-regulatory organizations in the field of land management. As an alternative to state control, a professional liability insurance of work performers is being introduced.

The documentation is checked once when entering data into the State Land Cadastre instead of a triple check (when coordinating documentation, when conducting a state examination, when entering information into the State Geocadastre).

It is proposed to eliminate the concept of agrochemical passport of a land plot.

It is proposed to cancel the separate procedure for issuing special permits for the removal and transfer of soil cover of land plots as documents of a permit character. Instead, it is proposed to introduce a general rule to determine the requirements for the conservation of the surface (fertile) soil layer in any land management documentation, the design resolutions of which will include violations thereof.

It is proposed to cancel the separate procedure for preliminary approval of materials for the location of the object supposed to be placed on the land plot, since it repeats and duplicates planning decisions on spatial composition and development parameters, which are determined in the urban planning documentation.

It is proposed to provide the opportunity to submit an application for entering information into the cadastre in electronic form. At the same time, the state cadastral registrar who will enter the information will be determined automatically according to the principle of randomness.

The provision of direct access of local authorities to the state cadastre, and officials will be able to provide any cadastral information.

The provision of the status of public, open and publicly available data to the documentation on land management and land assessment. In the register of property rights, it is proposed to introduce new information – the price of the object.

We will monitor the development of the situation and immediately report any changes.