13. Property rights
1. General overview
So far Ukraine has no adequate and feasible guarantees of the owners’ rights. This situation can be accounted for by unreliable system of property rights registration, faulty urban development legislation and overall legal basis which regulates the realty issues.
Despite the steps, aimed at reforming the system of property rights registration and facilitation of the procedure for acquiring titles and deeds, initiated by the state, so far the system does not protect the owners’ interests and does not provide full guarantees of the adherence to property rights. The bureaucratic component in the process is still very substantial, while public institutions are not ready for the changes that are in order. Besides, the closed nature of the title registries obviously does not contribute to the transparency in this area.
There are more problems related to the construction area. The rights of people investing into new construction and often becoming fraud victims are not protected at all.
The judicial bodies are losing their authority every year and cannot provide efficient guarantees of the property right. The violations of the property right, numerous as they are, cannot be addressed by the courts in timely fashion. The disastrous failure of the courts to enforce their decisions concerning the protection of the owners’ rights aggravates the problem even further. The court guarantees of the property right are out of question as long as two thirds of court decisions are not served.
The long-term moratoria on sales of state property create unequal conditions for various owners and give companies that own a substantial portion of state property a chance to avoid responsibility.
In 2013 the issues concerning the moratorium on agricultural lands sales were not resolved either. The mechanism of property alienation for the public needs did not become clearer or fairer. So the violations of the rights of owners in this area continue.
Meanwhile, the law enforcement bodies often violated the property rights they were supposed to safeguard and protect. Moreover, often they became the instruments of exerting pressure and depriving the legitimate owners of their property.
2. Guarantees of property right
State registration of the titles and deeds for the real estate
Efficient and reliable system of real estate titles’ registration is extremely important guarantee of peaceful ownership of one’s property. In Ukraine the procedure is defined by the Law “On state registration of proprietary interests to the real estate property and their restrictions”.
On January 1, 2013 the new procedure for state registration of the titles with respect to the real estate property and their restrictions came in force. In particular, the list of subjects authorized to do the registration was amended.
Since 01.01.2013 the competences of issuing real estate titles were transferred from the Technical Inventory Bureau to the State registration service and notary service. Now the Bureaus deal exclusively with technical inventories, which are obligatory only in special cases, while in general cases, i.e. alienation of the real estate (a building, an apartment etc.) is carried out upon the parties’ consent.
Alongside with that, the information and documentation concerning the real estate property and its owners is not clearly defined, thus opening the door for abuse and fraud, while the vacuum created by the lack of documents establishing the ownership, engenders the situation when several owners claim the same real estate objects.
The proprietary interests in real property and their restrictions are registered by the State registration service and its local branches. This service is short of qualified staff, while available employees are unable of providing services of appropriate quality. Besides, the facilities where the branches operate do not meet either the requirements for this services or basic needs of the public. The facilities cannot accommodate large numbers of people; the information materials explaining the registration procedure are in short supply. Besides, the long lines to the Technical Inventory Bureaus, despite the declared facilitation of the registration procedure, are still there.
Currently the State registration service deals with both primary and secondary registration of proprietary rights and their restrictions. Public and private notaries are now authorized to do the secondary registration when the title is passed to the new owner on the basis of contracts, testaments etc.
Meanwhile, the facilitation of the registration procedure increased the risks of scheming and manipulations involving dishonest notaries. As the notaries participate in the registration procedure notarizing property titles, they have an opportunity to notarize illegal contracts and to register the real property on the basis of these contracts. Unfortunately, so far such instances are numerous. Corruption is inherent to all state bodies and institutions; therefore, frauds in real property alienation become possible with the support of real property registration offices’ staff.
The changes in the registration procedure for the real property proprietary rights and their restrictions have become possible due to the creation of the State Registry of the real property, among other factors. This Register includes the database of the Uniform Registry of the bans on the real property alienation, State Registry of mortgages, State Registry of the movables, Registry of the titles to real property, which, in their turn, were liquidated. Nevertheless, the State land cadastre, containing the information on land plots, still functions independently. It is noteworthy that both state registrars and public and private notaries have the access to the State registry of the proprietary rights to the real estate property.
The liquidation of the numerous registries is definitely a positive development. However, the inaccessibility of the Register data for both public at large and attorneys testifies to the fact that the official approaches to the issues of real property have not changed. This information is available only to the owners of the real estate property and persons authorized by the owners. It still remains inaccessible for public at large, providing the opportunities of various schemes for the felons, while citizens have no real means of protecting their rights.
The closed nature of the register blocks market relations, because the openness of the information on property titles and deeds sets up the foundation for such relations – the economic potential of the assets, adequately evaluated in the market, is registered; private property is legalized and the liquidity of assets increases, setting up the basis for the development of social relation and capitalization of property.
