Experience is one of the most valuable reform-born assets of the Ukrainian society. Here we mean the experience of adjusting to the unexpected intrusion of reforms into our life and to instability.
The experience so acquired tells us that virtually every reform in Ukraine is a political one and, thus, it’s an unavoidable phenomenon, the phenomenon not always logical and sometimes even contradictory; the one not stemming from the orderly evolutionary development, but being distinctly revolutionary in nature, the phenomenon suspending certain legal relations for the period of its implementation, and, most importantly, the phenomenon, which does not depend on professional judgments and arguments.
The land reform promised to be implemented by January 1, 2012 will be no exception. The enacted Law of Ukraine “On the State Land Cadastre” and registered Draft Law No. 9000-1 “On Land Market” are a fitting confirmation of this forecast.
Based on Draft Law No. 9000-1 “On Land Market” in its current wording and, of course, relying on our experience, there are five months left until the final and irrevocable introduction of the land reform. If experience tells you that reform is unavoidable, you should then make time to prepare for the forthcoming developments. For this purpose, please consider the following recommendations.
Recommendation 1. It is recommended that you make time to rezone your agricultural lands until January 1, 2012.
By virtue of Clause 15 of the Transitional Provisions of the Land Code of Ukraine, it is currently prohibited to rezone land plots privately owned by agricultural commodity producers or individual peasant farms allotted from a land share. It is, however, not prohibited to rezone land plots for farming, gardening, ancillary farming, and individual peasant farming purposes, provided that such farms were not allocated from land shares. Furthermore, there is absolutely no prohibition on rezoning state/municipally owned agricultural lands today. Things will, however, change after the Law of Ukraine “On Land Market” becomes effective, i.e. from January 1, 2012, when a prohibition is anticipated to be imposed on rezoning any agricultural lands (of all types) purchased from state/municipal ownership within 10 years. Such prohibition will, however, not apply to agricultural lands purchased before the effective date of this law. The draft law allows the rezoning of agricultural lands for agricultural commodity production, farming, and individual peasant farming purposes, provided that such productions and farms are purchased after January 1, 2012 and only on the basis of duly approved land use schemes of respective administrative territorial units where lands are zoned into relevant categories.
Understanding the two-faced nature of the situation described above, it is recommended that Ukrainian citizens make time to privatize land plots with farming as their intended purpose. The privatization of farming lands is highly relevant as the moratorium does not apply to this operation and there are currently no rezoning restrictions and a significant area of vacant lands is available, which may be acquired for private ownership (one person may currently purchase, and privatize for a fee, the maximum area of 100 hectares of land). It is subsequently advisable that, before Time X, purchased land plots be rezoned to lands for auxiliary agricultural production purposes or be completely removed from the category of agricultural lands to ensure their free alienation unaffected by the Law on Land Market.
Recommendation 2. It is recommended that state district/oblast administrations conduct a technical inventory of vacant lands without losing time and exclude them from agricultural lands by putting them into other land categories, etc.
This recommendation is given in view of the fact that at present it is district state administrations, and sometimes also oblast state administrations, that are authorized to manage agricultural land plots located outside populated areas (other than tillage and especially valuable lands), including to change their intended purpose/use. They are not as yet allowed to sell state-owned agricultural land plots, but they may change their intended use. Starting from January 1, 2012, agricultural land plots located outside populated areas will be managed by the State Agency for Land Resources of Ukraine and its territorial directorates.
Recommendation 3. Interested Ukrainian citizens and their family members should consider setting up farms by first privatizing or buying land plots.
Starting from January 1, 2012, farms, unlike other legal entities, will be able to buy any agricultural land plots, including lands designated for the purposes of agricultural commodity production. It is expected that farms will be able to be sold to individuals as integral property complexes. Meanwhile, farmers will be required to have higher agricultural education or relevant work experience.
Recommendation 4. When we really intend to engage in agricultural business, we think how we can bypass the restrictions set for the maximum area of land plots designated for agricultural commodity production purposes through the consolidation of land plots.
The Draft Law “On Land Market” provides that the maximum total area of land plots designated for agricultural commodity production purposes and privately owned by one and the same person may not exceed 2,100 ha.
The maximum area of agricultural land plots designated for other intended uses is not subject to any restrictions.
The Draft Law also introduces the procedure for consolidation of agricultural lands. The consolidation of agricultural land plots may be initiated by persons holding at least 75% of the land area. The consent of the owners of the other 25% of the land area is not required, but these persons are also under an obligation to take relevant measures envisaged by the agricultural land consolidation project. Field road lands may be transferred for ownership on a free-of-charge basis.
Recommendation 5. When we lease an agricultural land plot for the purpose of its buy-out after the lifting of the moratorium, we should not pin too many hopes on the lessee’s preferential right.
Thus, those legal entities who do not have the status of farms and who lease land plots for agricultural commodity production purposes will not be able to acquire title to such land plots. The preferential right to buy privately-owned land plots for private farming and agricultural commodity production purposes will be given to the State Agency for Land Resources of Ukraine, the local self-government authority, and the owners of the neighboring land plots. The person who intends to transfer an agricultural land plot must give written notice to the holders of the preferential right to buy the land and must publish an announcement in the local printed media at the location of the land plot stating the price and the other terms of the sale of such land plot.
