A round table on “Importance, Peculiarities and Challenges of Land Reform in Ukraine” organized by LigaBusinessInform news agency was held on August 29, 2011.

The attendees addressed a number of issues including land titles and what the land reform is about in the eyes of the Ministry of Industrial Policy of Ukraine and made various land reform proposals voiced by land users. Leading land use experts shared with the mass media their recommendations on the prospects and opportunities to be introduced by the new Law of Ukraine “On Land Market”.

The Law of Ukraine “On Land Market” is expected to be adopted and to come into force in autumn 2011, which will enable to introduce a market turnover of agricultural lands from January 1, 2012.

The issues raised during the round table included the following:

• How dependant Ukrainian investment climate is on the launch of the land reform;
• Is land reform in Ukraine a whim of oligarchs or an opportunity for farmers?
• Peculiarities of agricultural lands turnover;
• Agricultural land size limitation;
• The sequence of acquisition of preemptive rights to purchase agricultural land plots;
• Agricultural land value and tax rates

Vasil Kisil & Partners was represented by Mrs. Natalia Dotsenko-Belous, Senior Associate. Addressing the participants of the event, she touched upon the land reform and discussed certain provisions of the draft law "On land market."

In particular, Natalie said that in the context of land reform the law on state land cadastre is very progressive. Some of its provisions have already come into action and began to address many key issues. For example, many residential property owners of individual houses for the past years could not dispose of the house due to the fact that they had no dedicated adjoining land plot with a corresponding cadastral number assigned to it. Now the procedure for obtaining the cadastral number for land plots with individual residential houses is much easier. The second rule deals with recognition of land plots with no cadastral number and with title documents received before 2004, before the system of obtaining an individual inventory number was introduced.

According to Mrs. Dotsenko-Belous the draft law "On land market” features a number of very progressive provisions. At the same time it includes some provisions that nullify all the positive things in the bill.

First, the bill is intended to guarantee the right to own land. In recent years, there was a serious problem of land raiders. In fact, lawyers at "Vasil Kisil & Partners" law firm had a number of cases in their practice when a certain chain of legal actions led state administration to cancel its previous decision on granting a cadastral number  to a certain land plot. Accordingly, the lessee of the site was losing the lease. Is this problem solved in the proposed legislation? Regretfully, not so… Not only does it not offer a way of resolving such conflicts, but it also, in essence, outlines a procedure for cancellation of the cadastral number, based which one can brilliantly execute the old "scheme", which we have already faced in the past.

Secondly, it is known that the current legislation, in particular the Land Code, prohibits changing the purpose and the targeted use of agricultural land and partial agricultural parcels. However, our experience shows that it is not difficult to overcome this prohibition. There are a lot of recorded cases where agricultural lands are used to build buildings and industrial facilities and warehouses. In our opinion, the discussed the bill should contain a rule prohibiting changing designated use of any and all agricultural land. It would also be nice to see a prohibition on changing the designated use of land in this document.

Third, there is a problem of limiting the area of land that is allowed to be purchased. For some reason these imposed restrictions apply only to agricultural land.

The fourth problematic issue is forced consolidation of agricultural land. This is new for Ukraine's practice and should be examined closely.

In summary, Mrs. Dotsenko-Belous said: "We expected more from the draft law" On Land Market. Based on international - both Russian and western - the market demands significant financial instruments, not just second-rate financial institutions. These can be options, mortgage bonds, securities that would activate the circulation land without an actual change of ownership of the land. "

Also, she said, it is difficult to predict who starting January 1, 2012 the process of registration of land rights will develop, because the corresponding order of the Government is paying very little attention to the registration of land rights. In addition,  the creation of a land market in the absence of a complete inventory of all land appears rather questionable.

About the Firm
Established in 1992, Vasil Kisil & Partners is a Ukrainian law firm that delivers integrated legal advice in banking & finance, mergers & acquisitions, capital markets,  commercial law, international arbitration, dispute resolution, tax law, energy and natural resources law, intellectual property law, international trade law, labor and employment law, real estate and construction law, as well as public private partnership concessions and infrastructure law.

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