In October 2013 the draft law addressing the openness of the Registry was submitted to the Supreme Rada. However, it has not been considered so far.
As compared to the former procedure of the registration of titles for the real estate property, the number of required documents was shortened; the Act of technical inventory is no longer needed as well as the excerpt from the Registry of property titles. Now this excerpt is prepared by the state registrar or notary in the process of registration of titles for the real estate property.
The elimination of the Act of technical inventory from the list of documents needed for the registration of titles for the real estate property is an ambiguous change. On the one hand, the technical inventory carried out by the monopolistic office, i.e. the Technical Inventory Bureau – significantly complicated the registration process. Due to the Bureau monopoly in this area corruption could flourish. The humongous lines at the Bureau entrance used to be routine, regardless of weather conditions. That is why the elimination of this rule significantly facilitated the registration of titles.
On the other hand, however, the technical inventory somehow prevented the uncontrolled development and re-planning.
The process of real property titles’ registration remains complicated. The promised on-line registration does not work. Unlike many other countries, not necessarily European, Ukraine never got anywhere.
Although the registration term was reduced to 14 days, in practice it can be longer, if the application and documents are inaccurate or faulty. The unjustifiably long registration term is due, first of all, to the fact that the state is not ready to reduce this term significantly.
The procedure for issuing land titles deserves special attention. The primary registration of the land titles is conducted by the State registration service, while the documents are to be submitted to State land agency. First the land plot is registered in the State land cadastre, and then the land plot information is submitted to the State registration service, where the land title is issued. However, the documents confirming the property right (State act on the ownership right, State act on the permanent use of the land plot etc.) are issued by the State land agency. The secondary registration (e.g. for the sale or purchase of a land plot) is conducted by the State registration service or by notaries.
This complicated registration procedure for the land plots as well as parallel functioning of two registers does not help either in achieving transparency in this domain or in the exercising of the ownership rights with respect to the land plots. We were informed that due to the lack of efficient information exchange between the registry and the cadastre the citizens were unofficially denied the registration of the land titles.
Generally speaking, in 2013 the procedure of state registration of real property titles and their restrictions became somewhat easier as opposed to earlier years, first of all, due to the elimination of numerous registration bodies and consolidation of various registries into one and only State Registry of the proprietary rights to the real property. The list of documents required for registration was cut down, while the registration terms were reduced.
The bureaucratic component of the procedure, nevertheless, remains an important factor despite the general simplification of the procedure. This fact is accounted for, among other things, by the mentality of the employees in charge of state registration, and by the lack of modern technical equipment in the state registration offices. Besides, the felonious schemes in dealings with real estate still are on the agenda.
In the meantime, a range of issues related directly to the exercising of property rights and to the attraction of foreign investments still has to be resolved. These latter are accurate indicators reflecting the actual situation regarding the adherence to property rights.
Guarantees for court protection of the property right
The cases of property rights violations are very common. Thus, the Uniform state registry of the court decisions contains hundreds of thousands cases related to property rights violations. The terms designated for the resolution of the cases are beyond reasonable, which affects the efficiency and relevance of defense.
Weakness and inefficiency of the court protection of the property rights in Ukraine were stressed also by the international experts in the course of preparation of the World Index of the supremacy of law, in which Ukraine is ranking tenth from the end. “The public institutions are inefficient as far as adherence to the laws goes (ranking 91st among the countries participating in the research and second from the end among the countries with income below average). The courts, although accessible, are inefficient and corrupt. The protection of property rights is weak” – specifies the Index. The study carried out by the Global Corruption Barometer 2013, shows that the Ukrainian judicial system is one of the most corrupt in the world, alongside with Afghanistan, Azerbaijan and Moldova.
The terms for the consideration of cases related to property rights protection are not observed. Moreover, these terms are so much longer than they should be that the protection in question becomes irrelevant. The courts commit procedural violations failing to satisfy the claim. In particular, in cases related to the protection of property rights the claimant often demands that the court prohibits the respondent to commit specific actions, e.g. to build a house (or other real property) on the disputed plot, to fell the trees, to put down a fence etc. These claims, however, in contempt of the procedural law, are ignored by the court. It constitutes the violation of the property rights and makes their further protection impossible, even if the case is resolved in favor of the claimant.
A claim containing the request to extort the real property from the illegal possession and to recognize the legal title on the property, and lasting for 7 years, is just one example of inefficiency of the court operation concerning property rights protection.
