The new year started with significant changes regarding the registration of rights to real estate.
In particular, the restated Law of Ukraine “On State Registration of Proprietary Rights to Real Estate and Their Encumbrances” entered into force (partially from 13 December 2015 and partially from 1 January 2016) (the Law), and Resolution of the Cabinet of Ministers of Ukraine “On State Registration of Proprietary Rights to Real Estate and Their Encumbrances” dated 25 December 2015 No. 1127 (the Resolution) took effect.
The Resolution abolishes the following resolutions of the Cabinet of Ministers of Ukraine, specifically:
- “On Approval of the Amount and the Procedure for Use of the Fee for Introducing Amendments to the Entries in the State Register of Proprietary Rights to Real Estate and the Provision of Information from the Said Register” dated 21 November 2012 No.1204
- “On Approval of the Procedure for State Registration of Rights to Real Estate and Their Encumbrances” dated 17 October 2013 No. 868
- “Some Issues Related to the Provision of Information on Registered Proprietary Rights to Real Estate and Their Encumbrances” dated 24 December 2014 No. 722
- “On Provision of Services in the Field of the State Registration of Proprietary Rights to Real Estate and Their Encumbrances in a Shorter Period” dated 8 April 2015 No. 190
The Resolution also approves:
- The procedure for provision of the information from the State Register of Proprietary Rights to Real Estate
- The procedure for access to the State Register of Proprietary Rights to Real Estate
Thus, all “procedural” matters with respect to the registration of rights to real estate and their encumbrances have been changed.
In addition, on 1 January 2016 the Order of the Ministry of Justice of Ukraine dated 2 April 2013 No.607/5 “On Measures Concerning Interaction between Authorities Engaged in the State Registration of Rights and Their Officials” setting out the requirement to register ownership rights to property with an area of more than 5,000 sqm through the State Registration Service was cancelled.
What global changes will occur as a result of the adoption of the Law and the Resolution?
- The list of rights subject to registration has been slightly modified. Now, the Law expressly states that the right to use (hire, lease) a building or another permanent structure (their separate part) arising out of an agreement for hire (lease) concluded at least for three years is subject to registration. Previously, the Law stipulated that any lease, regardless the term, had to be registered. By such amendment, the provisions of the Law have been brought into compliance with the provisions of the Civil Code of Ukraine (with respect to which there had previously been a conflict).
- At present the Law clearly stipulates that the state registration requirement does not apply to proprietary rights to and encumbrances on mineral resources, plants as well as small architectural forms, temporary non-permanent structures located on land which can be relocated without their depreciation and change of the designated purpose, and separately to appurtenant or component structures, specifically to main and industrial pipelines (including gas distribution networks), motor roads, electricity networks, main heating networks, communication networks, railway lines. Until the adoption of the Law there were different legal views regarding the necessity to register ownership of main and industrial pipelines (including gas distribution networks), motor roads, electricity networks, main heating networks, communication networks and railway lines.
- The list of entities that may carry out registrations has been changed. Starting from 1 January 2016 registration may be carried out by: (1) entities engaged in the state registration of rights (executive bodies of village, town and city councils, Kyiv, Sebastopol city, district, district in the cities of Kyiv and Sevastopol state administrations, accredited entities) and state registrars of rights to real estate (notaries, state enforcement officers, a person who meets the eligibility requirements of the Ministry of Justice of Ukraine and is employed by an entity engaged in the state registration of rights.)
- The registration process has itself also now become easier. It is now possible to carry out the state registration based upon the application submitted by an applicant in electronic form to the entity engaged in the state registration of rights or the notary through the web portal of the Ministry of Justice of Ukraine.
Note that although from 1 January 2016 notaries may register rights to newly built and reconstructed buildings, they do not in fact register them so far for the following reasons:
- An unclearly stated “exterritoriality principle” (that is, a possibility of registration of ownership of real estate by a notary who is administratively situated not at the location of the real estate). We expect more detailed clarification on this matter from the Ministry of Justice of Ukraine.
- Previously confirmation of the state registration was drawn up as a formal extract, but now, according to the requirements of the Resolution on an official form, information from the Register may be provided in two forms: (1) electronic form; and (2) paper form. Information in paper form shall be provided by means of its printing using software for maintenance of the State Register of Rights on A4 paper sheets (210 х 297 millimeters) without using any special forms, affixing any signature or seal. Market participants and notaries still discuss this novelty, since confirmation of ownership of real estate received in the form of an information sheet only (without issue of any formal title document) seems to be very controversial for the market, which has become used to the previous formalities.