New law on selling land together with house: Lawyers’ clarification

Author

Lesia Solovchuk

On October 28, the Law of Ukraine No. 1174-IX "On Amendments to Certain Legislative Acts of Ukraine Concerning a Single Legal Share of a Land Plot and Its Property", adopted by the Verkhovna Rada in February this year, came into force.

And on January 1, 2022, the Law of Ukraine No. 1720-IX "On Amendments to Certain Legislative Acts of Ukraine on the Transfer of Rights to a Land Plot Relating to the Transfer of Rights to Its Property" comes into force.

The law defines the simultaneous transfer of the right to use the plot when buying any real estate, as well as a facility under construction, with the exception of apartment buildings. For leased land, consent to the sale of real estate is not required, it will be enough to notify the landlord about the transfer of rights to the land plot.

Pros: Fewer documents and less corruption

According to the lawyers, the sale of a building together with the land itself is not a know-how in the Ukrainian legislation.

"Before the law adoption, the seller of a building could not sell a house without land and vice versa, since the building and the land are virtually inseparable in the legal plane. Now this process has been simplified and the transfer of ownership of the land plot will become automatic. This means that there will be one agreement—the house sale and purchase contract. Previously, there were two transactions: one for housing, the other for a land plot," Volodymyr Kopot, a lawyer and co-founder of the service Monitor.Estate, explains.

Such norms will really simplify the life of Ukrainians, the automatic transfer of ownership or use to the plot excludes the corruption component, Olesia Romanenko, Managing Partner at the company Olsten Partners, believes.

At the same time, according to the expert, a cadastral number must be a prerequisite for such agreements. If there is none (the land has not been privatized or was registered a long time ago), you must first assign a cadastral number.

Also, Law 1174-IX imposes the obligation upon the new owner to inform the landlord or the person who transferred the land plot for use on the basis of the right of emphyteusis and superficies about the transfer of ownership.

In turn, Law 1720-IX will impose the obligation to notify the landlord or the person who transferred the land plot for use on the basis of the right of emphyteusis and superficies about the transfer of ownership upon the state registrar.

The state registrar is obliged, simultaneously with the registration of title to real property and land plot title, to immediately notify the lessor, or the person who transferred the land for use on the right of emphyteusis and superficies (if information about their place of residence is in the State Register of Property Rights) by regular mail or e-mail.

Both regulatory acts stipulate that the expression of the will of the landlord (owner) of the land plot, the previous owner, and the acquirer of such a property, as well as the introduction of amendments to the land lease agreement, emphyteusis, and superficies with an indication of the new tenant (user) of the land plot is not required.

"In addition to the cadastral number, Law 1720-IX provides for one more condition of the agreement that provides for the transfer of ownership of the immovable property. This is a condition for the simultaneous transfer of ownership of such a plot (share in the common ownership of it) from the previous owner of the property to the acquirer of such a property. So, when certifying agreements from January 1, notaries will need to pay attention to both conditions that were not provided for until 2022," Romanenko explains.

Both laws stipulate: the basis for state registration of the transfer of ownership or use of the plot such a property is located on to the new owner are documents confirming the acquisition of ownership.

However, Law 1720-IX obliges the state registrar, simultaneously with acquiring real estate ownership, to register a real right to a land plot, while Law 1174-IX does not require this simultaneously, and the registrar can register the corresponding land title subsequently.

"The laws provide that if a person who cannot own a land plot under real estate acquires title to real property, such a person has the right to demand that the owner of the land plot transfer the relevant land plot to him or her on lease or superficies on the terms determined by the new owner," Olesia Romanenko stresses.

In this case, the new owner of the real estate has an obligation to reimburse the plot owner for the payment for the land, which, according to the law, must be paid by its owner. Such norms are provided in order to avoid abuse by the new owner of real estate and from the temptation to establish a minimum payment for land.

Gaps in the law

Of the law minuses, experts believe that the regulation of the automatic transition will badly impact the owners of land plots a house is being built on, for example, according to superficies (that is, the right to build on another person’s land). Now the plot owners will have to carefully choose partners who will build something on their land.

Volodymyr Kopot predicts that many technical issues of automatic registration of the land title transfer may arise, and abuses are also possible when, having property rights to incomplete construction, attempts will be made to illegally acquire land plots.

On the other hand, none of these laws establishes a ratio between the size and value of the acquired property and the size and value of the land plot it is located on, Olesia Romanenko stresses.

"There is a possibility of unfair seizure of land plots, the size and value of which is much higher compared to the real estate properties located on them," the expert explains.

Also, none of the laws regulate the issue of alienation of one of several real estate properties located on the same land plot.