The biased attitude of the courts often becomes an issue in judicial practice of property rights protection. For examples, when interests of a communal enterprises and a consumer clash, the judges, as a rule, will not pass a fair decision which would entail financial damages for the enterprise. The judge will not feel ashamed to ask the claimant “Are you aiming at ruining the company?” In fact it is a rudiment of totalitarian thinking. The European judicial practice, on the other hand, is aimed at ensuring the balance of the interests on the basis of the supremacy of law and restrictions imposed on the corporate and power bodies for the protection of the consumers’ rights.
Non-execution of the court decisions aimed at the protection of property
Analyzing practices of the European court and Ukrainian national courts one comes to a lamentable conclusion – the Ukrainian judicial system so far has not resolved the issues of non-compliance with or/and long-term non-enforcement of the court decisions.
The non-execution of court decisions concerning property protection has become threatening. Even the judges recognize the fact. The experts point at the bodies of authority as main violators that repeatedly fail to satisfy the legal demands of public.
Only every third court decision is served in Ukraine. The number of Ukrainians’ claims filed with the ECHR is increasing. The claimants complain of prevarications in the serving of the national courts decisions. Last year the Law “On the state guarantees of the enforcement of the court decisions” was passed, but by early 2013 almost three million of non-executed court decisions have accumulated in Ukraine. It is a symptom of the judicial system invalidity, which has been stressed by the Supreme Rada speaker, chief justices, Prosecutor General office and attorneys during the parliamentary hearings on May 22, 2013 in Kiev.
Even the chief justice of the Constitutional Court A.Golovin complained of failure of bodies of power to serve almost one half of the decisions. He believes that this situation threatens observance of human rights and called the parliament to establish liability of public bodies and bureaucrats for non-compliance with court decisions. Golovin suggested the setting up of the parliamentary monitoring unit to follow up the serving of the Constitutional Court decisions and identifying the legislative problems hindering the implementation of these decisions.
The chief justice of the Highest economic court V.Tat’kov believes that the essence of the problems is accounted for by the earlier decision to transfer the State office in charge of the court decisions’ enforcement from the jurisdiction of the judicial branch of power. Now it falls under the jurisdiction of the executive branch being a structural subdivision of the Ministry of Justice. “The executive proceeding is the final stage of the court deliberations, which is possible only under control carried out by the judicial branch” – concluded Tat’kov. 
The deputy minister of justice A.Sedov admitted the faults of the executive service operation. He explains them, among other causes, by the lack of funding assigned for this body. “The executors’ and senior executors’ operation is characterized by high level of responsibility and complexity, while their salaries remain at the level of the minimum wages” – Sedov stressed.
Many experts agree that large number of court decisions concerning the payment of salaries and social benefits cannot be served due to the absence of funding and scarce resources of the state budget.
The serving of the court decisions involving the bodies of power in Ukraine is much more problematic than serving of the decisions concerning private persons or companies. The efforts of the state to set up an efficient mechanism that would address the non-compliance with court decisions in which the state is a debtor, can be hardly described as successful. The procedure of implementing the Law of Ukraine “On the state guarantees of the execution of the court decisions” is inefficient and hardly viable. In 2013 this mechanism did not cover significant number of court decisions in which state acted as respondent; only on September 19, 2013 this law was amended with the goal of broadening its purview.
The situation with respect to the allocation of funds to make this mechanism work is even more dramatic. The Law of Ukraine “On the state budget of Ukraine for 2013” envisages the amount of 153 921 600 UAH in the state budget to guarantee the serving of the court decisions.
On the one hand, the allocation of this amount testifies to the possibility of assigning certain amount from the budget to cover the expenses for financial damages under a special budget program. However, by April 1, 2013 the Ukrainian courts have passed 2.2 million decisions on payment of pensions and social benefits to the claimants, which have been appealed in the courts of various instances, under which 7.2 billion UAH had to be paid. Obviously, several billion UAH are lacking to pay all the debts.
The draft law of Ukraine #3035 of July 29, 201З was devised to address the due and fair payment to recompense arrears in pensions and social benefits established by the courts. However, the Highest administrative court in its conclusions of July 29, 201З with respect to this draft law  specified that its passing would not resolve the issue of non-execution or delayed execution of the court decisions because of its declarative (and not really viable) nature due to the lack of appropriate financial support.
Therefore, the state budget of Ukraine does not provide for sufficient funds needed to ensure the payments guaranteed by the law, in particular, compensations, benefits, bonuses etc. Hence, the legislation failed to resolve the problem of non-execution or delayed execution of the court decisions due to the debtor’s lack of funds.
