The result of such process is not yet understood, as each practicing lawyer and each subject of land law relations encounters his or her individual situation. Here we will focus on the outcome of and the advantages offered by the national land law legislative process.
Rights to land plot in Ukraine
If we sum up all the variety of rights to land plot directly or indirectly legislated, then this is what we will have, in the author's opinion:
• right of ownership of land plot acquired exclusively on the basis of the state act for the right of ownership to the land plot (Article 126 of the Land Code);
• right of use of land plot acquired pursuant to the lease agreement or the state act for perpetual use of the land plot (Articles 92, 93, 126 of the Land Code);
• right of joint use of land plot acquired pursuant to the joint operation agreement – a partnership (provided that one or several participants contribute the right of use of the land plot to the joint activities) (Article 86 of the Land Code, Article 1134 of the Civil Code);
• superficies – the right of use of a land plot owned by other person for construction purpose (Article 1021 of the Land Code, Article 413 of the Civil Code);
• emphyteusis (perpetual lease) – right of use of a land plot owned by other person for the cropping purposes (Article 1021 of the Land Code, Chapter 33 of the Civil Code);
• land easement – right of the land holder or user for the restricted payable or free use of a land plot owned by other person (Chapter 16 of the Land Code, Chapter 32 of the Civil Code);
• right of free use of land plot arising pursuant to loan agreement (Chapter 60 of the Civil Code);
• right of trust ownership arising pursuant to the estate administration agreement in accordance with Article 316 of the Civil Code subject to further issuance of the state act for perpetual use of the land plot in the name of the trust owner.
Practically, everything is clear with the right of ownership of land plot and right of use of land plot, considering that these rights are deemed basic. But as for the other six kinds of right, these profess to be exclusive (alternative).
Alternative rights to land plot
The successful application of the joint operation agreement as an agreement giving rise to the right of joint use of land plot is proven in the construction practice. Majority of developers acquired their status having no rights for the land plot in form of the right of ownership or right of use, while they disposed of the joint operation agreement entered into with the land user. Therewith they were guided by Article 24 of the Law No. 1699 .
Superficies as a kind of alternative right to land plot may be described as follows:
• it is granted exclusively by the owner; in pursuance of law, the land user is not empowered to enter into a superficies agreement;
• it arises pursuant to an agreement or a testament respectively, may not arise subject to a court decision with no subsequent agreement execution. Moreover, the legislators failed to mention the agreement giving rise to superficies. The legislation does not provide for a separate notion of superficies agreement, thus this creates a dilemma: could the superficies agreement simply be the land plot lease agreement for construction purposes;
• is an alienable right pursuant to the superficiary right purchase agreement;
• may be established for a specified or an uncertain term;
• suggests the fee for the land plot use;
• due to the sale of superficies the right of ownership to constructed buildings is held by the land user;
• the failure to use the land plot for construction purpose during three consecutive years results in termination of the superficies.
The unique aspect of emphyteusis may be characterized as follows:
• it arises pursuant to an agreement entered into exclusively with the land plot owner;
• it may be alienated, but the such sale suggests that the land plot owner is entitled to a transaction interest or may exercise its preferential right to repurchase the land plot;
• is executed for an uncertain terms;
• the land user obligations comprise the improving the land fertility and use of environment protection technologies.
Easement is a certain hybrid of the right to land plot and encumbrance of land plot (Article 111 of the Land Code) having noting in common with superficies and the emphyteusis analyzed above. The land easement has the following distinctive features:
• is a land plot encumbrance subject to registration;
• it arises pursuant to an agreement, testament, law or court decision;
• it may be perpetual or terminable;
• it does not result in deprivation of the land plot owner of his right of use, right of possession and right of disposition of the land plot;
• it may be established in favor of any person;
• it is not subject to alienation;
• the land plot owner may claim the loss indemnification.
