The adoption in 1992 of a Land Code to regulate private and communal ownership, alongside state ownership of land, marked the beginning of a long transition of former state farmlands into private ownership by Ukrainian citizens.
“We have a law on the redistribution of plots, but it is not used effectively enough. For the time being all land ownership matters are regulated by the Land Code. It is now essential to inform citizens about the ways in which they can obtain land,” says Alla Kalnychenko, head of the legal department at the State Committee for Land Resources, who appeared at a recent seminar on “Land Regulations in Ukraine: Analysis of Current and Prospective Legislation.”
Every citizen of Ukraine has the right for once-in-a-lifetime privatization of land free of charge. However, this right does not necessarily guarantee that you will establish ownership of this land. Under Article 121 of the Land Code, everything depends on whether local self-governing or executive bodies have available plots that they can distribute among those who wish to obtain them. The more claimants there are, the higher the probability that they will obtain much smaller plots than envisaged by law. For example, while the law provides for a two-hectare plot for private use, in reality people get between 1 and 1.5 hectares. Meanwhile, residents of oblasts close to the Carpathians can obtain several plots in different locations, and all transactions with individuals are recorded in a single deed.
In addition, the plot must be used for its intended purpose. That is, if you have obtained land to build a private cottage, you may not build a store or car wash; otherwise you will face sanctions from the tax authorities, who will levy different taxes on private property and profit-generating property. Still, if you have decided to use your own home for commercial purposes, the only way is to reregister some part of your plot officially, according to its new purpose.
Aside from obtaining land through privatization, you may buy it from other individuals or entities, or from the state. Purchase and sale transactions are based on a lifetime ownership contract, when one person transmits his land ownership rights to another person. However, as long as the land grantor is alive, the grantee may not dispose of this land freely.
Similar restrictions are in place for land bought on the installment plan, except in this case they are cancelled not after the seller’s death but after the balance has been paid in full. In the case of purchases by installments, buyers often face problems establishing their right of ownership. A person is considered a full owner of purchased land after establishing the boundaries and receiving an official land ownership deed that is subject to registration. Yet sellers often refuse to issue this deed in the case of purchases on the installment plan as a safeguard against unscrupulous buyers who, after becoming full owners, might sell the land without paying off the debt in full. According to Kalnychenko, such fears are unfounded, since no one prevents sellers from stipulating preventive sanctions in the contract. In addition, starting in 2005 the land resources committee has instituted a register of real estate rights and restrictions. Every plot of land is assigned a cadastral number. Where land has been sold under an installment contract, any operations with this land are banned until it has been paid for in full.
According to Kalnychenko, legal entities face a much more difficult situation. The Land Code classifies them into several groups, only some of which may obtain land. This unconditional right belongs to legal entities established by Ukrainian citizens who intend to use land as part of their business operations. Thus, those who wish to privatize land to build a daycare center have to obtain permits from the land authorities.
Foreign entities may secure the right to own land only on condition that they have permanent operations in Ukraine, and only if this land is occupied by the immovable property of this legal entity or it has been offered for sale by tender for a construction project. The sale of land to foreign entities within city or village limits must be approved by the Cabinet of Ministers and land outside populated areas, by the Verkhovna Rada, which is virtually impossible. The same restrictions apply to joint ventures.
Notably, no one has been able to buy agricultural land in Ukraine since 2000 because the ban on the sale of arable land is in place until the beginning of 2007. This means that plots distributed among members of collective state farms may not be sold. The only type of land that can be sold, and hence bought, is land intended for personal use. But a legal entity may obtain land only if it quickly changes the intended purpose of such a plot from “for personal use by the village population” to “private land plot.”