Besides, the moratoria, and, specifically, the moratorium on the compulsory sales of the public property, the fuel and power enterprises, pipelines companies, “Ukrrudprom”, ship-building companies, are still in force. It is noteworthy that the ECHR in many decisions concerning non-compliance with court decisions in Ukraine made a notice that the violation of commitments taken by Ukraine with respect to fair trial and unimpeded possession of one’s property, is accounted for by the existence of the aforementioned moratoria. Nevertheless the provisions on the banning of the moratoria are systematically removed from the draft laws attempting to resolve the issue of non-execution of the court decisions.
Problems related to the observance of the property right with respect to the new construction
The main obstacle for the exercising of the property rights in construction in Ukraine is poor quality of its normative and legal regulations and inadequate administering of the legislation in force.
The issue of attracting funds from physical entities in the course of multi-apartment buildings’ construction has become a most crucial issue, as the lack of the investors’ legal protection made exercising of their rights impossible, especially, in the cases of the so-called “frozen” construction.
As of today, investments in construction have become for many Ukrainians the one and only chance of resolving the housing problem. Relying on just the “word of honor” they invest their money into “hushed” new development. Naturally, some investors at the end of the day become the happy owners of their own housing, but many others get just a concrete box without water, gas or electricity.
The number of incomplete buildings in Ukraine is impressive. The “frozen” housing situation in Ukraine has not changed since the beginning of the crisis till present day. According to the data provided by the minister of regional development, construction, housing and communal services G.Temnik this number amounted to 15 733 unfinished buildings by July 1, 2013. 186.2 billion UAH are needed to complete the construction. Over 568 of the incomplete objects, according to the Chief Department of Statistics, are located in Kiev.
According to the real estate market expert Ya.Tsukanov, “in the first quarter of 2013 the number of frozen construction projects for cottage villages in Kiev oblast’ has increased by 7% as compared to the last year, amounting to 25%.”
Most interestingly, some developers still manage “to sell the air” to the individuals wishing to have their own housing and signing respective contracts, ignoring the fact that the courts have banned the construction of the said housing and court proceeding with respect to this construction still continue.
Let’s look, for example, at “Ukrkagrobud” company, a developer of the “Skhidna Brama” residential complex. The economic court of Kiev as far back as 2012 passed a decision #5011-11/4098-2012 under which “Ukrkargo”Ltd and “Ukrkargobud” Ltd were obliged to demolish the unfinished construction and bring the land plot at the address 3, Svitla str., Darnitsa district, Kiev, back to its primary condition at their own cost. Apart from this decision and appeal filed against it by the developer, several other court proceedings were initiated with respect to this construction. The developer, notwithstanding, keeps selling the apartments till present day on its site, (http://s-brama.kiev.ua/flats.html) without ever mentioning all the aggravating circumstances.
Another problem the investors are often facing is the long-term construction. The developer “Ukrinvestbud”Ltd, postponing the commissioning of the “Mega city” complex at Kharkiv highway in Kiev, is a good example of the red tape. The construction started as far back as 2005 and was completed in December 2012. The residents, however, still complain of impossibility of registering their titles in due order. Besides, the “Kievvodokanal” advised that a sewage collector is located right under the building, and has now become inaccessible due to the concrete parking above it.
The courts are also facing the problem of separating investments’ contracts from all the contracts regulating development relations.
Thus, a new claim # 10113/10159/2012 was filed with a court by Claimant 1 against “Avers-city” Ltd Company, the developer of the “Kotsyubynsky” residential complex.
Claimant 1 in his claim demanded that the earlier sales and purchase contract is classified as fraudulent and should be invalidated, and that the money invested under the contract is returned to him. The Claimant complained that the construction has stopped at the foundation stage with no further development, while the developers avoid any contacts with him in any possible.
Claimant 1believes that, although the controversial contract was described by the parties as preliminary contract, is an investment contract in its essence, because its contents and aim address the investment made into the housing construction, specifically into the object of sales. This fact is corroborated by the parties’ obligation of signing the sales-purchase contract upon commissioning of the building to legalize the property right with respect to the aforementioned property, as well as by the parties’ actions envisaging the down payment of 98.95%, with subsequent payment of 100% of the apartment cost.
Claimant stated that if the preliminary contract was entered into by the parties with an actual goal of Claimant’s funding of the construction, then, in this case, the relations between parties are regulated by the rules of the legal act composed by them, i.e. by the rules to be applied to a contract on the investment into housing construction.
The Appellate court of Kiev oblast’, however, was of different opinion. The judges’ board agreed with the local court’s decision, i.e. that there were no grounds to consider the preliminary contract a fraud devised to hide the investment contract, and, hence,, the court did not see any grounds for the reimbursement of the down-payment made at the time of signing of the preliminary contract by Claimant 1.
Therefore, Claimant 1 ended up without apartment and without money, as the renewal of construction is hardly possible, while the developer managed to come off clear.