In a number of communities the local councils determine the procedure of establishing easements over public utility land plots and the amount of the easement fee (as it is done in the Resolution No. 844 for placement of small dimension architectural buildings, in-built and attached constructions). But to what extent are these provisions lawful? If we still can consent to determining a certain easement fee in respect of the public utility land plots, then the limitation of the "easement" use of a land plot privately owned by other person which is imposed by a local authority is unlikely to be legitimate, as this is the power of the parties to the agreement or the prerogative right of a court.
In Kiev the limitation of the easement fee rate is not practiced as in accordance with Articles 98-100 of the Land Plot and Chapter 32 of the Civil Code: the easement may be stipulated in an agreement (and in this case the parties individually determine the fee rate), in a court decision (determined by the court) or by law. This viewpoint is supported in the letter of the State Committee for Entrepreneurial Business dated December 16, 2002 No. 2-222/6717.
Such variant of land plot use as the right of free use of land plot arising pursuant to loan agreement has long been not applied and recognized by the practicing lawyers (as it is not mentioned in the Land Code). Could that mean that the free use of the land plot is inadmissible and prohibited?
Apparently not. Due to the norms stipulated in Chapter 60 of the Civil Code, the free use of land plot can be practically realized (as provided in Article 827 of the said Code, the lender transfers or undertakes to transfer to the user the object of use for the period specified). The subject of the loan agreement may be the real estate which is evidenced by Article 828 of the Civil Code (consequently, this requires notarization and state registration of transaction). In actual practice loan agreements are more common for individuals, public sector entities and other non-profit organizations.
The actual implementation of the trust ownership for land plots is, for example, the acquisition by asset management companies (AMC) of land plots in form of assets of unit investment funds (UIF) with the issue of a title document in its name as the trust owner (Article 23 of the MII Law . In this case if the land plot is acquired in form of assets of an open or interval corporate fund, the trust ownership right which arises is not separately endorsed, as the title document is issued in the name of the corporate fund as a separate legal entity. The creation of trust ownership is also typical for activities of financial companies managing the real estate operations funds (REOF). It happens that the land plot management agreements are entered into between ordinary economic entities pursuant to provisions of Chapter 70 of the Civil Code.
In spite of such variety of rights to land plots recognized in legislation, one should keep I mind the provisions of Articles 125 and 126 of the Land Code under which two documents only lead to creation of right to land, namely the state act for the right of ownership to the land plot or the right of perpetual use and the lease/sublease agreement. In particular, these rights – right of ownership and right of use, including right of lease) are the only to be registered (the registration is carried out under the Regulations No. 174 ).
How to alternatively acquire the right to land?
The topical issue of the rights to land plots has become extremely important since January 1, 2008 when the Law No. 107 introduced the obligatory auction acquisition of rights to undeveloped public utility land plots and state property land plots.
As a result, people started to seek a way to acquire rights to public utility land plots and state property land plots which would not require any auctions. This became possible through exercising of the above alternative rights.
The most popular way of such exercising is recognition of the agreement execution and establishing of other significant facts in a judicial proceeding.
Way 1. To recognize as real estate the temporary facilities located on the land plot owned by other person and then recognize the fact of execution of land plot lease agreement.
This way suggests the accomplishment by the interested person of the following actions each of which separately goes not guarantee the achievement of the objective.
Step 1. To obtain the permit of local council (village council in our instance) for placing on the land plot of temporary facilities the purpose of which is servicing a resort complex. As such temporary facilities do not represent the objects of real estate or construction the placement thereof does not require allotment of land plot for construction purpose.
Step 2. To recognize in a judicial proceeding the same temporary facilities as an integral property complex i.e. real estate facilities, pursuant to Article 191 of the Civil Code.
Step 3. To sell the integral property complex to a good faith purchaser in order to avoid the risk of subsequent challenge of rights to the real estate facilities (Articles 330, 388 of the Civil Code).
Step 4. To acquire in a judicial proceeding the right to the land plot pursuant to Article 1201 of the Land Code, Article 377 of the Civil Code (enter into and register the lease agreement).
Way 2. To recognize the execution of superficies agreement and oblige its registration.
