UKRAINE LEGAL UPDATE
14 September 2022
A new law provides for registration of rights to future immovable property, specifically to flats in apartment buildings. Until now the registration requirement has only concerned existing properties.
The law generally deals with the protection of investors acquiring properties yet to be built. Due to uncertainty about future properties and their owners’ identities, the practice has been marred by much abuse. Now building companies will have to obtain registrations of specific apartments in the name of specific investors before the apartments are built.
Ukrainian law generally follows the principle that rights and encumbrances in real estate arise upon registration in a special register of real rights. The procedure is meant, among other things, to ensure legal certainty and give notice of title or the other rights to interested parties.
Subject to registration are ownership and other real rights, such a easements, as well security rights, such as mortgages.
Real rights refer to all such rights in tangible property that have absolute effect, being valid against the whole world. The opposite category is relative or personal rights (such as contractual claims), good only against specific persons.
Registration also applies to encumbrances. These include third party rights and other charges over properties, arising from contract or otherwise.
Immovable property includes land and structures firmly attached to it, such as buildings or their individual units (e.g., apartments).
In practical terms, the principle of registration means that in order to acquire title to real estate, it is not enough for the parties to enter into a respective sale or other contract. The ownership or other rights arising under the contract must further be registered.
Exceptions include properties acquired before 2004 (when the current registration system was introduced), provided such properties were registered under the then applicable law or no registration was required.
Prior to 2010 the rule was that real rights could arise apart from registration, but registered rights had priority over unregistered ones. So, under the old system, where two persons bought the same property, the party who got the registration first was able to assert title.