The negative results analyzed above lead to a lamentable conclusion: the citizens investing into the housing construction have no legal protection at all and are running a serious risk of losing money without getting any housing. Giving out their money to the developer, the investors have absolutely no guarantees, apart from the developer’s reputation, of enjoying the fruit of their investment.
The lack of guarantees for the investor, both with respect to the housing and to the invested money in case of developers’ illegal actions or inertia, absence of mechanism allowing for obtaining some portion of unfinished construction in kind of for the completion of the construction in case of the developer’s bankruptcy, lack of risk insurance for both the investor and the developer can be enumerated among the major problems. The provisions of the Law of Ukraine “On insurance” stipulate insurance for investments and financial risks, but do not provide any conditions for insurer’s control over the operation of developer or any financial institution using money of physical or legal entities.
The only positive step in resolving the said problems is the effort made in the direction of improving the normative and legal basis of the guarantees of investors’ rights in construction, e.g. the Law of Ukraine “On enhanced protection of the investors’ rights in the course of investing into (financing) the housing construction”, or other draft laws, which, under the information of the Ministry of regional development, construction and housing and communal services, are to amended.
3. Restrictions of the property rights imposed by the bodies of power
Buying out the land plots in private ownership for public use
No one in Ukraine is protected against the expropriation of land and premises sitting on this land. The procedure for land expropriation is regulated mainly by the Law of Ukraine “On alienation of land plots and other objects of real property located on them, which are in private ownership, for public use or for the reasons of public need” of 17.11.2009. (hereinafter the Law of Ukraine “On alienation…”).
The Law reads that the land plots and objects of real property located on them, which are in private ownership of the physical and legal entities, can be alienated by force as exception only for the reasons of public need, with advanced and full reimbursement of their cost in due procedure established by the law.
In 2013 the order of private land plots’ buying out was changed by the number of new legal acts. Thus, under the Law of Ukraine “On sea ports”, which came in force this year, the land plots created artificially in the water areas adjacent to sea ports were classified as the lands of the water fund of Ukraine, so that the property right with respect to these plots and their use can be limited to the public need. The same law introduced the changes into the Law of Ukraine “On alienation…” According to these changes construction, capital renovations and maintenance of the ports can be the reason for the purchase of privately owned land plots by the state power bodies. The respective decision is made by the executive power bodies. Besides, the sea ports fall under the category of objects, the construction of which can justify the alienation of the land plots enforced by a court decision. It is noteworthy that respective decision can be made only if the alienation of the territory is required for the most efficient use of the land with due consideration to all the economic, technological, social and environmental factors.
Therefore, the list of the lands which can be alienated by force for the reasons of public need was broadened in 2013 under the Law of Ukraine “On alienation”…
Meanwhile, the changes addressing the definition of the public expediency and need allow for misinterpretation of the respective provisions of the Law and lead to the conflict situations. Taking into account critical remarks made by the experts in former years, the broadening of the sphere of the law application and inclusion of the sea ports into the list within the category of public use and need, can lead to the further deterioration of situation and abuse. Thus, some lawyers propose to use the mechanism of buying out the land plots for public use with the goal of getting around the moratorium on the sale of lands in agricultural use. Special attention should be paid to the fact that this suggestion allows for the alienation of lands with valuable natural resources. It is especially important in the context of sharing the products between Ukraine and exploration companies dealing with extraction of shale gas and conflicts arising around this issue. Specifically the issue of land plots alienation with the goal of shale gas extraction in Prykarpattya region is one of the most crucial for the local residents and local self-governments as far as the signing of the contract with “Chevron” company goes .
The conflicts involving land alienation for the construction of Euro-2012 facilities give grounds to suspect that such scenarios could repeat themselves in 2013. In late August the Cabinet of Ministers of Ukraine suggested the passing of the law on enforced alienation of land plots and infrastructure objects “for the reasons of public need to construct the objects envisaged by the State social target program of preparation to and conducting of the final basketball tournament of Europe-2015 in Ukraine”. It means that the issue of land alienation with the goal of constructing sports facilities will remain topical in the nearest future.
The issues of contention also arise with respect to construction of main power lines stipulated in the “Power strategy of Ukraine till the year 2030”. In 2013 the working groups to address the issue of the buy-outs of land plots for the construction were set up in several raions of Zhytomir oblast’.
The amount of compensation to be paid for a given land plot is one of the major bones of contention. Under the law in force (Article 19 of the Law of Ukraine “On land evaluation” ) the required assessment can be achieved by means of the following methods:
- Capitalization of the strictly operational or rent income from the use of the land plots;
- Comparison of the values of similar plots;
- Calculation of the costs of land improvements.
