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Saturday, January 20, 2007

Ukraine real estate tips - State registration of proprietary rights

The State Registration Act introduced into Ukrainian law a state registration by which the state now officially recognizes and confirms the arising, transferring and termination of proprietary rights to real estate property and the limitations on such rights. The State Registration Act requires the following proprietary rights to be registered: (1) ownership rights (title); (2) proprietary rights, including rights of possession, servitudes and rights of use (including leases) of real estate having a term of one year or more; and (3) limitations of proprietary rights arising, for example, out of mortgages, court injunctions and decisions of courts and other competent authorities as provided by the Registration Act.

For the purposes of such state registration, the State Registry of Rights to Real Property and their Limitations (State Registry of Rights) is to be created by the State Committee for Land Resources which, according to the Registration Act, will be the holder of the State Registry of Rights. This State Registry of Rights has not yet been created, however, and until it is, such registrations of titles to real property continue to be handled by the appropriate local Bureau of Technical Inventory (BTI) as the Registry of Title to Real Estate (Title Registry), with other registrations being handled as described below.

The State Registration Act has also introduced a significant guarantee for acquirers of proprietary rights who register these rights - in case of any dispute over particular real property, registered rights to real property should prevail over non-registered rights. Furthermore, by virtue of the State Registration Act, until such registration is completed, no further transaction with a property by a new owner (buyer) of such property should be able to take place.

Notwithstanding the above, the State Registration Act has left some unresolved issues and controversies concerning the registration of title to real estate and agreements on real estate, in particular, concerning the reliability and timing of the registration process, as well as on how the State Registry of Rights will be integrated with other state registries related to real property. Hopefully these problems will be successfully resolved in the near future. Until they are, wherever possible, there is recommend that payments for real estate being purchased be withheld or escrowed until the successful registration of the purchase is confirmed.