What has changed in the draft for the land sale No. 2178-10
The introduction of quarantine in Ukraine is is being considered not only as a measure for the control of coronavirus.
Coincidentally, this week Verkhovna Rada had to continue consideration of the draft law No. 2178-10 on the abolition of the moratorium on the sale of agricultural land.
Besides, the Rada tackled other more urgent questions, and passed several draft laws for the period of implementation of measures aimed at preventing the contraction and spread of coronovirus diseases (COVID-19).
However, the issue of abolition of the moratorium on the land is not resolved yet, and its consideration aparently will take place after the quarantine.
What provisions are proposed to be introduced by Bill No. 2178-10 on the sale of land and what farmers and other owners should be prepared for read in article of Inna Zaliska, attorney of ESQUIRES Law Firm in Mind.
1.Who can purchase an agricultural land?
The bill amends the Land Code of Ukraine, in particular, it defines a new list of persons who can acquire right of ownership of land for agricultural purposes.
So, the current Land Code of Ukraine regulates that today the land can be bought by:
- citizens of Ukraine with agricultural education / work experience or current employment in agricultural production;
- legal entities of Ukraine, which constituent documents provide agricultural production.
However, although such persons are defined as holders of property rights, the Transitional Provisions of the Land Code of Ukraine impose a moratorium on the purchase and sale of agricultural land until the law on the agricultural land transactions comes into force. Since the law on the agricultural land transactions has not came into force, a moratorium remains in force.
The draft bill proposes to provide the right to buy agricultural land to:
- citizens of Ukraine;
- legal entities of Ukraine established under the laws of Ukraine;
- territorial communities;
- to the state.
Foreigners and stateless persons may acquire ownership rights for land by inheritance the law, but must alienate them within one year from the date of acquisition of ownership.
There is a simplification of the acquisition of the right for land ownership by citizens of Ukraine, – the requirement to have an education, experience and sphere of activity is abolished, – the requirement for legal enteties in regard of constituent documents is abolished.
In addition, there are no restrictions for founders of legal entities. That means, it can be legal entities, beneficial owner (controller) is foreigner, stateless persons, legal entities established under the legislation other than the legislation of Ukraine, foreign states.
The draft law prohibits legal entities to alienate (moratorium is expand till January 1, 2024):
- agricultural land of state and communal ownership;
- agricultural land of private property intended for farming, land plots allocated in kind (on the fild) to owners of land shares to conduct of personal farming, as well as land plots (shares).
Legal entities may acquire ownership of:
- agricultural land that was in use of this legal entity on lease or on the right of the emphiteus before this draft bill came into force;
- citizens are allowed to acquire ownership of agricultural land with paymants in installments of up to 5 years at a price equal to the standard monetary value of such land without conducting land trades of agricultural land, which: – belongs to them on the right of permanent use, lease, the right of a Lifelong inheritable use rights of land of state and communal property intended for the conduct of farmer activity.
Thus, in the case the bill is passed, legal entities registered under the legislation of Ukraine (including the beneficial owners of which are foreigners, stateless persons, legal entities established under the legislation other than the legislation of Ukraine, foreign states) that ownes an agricultural land in lease or on the right of the emphitheusis will be able to purchase it.
However, the moratorium established on January 1, 2024 does not apply to this category of land.
2. Restriction of the total area of land or forced alienation
The bill introduces a restriction of territorial and state-wide ownership of agricultural land. Thus, the total area of agricultural land owned by a citizen or a legal entity (its controller) сan not exceed:
- – 35% of agricultural land within one amalgamated territorial community;
- – 8% of agricultural land in the region;
- – 0,5% of agricultural land in Ukraine.
Violation of these requirements is the basis for the enforced alienation of the land.
It should be noted that such restrictions apply only to legal and natural persons. However, the legislator does not restrict territorial communities and the state, although includes them into list of the owners.
These restrictions indicate that today’s landowners are at risk of forcible land alienation, in case of interest rate excess in the amalgamated territorial community, region or Ukraine.
Therewith, the amalgamated territorial community can posess unlimited rate of this lands.