Noteworthy the use of this methodology often ends up in much lower costs of the purchase value of the real property, and usually does not ensure the coverage of the costs needed by a person to buy new residential premises and land plot. The problem of owners’ compensation for the expenses incurred in the course of property alienation remains most controversial.
The construction of the detour around the village of Rakoshino is a most demonstrative example of this situation. The data from the “Bulletin of the state purchase” show that the motorways unit in Transcarpathian oblast’, following the tender results on August 27, 2013, signed an agreement with “Pivden’zakhidshlakhbud” company for the construction of the segment of the motorway Kiev-Chop at the cost of 67.23 million UAH. Looks like good news, but the highway was designed so that it goes through the land plots belonging to the villagers. According to the technical evaluation the trees should be uprooted, residential and other premises demolished, communication networks transferred etc. The villagers are offered 5 UAH per square meter for loss of their property and alienation of the land plots.
Obviously, this is a far cry from the market value, and, considering the fact that some villagers, alongside with land plots are deprived of their real property, it can be assumed that they are offered to give their property away without any compensation.
Naturally people were not happy with the quoted price and appealed to court to protect their rights. Their chances of winning the case, though, were very small, as the Law does not require from the authorities any reasons or arguments to justify the choice of a given plot or facility. Traditional practice shows that usually the court passes a decision on confiscation of the land plot and also establishes compensation – in terms of money or in kind - for the alienated property. The price established by the court would hardly differ from the one offered at the moment of land or facilities purchase.
The draft Law of Ukraine # 2610 “On introducing changes into article 19 of the Law of Ukraine “On land evaluation” concerning the changes in methodology of expert monetary evaluation of a land plot” was developed and registered on March 21, 2013. This draft law is aimed at changing methodology of expert evaluation of the plots that should be bought out for the reasons of social need or necessity. It suggests the comparison of the prices of similar land plots as the method to use, as it supplies the price, closest to the market prices. If the amendments are accepted and used in the future, the issues of land plots purchases for the reasons of public need or necessity will probably become less acute.
Another difficulty in the purchase of the real property objects for public needs is represented by the procedure of money transfers to compensate the lost property. Under p. 5, article 16 of the Law “preliminary compensation of the cost of land plot and other real property objects on that land in full in the terms of money is realized in the form of the deposit made by the executive power body or local-self-governance body that had made the decision on the alienation of the land plot, to the notary’s account under the order established by the law, in the area where the land plot and other real property objects are, or transfer of money to the bank account given by the owner of the said objects.
Therefore, following the decision on alienation of the land plot and other real property objects, the money should be deposited to the notary’s account, in the area where the land plot and other real property objects are, after which transaction no one cares whether the owner had been reimbursed for the alienated property, and whether he agrees to the amount he had been given. In fact, he is forced to forfeit his property to the bodies of executive power or local self-government.
The decision of Volyn’ circuit administrative court of March 19, 2013, in the case # 2а/0370/2900/12.
The file shows that land plots of 1000 square m and 1955square m, a house and perennial plants which have been growing on the land plot were alienated from Claimant 1 by the decision of Lviv Appellate administrative court and act of execution under the pretext of public need, i.e. for the construction (reconstruction) of the public use motorway Ustylug– Lutsk – Rivne, km 0+420 – km 3+600. The purchase price for the said objects was established at 303 983 UAH. Despite the fact that Claimant 1 disagreed with the established price, the head of Volodymyr-Volynsky raion state administration passed resolution #467 “On making a deposit to the private notary’s account of Volodymyr- Volynsky raion notary district’, under which the department of finance and economy of the raion state administration made a deposit of 303 983 UAH to the private notary’s account to be delivered to Claimant 1.
Although Claimant 1 kept disputing the evaluation sum and never got her money back, the court disregarded this fact and classified the actions involving Claimant’s 1 forced eviction from the object located on the land plot as legal.
Conclusion: the property was alienated by force, and it would probably take Claimant 1 a very long time to receive her due compensation in full.
The analysis of the procedure for the alienation of the land plots and other real property objects sitting on them for the reasons of public need in Ukraine once again demonstrates the complexity of economic/legal mechanism of the extortion of property, i.e. of the land plots and other real property objects sitting on them. A cardinal adjustment in the procedure of buying out (alienation) of the land plots for the reasons of public need is in order. Most importantly, the problem should be addressed professionally and comprehensively, with due consideration of the whole range of the issues, which can arise in the course of extortion of the private property objects.
Moratorium on the sales of the agricultural lands
The moratorium (the banning of alienation and change of use of the agricultural land plots) restricting the rights of the land owners, stipulated by part one of article 90 of the Land Code of Ukraine and article 41 of the Constitution of Ukraine has been in force for over 12 years.
