The Plenum of the High Commercial Court of Ukraine (the "Court") has issued Decree No.12 "On Application of the Property Lease (Rent) Laws" dated 29 May 2013, (the "Decree") clarifying certain provisions of Ukrainian law concerning the execution, amendment or termination of a lease of property, including buildings or other permanent structures or any part thereof ("Property"). The Court clarified, inter alia, (1) whether or not any lease extended for a three-year or longer period needs certification by a notary; and (2) the effects of continued occupation of leased property after expiry of the lease.

Notarial certification and lease extension

As a general rule the Civil Code of Ukraine (the "Civil Code") provides that any Property lease made for three years or longer requires certification by a notary, and the lease right requires state registration.

Until recently there was no common position on whether or not a Property lease may be extended, by entering into an amendment, for a three-year or longer period, if the lease has not been certified by a notary.

The Court clarified that no lease is to be rendered invalid for failure to have it certified by a notary, if such lease is extended for a three-year or longer period under article 764 of the Civil Code, i.e. if (1) the lease has expired, and (2) the lessee continues to occupy the property, and (3) the lessor has stated no objection to such use within one month.

Further, the Court expressly determined that in such an event the lease shall extend automatically for the same period and on the same terms and conditions, and no renewal, amendment or any other document need be executed to give effect to such extension. These rules also apply to the lease of any state-owned or municipal property.

However, if the parties amend any lease which remains in force, providing for its extension for a three-year or longer period, then such amended lease requires certification by a notary and any failure to do so may cast doubt over the validity of such lease.

Conclusion

The Court's clarifications must be taken into consideration when concluding or extending any Property lease in order to avoid any risk to the lease.

We note that the Decree has no force of law; however the courts are bound to take the Decree in account when ruling on any property lease matter.