The experience so acquired tells us that virtually every reform in Ukraine is a political one and, thus, it’s an unavoidable phenomenon, the phenomenon not always logical and sometimes even contradictory; the one not stemming from the orderly evolutionary development, but being distinctly revolutionary in nature, the phenomenon suspending certain legal relations for the period of its implementation, and, most importantly, the phenomenon, which does not depend on professional judgments and arguments.
The land reform promised to be implemented by January 1, 2012 will be no exception. The enacted Law of Ukraine “On the State Land Cadastre” and registered Draft Law No. 9000-1 “On Land Market” are a fitting confirmation of this forecast.
Based on Draft Law No. 9000-1 “On Land Market” in its current wording and, of course, relying on our experience, there are five months left until the final and irrevocable introduction of the land reform. If experience tells you that reform is unavoidable, you should then make time to prepare for the forthcoming developments. For this purpose, please consider the following recommendations.
Recommendation 1. It is recommended that you make time to rezone your agricultural lands until January 1, 2012.
By virtue of Clause 15 of the Transitional Provisions of the Land Code of Ukraine, it is currently prohibited to rezone land plots privately owned by agricultural commodity producers or individual peasant farms allotted from a land share. It is, however, not prohibited to rezone land plots for farming, gardening, ancillary farming, and individual peasant farming purposes, provided that such farms were not allocated from land shares. Furthermore, there is absolutely no prohibition on rezoning state/municipally owned agricultural lands today. Things will, however, change after the Law of Ukraine “On Land Market” becomes effective, i.e. from January 1, 2012, when a prohibition is anticipated to be imposed on rezoning any agricultural lands (of all types) purchased from state/municipal ownership within 10 years. Such prohibition will, however, not apply to agricultural lands purchased before the effective date of this law. The draft law allows the rezoning of agricultural lands for agricultural commodity production, farming, and individual peasant farming purposes, provided that such productions and farms are purchased after January 1, 2012 and only on the basis of duly approved land use schemes of respective administrative territorial units where lands are zoned into relevant categories.
Understanding the two-faced nature of the situation described above, it is recommended that Ukrainian citizens make time to privatize land plots with farming as their intended purpose. The privatization of farming lands is highly relevant as the moratorium does not apply to this operation and there are currently no rezoning restrictions and a significant area of vacant lands is available, which may be acquired for private ownership (one person may currently purchase, and privatize for a fee, the maximum area of 100 hectares of land). It is subsequently advisable that, before Time X, purchased land plots be rezoned to lands for auxiliary agricultural production purposes or be completely removed from the category of agricultural lands to ensure their free alienation unaffected by the Law on Land Market.
Recommendation 2. It is recommended that state district/oblast administrations conduct a technical inventory of vacant lands without losing time and exclude them from agricultural lands by putting them into other land categories, etc.
This recommendation is given in view of the fact that at present it is district state administrations, and sometimes also oblast state administrations, that are authorized to manage agricultural land plots located outside populated areas (other than tillage and especially valuable lands), including to change their intended purpose/use. They are not as yet allowed to sell state-owned agricultural land plots, but they may change their intended use. Starting from January 1, 2012, agricultural land plots located outside populated areas will be managed by the State Agency for Land Resources of Ukraine and its territorial directorates.
Recommendation 3. Interested Ukrainian citizens and their family members should consider setting up farms by first privatizing or buying land plots.
Starting from January 1, 2012, farms, unlike other legal entities, will be able to buy any agricultural land plots, including lands designated for the purposes of agricultural commodity production. It is expected that farms will be able to be sold to individuals as integral property complexes. Meanwhile, farmers will be required to have higher agricultural education or relevant work experience.
Recommendation 4. When we really intend to engage in agricultural business, we think how we can bypass the restrictions set for the maximum area of land plots designated for agricultural commodity production purposes through the consolidation of land plots.
The Draft Law “On Land Market” provides that the maximum total area of land plots designated for agricultural commodity production purposes and privately owned by one and the same person may not exceed 2,100 ha.
The maximum area of agricultural land plots designated for other intended uses is not subject to any restrictions.
The Draft Law also introduces the procedure for consolidation of agricultural lands. The consolidation of agricultural land plots may be initiated by persons holding at least 75% of the land area. The consent of the owners of the other 25% of the land area is not required, but these persons are also under an obligation to take relevant measures envisaged by the agricultural land consolidation project. Field road lands may be transferred for ownership on a free-of-charge basis.
Recommendation 5. When we lease an agricultural land plot for the purpose of its buy-out after the lifting of the moratorium, we should not pin too many hopes on the lessee’s preferential right.
Thus, those legal entities who do not have the status of farms and who lease land plots for agricultural commodity production purposes will not be able to acquire title to such land plots. The preferential right to buy privately-owned land plots for private farming and agricultural commodity production purposes will be given to the State Agency for Land Resources of Ukraine, the local self-government authority, and the owners of the neighboring land plots. The person who intends to transfer an agricultural land plot must give written notice to the holders of the preferential right to buy the land and must publish an announcement in the local printed media at the location of the land plot stating the price and the other terms of the sale of such land plot.