Purchasing/Leasing property in Ukraine (finished construction)

Puschasing/Leasing property in Ukraine (finished construction)

Documents Confirming Property Title and Lessor's/Seller's Identity

In all cases involving real estate (purchase or lease), questions of security in the property's title and ownership rights predominate the agenda, frequently causing great confusion and distrust. The reason is quite simple: fraudulent transactions are abound and, as a consequence, all issues connected with title transfer and identity of the true owner must be flushed out before the actual execution of a sale-purchase (or lease) agreement in front of the relevant officials (notary public or commodity exchange).

In the past, gullible companies incurred significant financial losses after effectuating substantial pre-payment (up to 6 months' of lease price) to false lessors, only to find that their newly leased apartment actually belonged to an innocent third party. Other cases involved premature termination of fake lease agreements (often following repairs at the lessee's expense). Naturally, recourse to the law has minimal, if any, effect on reimbursement of expenses or provisions for alternative office space.

To avoid the various pitfalls, and before making any advance payments, the potential purchaser or lessee must review the background documentation, which serves as the ultimate proof of ownership, including:

1. sale-purchase agreement, gift agreement or privatization certificate for the property;

2. "technical characteristic" certificate from the
Bureau of Technical Inventory; and


3. certificate from the 1st Notary Public that the property is not secured by collateral or subject to encumbrances (i.e., it has no liens or "arrests" placed on it).

Other documents may be necessary, such as a waiver of children's rights to the property. In case the alleged owner is a legal entity, the seller's foundation documents, among other documents, are most helpful. Of course, if the alleged owner is a natural person (individual), his/her passport must be verified.

All of the above documents should contain the relevant seals of the state authorities, and should be collected within 3 months from the date of their presentation for professional review. Based on these documents, a legal opinion is prepared, confirming or rejecting the ownership rights to any given property.

Various excuses, such as lost documents necessary to confirm ownership rights or that a particular document original is somehow inaccessible, are an indication of a potential problem. Contrary to a popular misperception, property ownership records are kept in meticulous order somewhere in the state archives. In fact, we once tracked a complete set of documents dating as far back as 1944, which granted land rights to a Soviet army general, whose children wanted to sell his house to a foreign investor before immigrating.

A title search, however, is only a part of the chain of legal dilemmas surrounding the procurement of property. The supporting legislation concerning currency regulations and taxation also plays a large role in deciding the best way to structure real estate transactions and secure long-term possession and quiet enjoyment of the premises.

Procedure for Purchasing Real Property

Article 657 of the Civil Code of Ukraine states that real estate transactions must be executed before a notary public in writing and are subject to state registration. Alternatively, the Law "On Commodity Exchanges" permits certain commodity exchanges to execute real property sale-purchase agreements.
In the past, purchasers had significant difficulties with state-employed notary publics and, because an alternative existed, 99% of all property transactions were executed at commodity exchanges. Since then, Ukraine has introduced a system of "private notaries" to undertake this role. Currently, sale-purchase agreements are executed either before a state notary public or before a private notary. Below we review both alternatives.

State Notary Public


With reference to residential buildings and apartments, the Ukrainian government is represented by various entities, such as notary publics (state and private), the Bureau of Technical Inventory and the local ZHEK (literally translated as "Residential Exploitation Committee"). These bodies attest to the Ukrainian seller's ownership and occupancy rights to any property.

State notary publics are usually state officials and, as a rule, use their own standard forms for most transactions. In the context of real property transfers, the standard 2-page notary form for sale-purchase agreements recites only the most fundamental information concerning the property transfer, such as the names of the parties, the property's address, etc., and bears the parties' signatures and the notary's seal.

Negotiated provisions, including representations
and warranties, are viewed as irrelevant.


To encourage sellers and purchasers to state realistic sales price in sale-purchase agreements (instead of a fraction of such value, as was the long-standing practice to avoid property tax), in the spring of 2000, the government decreased the state fee for notarization of agreements on the alienation of immovable property from 5% to 1% of the amount of the transaction (i.e., the total amount indicated in the sale-purchase agreement)

Private Notary Public


Ukrainian legislation generously permits the existence of private notary publics. Once licensed, their powers are equal to those of state notary publics without the drawbacks of bureaucracy. By law, private notary publics cannot charge less than the current state fee to notarize real estate sale-purchase agreements. Although private notaries are permitted to take a higher percentage, most private notary publics do not charge higher than the state notary publics due to the tight competition between private notary publics these days.

A a reminder, in all cases, follow-up registrations must take place with the Bureau of Technical Inventory (establishing the new owner's identity), the notary public (central and rayon) and ZHEK.



Today, due to the abundance of privately owned, Western-quality property, foreign investors can easily purchase (or lease) virtually any real estate object, depending on the price. Reviewing ownership documents, drafting (and executing) the sale-purchase agreement, and registering the property at the Bureau of Technical Inventory, are the necessary technical details that accompany any transfer of property rights.

Sourse:Frishderg&Partners