This way does not stipulate for creation of a real estate before acquisition of right to land plot.
Step 1. To apply to the relevant local authority or executive body with a request for lease of the land plot for construction purposes.
Step 2. To obtain the consent from a competent body for elaboration of technical documentation in respect of land plot allotment.
Step 3. To ensure the allotment project elaboration and approval.
Step 4. To wait for refusal of the competent body to approve the allotment project and the land plot lease, as the absence of auction is not provided (pursuant to Article 124 of the Land Code).
Step 5. To apply to court for the purpose of challenging the refusal of the competent body to allot the land plot for construction given the fact that the agreement suggested is in effect the superficies agreement (in such case the action is not provided).
The claims of the interested person will be as follows:
• to recognize the right to develop the land plot;
• to deem the superficies agreement executed in the wording suggested by the claimant;
• to oblige the relevant administration (department) for land resources to register the land plot superficies agreement as a lease agreement.
In order to file the claim the claimant has to have available:
• the request for the land plot allotment;
• the allotment project;
• the approvals (conclusions) to the land plot allotment project pursuant to Article 123 of the Land Code;
• the positive conclusion of the state land use examination issued in compliance with the requirements of Law No. 1808 (in some instances such document is not needed);
• the executed land plot superficies agreement filed for signing by the local council (executive body) (Article 181 of the Commercial Code) ;
• absence of answer from the local council (executive body) within twenty days following the receipt of superficies agreement (the answer may represent either the signed agreement or the discrepancy report) (Article 181 of the Commercial Code).
Step 6. In case the claims are satisfied by the court the interested person applies to the administration (department) for land resources with a request for the technical documentation execution for the purpose of concluding and registration of the superficies agreement.
Step 7. To execute and register the superficies agreement.
Way 3. Use of emphyteusis to acquire the right of ownership of the land plot.
This strategy is based on the fact that the legislative norms equal the perennial plantings with real estate due to the inextricable connection with the land plot (Article 57 of the Law "On Pledge" , Articles 181, 351 of the Civil Code).
This way supposes three steps to take for its accomplishment.
Step 1. To conclude the emphyteusis agreement with the relevant local authority of executive body and recognize its execution in a judicial proceeding.
Step 2. To use the land plot for cropping purposes by planting perennial plantings. Such action is directly allowed for gardening lands as a type of farming land (Article 35 of the Land Code) and is explicitly prohibited for horticulture (Article 36 of the same Code).
Step 3. To acquire without an auction the right of lease or right of ownership of the land plot by using the status of "owner of the real estate" located on the land plot and the exclusions provided by Articles 124 and 127 of the Land Code accordingly.
However one should keep in mind the acting restrictions in respect of purchase and sale of public utility and state property farming land plots set forth in Clause 15 of Transitional Provisions of the Land Code. Thus, the consummation of the process has to be the free privatization by an individual of land plot with previous perennial plantings which is not available for legal entities.
Consequently, despite the declarative character of the majority of land rights provided by the Land Code, such are still practicable due to the norms of the Civil Code, "non-precedent" judicial law and the creativity of the national land owners.
1/ Law of Ukraine "On Planning and Development of Territories" dated April 20, 2000 (editor's note).
2/ Resolution of Vinnytsya City Council No. 844 dated September 21, 2004 (editor's note).
3/Law of Ukraine "On Mutual Investment Institutions (Unit and Corporate Investment Funds)" No. 2299-III dated March15, 2001 (editor's note).
4/Provisional Regulations for keeping of state land register approved by the State Committee for Land Resources No. 174 dated July 2, 2003 (editor's note).
5/Law of Ukraine "On State Examination of Land Use Documents" No. 1808-IV dated June 17, 2004 (editor's note).
6/The draft agreement has to comply with requirements of Article 1021 of the Land Code, Chapter 34 of the Civil Code, the allotment project and the approvals (conclusions) (editor's note).
7/ Law of Ukraine "On Pledge" No. № 2654-XII dated October 2, 92 (editor's note).