As a result, the land market is becoming more and more “shadowy”, corruption is on the rise, the agricultural land use is more and more monopolized by agro-holdings etc.
New laws prolonging the moratorium validity have been taken almost every year. Under the most recent Law of Ukraine “On introducing changes into the Land Code of Ukraine” of December 20, 2012 року, the moratorium on sales and purchases of the agricultural lands will remains in force till January 1, 2016. Despite the temporary nature of this provision it is obviously impossible to predict the date of its termination.
Authorities tried more than once to regulate the land market. First the moratorium was considered indispensable till the moment when appropriate legal regulation of the agricultural lands market would come in force. For many years draft laws “On land market” aimed at regulating legal relations with respect to land circulation in Ukraine have been considered by the Supreme Rada of Ukraine. Not a single law, however, was passed.
By the Law of Ukraine “On introducing changes into the Land Code of Ukraine” of December 20, 2012, the Supreme Rada decided to pass another law “On circulation of the agricultural lands”. On July 20, 2013 this draft law was submitted for the Supreme Rada consideration and had to become the finalizing point in the land reform. However, it caused a lot of controversy and discussions.
The norm cutting down the list of subjects legally competent to buy agricultural land plots turned out the most controversial. Under the draft law only the following entities can be the legal subjects of purchase: the state, territorial communities, National land bank and Ukrainian citizens. Foreigners, stateless persons, foreign countries, international governmental and non-governmental organizations were removed from the list of the entities entitled to purchase of land.
New requirements for the Ukrainian citizens willing to purchase the land were introduced. In particular, they should reside at least for three years in a settlement within 20 km radius from the land plot in question; be willing to carry on independent commercial agricultural production individually or with their families; have experience in farming or in commercial agricultural production and be registered as physical persons-entrepreneurs or members of a farming community.
These requirements open the door for big time corruption, as the law does not specify the notion of agricultural “experience”, how it can proven and how long should one work in the independent agricultural production of goods for sale to be entitled to own a land plot. It is also unclear how one can prove or confirm one’s wish to conduct independent commercial agricultural production individually or with one’s family. And the last point – what did the legislator have in mind insisting on 3-years’ residence in a settlement? Is it about the registered domicile or actual place of residence?
The norm, restricting the acceptable size of a land plot to be purchased as property by a Ukrainian citizen – no more than 100 ha, – deserves special attention as well. The plot of this size is not enough for profitable commercial agricultural production. Noteworthy, these restrictions do not apply to the state, territorial communities, National land bank. The state, therefore, tries to buy land plots as big as possible and to monopolize its market position.
This conclusion comes from the draft law norm stipulating that in case of purchase of agricultural land plot in private ownership, the preferential right to its purchase at the first exposition stage is given to the state, that realizes it through the relevant bodies of executive power, territorial communities, realizing this rights directly or through local self-governments, National land bank – in this order, under the Law. Only after the government forfeits its right the Ukrainian citizens is entitled to purchase the land plot.
This norm in fact restricts the owner’s right to dispose of his property and obliges him to give out his agricultural land plot in “voluntary- enforced” procedure to the state, simultaneously depriving another citizen of the right to purchase this land.
The norm establishing the minimum lease term of 15 years of use of the agricultural land plots for the commercial agricultural production can be described as positive, as it contributes to the competitiveness and allows the manufacturers to use the land in a sustainable way, making long-term plans. However, even this, superficially good norm, needs further improvement. It should address specific situations when the lease can be terminated at earlier stage due to force-major conditions encountered by the owner.
The abovementioned arguments make it clear that the draft law still has to be amended and a well-justified approach to the agrarian reform is called for. Hopefully the most problematic issues will be resolved and the Law of Ukraine “On circulation of the agricultural lands” shall be passed at the end of the day.
Meanwhile, a draft law # 2181а, “On introducing changes to some laws concerning the simplification of transfer of agricultural land plots into private ownership and use”, which had to annul the moratorium for one legal entity only, i.e. the National land bank of Ukraine is submitted to the Supreme Rada from time to time. If this law is passed, for the next two years at least the Ukrainian owners would be capable of selling their land to the National land bank, which, consequently, will become monopolist in agrarian area. For the first time the Supreme Rada wanted to include this draft law into its agenda at the session of June 18, 2013, but not enough members voted for it. According to the Chief research expert directorate conclusion of June 14, 2013 this draft law should be rejected. Nevertheless, it was submitted again. The last deliberation on it occurred on October 10, 2013. Fortunately, the draft law #2181а was rejected by the committee members, but there no guarantees that a similar draft law won’t be submitted once more to the Supreme Rada under a different title.
Violation of property rights by the Ministry of Interior bodies
The actions of the law enforcement officers in 2013 have caused numerous violations of property rights.
Some violations were related to illegal appropriation of property in the course of searches or other investigation actions. The examples of such violations include confiscation of 8 tons of scrap metal during a search in Crimea, illegal appropriation of the victim’s credit card during search of his residence in Kiev, confiscation of computer and office equipment (in scope much bigger than was stipulated by the relevant resolution) during the search conducted in Ukrsotsbank, illegal appropriation of goods and personal belongings of the staff of Kharkiv printing house,disappearance of about 100 thousand USD in Chernivtsy.
The instances of money apropriation by the militia officers at the crime scene are quite numerous, too. Thus, in Ternopil a militia official was charged with stealing1000 UAH confiscated at the crime scene as material evidence. In Odessa militia officers returned the empty wallet to the victim of robbery, having earlier taken the money out of it. .
We see, therefore, that the abuse of office by the law enforcers, i.e. the stealing f the citizens’ property, is widely spread all over the Ukrainian territory. The most aggravating factor is that the culprits are not always brought to justice, thus intensifying the sense of impunity among the law enforcement staff and, potentially, leading to the further spreading of these violations.
Complicated relationship between the law enforcers and the owners of mobile coffee stands in Kiev deserves special attention. According to the members of the Association of the mobile coffee stands’ owners, militia officials tow away the mobile coffee stands to hinder their operation. The company operating legally, with all the due permits believes that this situation is accounted for by its employees’ reluctance to pay bribes in order to avoid militia inspections. Those who do pay the bribes have no problems even operating without required permits. .
Besides, the militia officials seem to treat the small businesses’ property as their own. The cases of confiscating kvas without any clarifications or protocol, have been registered both this and last year. In June 2013 a militia official stated, on top of everything, that kvas belonged to militia. Of course, these facts are not enough to draw the conclusion that militia “protects” certain mobile coffee stands, but they quite suffice to demonstrate the abuses committed by militia with respect to the owners of these businesses and the urgent need to put an end to this practice.
In many cases the militia officials tried to expropriate real property, using various methods to that end.
For example, in Kirovograd the militia precinct inspector forcibly evicted 100-year old veteran from his house. He used the owners’ children’s unpaid debts as official pretext for evictions, but the house was not mortgaged. The militia official was charged with exceeding his authority..
In Sudak a local law enforcer illegally appropriated a mini-pension with the help of a Crimean Tatars’ family. On the petition of a mini-pension’s owner the actions of a militiaman were qualified according to article 356 of the Criminal Code of Ukraine (“Arbitrary actions”).
Militiamen in Kerch chose another mode of operation, once they decided to get hold of real property. They filed a claim against the person residing in the departmental housing after his father, who also had been a militiaman, passed away, and held him in custody.
Despite the fact that sometimes officials guilty of lawless actions are duly penalized, it seems that in general the law enforcers feel their complete impunity. For example, the owner of illegally confiscated car in Kamenets-Podilsky not only failed in his efforts to get it back, but also received an unambiguous response from the head of the local road and motor vehicles inspection: “You are a loser, so face the fact. No one will give you your car back". In this context one can conclude that due punishment of those guilty of illegal actions is rather an exception than the rule.
1) Setting up transparent and efficient system for the state registration of real property titles.
2) Improving the scope of protection of rights of the land plots’ owners; setting up the mechanism to counteract forcible appropriation of lands; passing the laws that would regulate the basic aspects of land market operation.
3) Ensuring the efficient judicial protection of the owners rights; in particular, introducing measures to address the issues of non-serving of the national courts’ decisions protecting property, including the further enhancement of judicial control over the serving of courts’ decisions; putting an end to the moratorium on forcible sales of the state property. Also, ensuring immediate implementation of the Law of Ukraine “On state guarantees of the serving of the courts’ decisions” with allocation of sufficient funds for its implementation.
4) Promoting transparency and simplification of the procedure of control over housing construction and ensuring protection of the investors’ rights in this area.
5) Ensuring efficient legal regulation of the property rights for the co-owners of condominiums.
6) Improving legal regulation of the stake-holders’ associations operation to eliminate the illegal seizing of enterprises and organizations in Ukraine, and to avoid corporative conflicts.
6) Providing regulations for the buying out of the land and facilitates for the reasons of public need in strict compliance with Constitution and international obligations undertaken by Ukraine.
7) Introducing measures counteracting the violations of property rights by the Ministry of Interior bodies.
 Prepared by M. Shcherbatyuk, UHUHR attorney.
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