Main points
- Renewal of land lease agreements in Ukraine is often accompanied by confusion due to the mixing of different legal mechanisms, and legal errors can lead to the loss of the plot.
- The most common way to renew a contract is to conclude an additional agreement, but it is important to correctly determine the term of the contract, taking into account restrictions such as a total lease term of up to 50 years.
Renewal of lease agreement / Photo Freepik
Renewal of land lease agreements in Ukraine still causes a lot of controversy and confusion. The greatest risks for the tenant arise precisely at the moment of the contract expiration, when even a small legal error can lead to the loss of the plot.
What possibilities does the law provide?
Lawyer Lyubov Polishkevych said in a commentary for Channel 24 that the issue of renewing land lease agreements has been a subject of debate among lawyers, agrarians, and landlords themselves for years, and despite numerous changes in legislation, confusion persists. Most often, it arises due to the mixing of two different legal mechanisms: renewal of the lease agreement and the exercise of the tenant's preemptive right to conclude an agreement for a new term.
According to the expert, practice shows that the moment of the end of the contract is the most vulnerable for the tenant. That's when competitors appear, and any legal mistake can cost the loss of the plot.
Lyubov Polishkevich
Managing Partner of the Law Firm Result, Head of the Land Law and Real Estate Practice
The legislation provides for several different models of contract renewal. Some of them apply only to new contracts, others to those concluded many years ago. For example, Article 126-1 of the Land Code allows the parties to provide for a condition in the contract on its renewal. In professional circles, this is often called “automatic renewal”. It is important to understand that this model applies only to contracts concluded after the appearance of this norm.
At the same time, the law gives the parties the right to refuse renewal. To do this, you must submit a corresponding application to the State Register of Property Rights no later than one month before the end of the contract. It is obvious that the first large-scale disputes regarding this mechanism may appear when the first contracts with such a condition expire.
According to the lawyer, for most contracts that expire today, a different approach is used. These are the rules that were in effect at the time the contract was concluded. This is directly provided for by the transitional provisions of the Law of Ukraine “On Land Lease” and is confirmed by case law. The classic model looks like this. A tenant who wants to use the preemptive right must notify the landlord in advance of his intention to extend the lease. A draft additional agreement is attached to the letter.
The most common option is an additional agreement.
In practice, the renewal of the contract most often occurs by concluding an additional agreement. This is the simplest option from the point of view of registering rights. If the lease right has already been entered in the State Register of Property Rights, it is enough for the registrar to submit an additional agreement signed by the parties and pay an administrative fee. After that, the lease term in the register is extended.
However, even here there is a typical mistake. Quite often, the parties incorrectly determine the term of the contract after renewal. It is calculated from the date of conclusion of the additional agreement, although the law requires a different approach. The term of the lease agreement is calculated from the date of conclusion of the main agreement,
– reports Lyubov Polishchuk.
Therefore, if the contract is initially concluded for 7 years and the parties agree to extend it for another 7 years, the additional agreement should state that the total term is 14 years. Sometimes this wording causes concern for the landowner. In such a case, the term can be specified by a specific date of completion of the contract.
There is another limitation. The total term of the land lease cannot exceed 50 years. If this limit is reached, it will no longer be possible to renew the contract with an additional agreement. In such a situation, the parties terminate the previous contract and conclude a new one.
Renew when a new contract becomes available
Sometimes the parties deliberately choose to conclude a new contract instead of a supplementary agreement. This decision has practical reasons.
Over the years of using the plot, key conditions may change: the normative monetary valuation of the land, the amount of rent, the rules for using the plot, the possibility of subleasing or planting perennial plantings. If the parties actually rewrite almost the entire text of the agreement, concluding a new document seems logical,
– notes Lyubov Polishchuk.
However, according to her, this option also has its drawbacks. To register a new agreement, you must first terminate the lease right under the old one, and only then register the new right. Each of these actions is accompanied by an administrative fee.
However, in practice there is a compromise option. The parties can conclude an additional agreement, in which it is noted that the contract is set out in a new version. After that, the updated text of the contract is actually signed, but legally it remains a continuation of the previous one.
Features for state and communal lands
Renewal of contracts for state or municipal land has its own characteristics. As a rule, this requires a decision of the relevant government body or local government. Without such a decision, the state registrar usually does not carry out registration. However, according to the lawyer, the legislation provided for periods when the head of the government body could sign an additional agreement without a separate decision of the council or administration.
In practice, however, another problem sometimes arises. Registrars refuse to register new contracts, arguing that the transfer of state or municipal land must take place through land auctions. At the same time, the Land Code directly establishes an exception. If the contract is concluded for a new term with the use of the tenant's preferential right, land auctions are not held.
What is an important condition for contract renewal?
All of the above mechanisms work only under one condition. The tenant must prove that he has properly fulfilled his obligations under the contract. The most common mistake is to believe that it is enough to simply pay the rent on time. In fact, this is only one of the conditions. Completely different violations can become an obstacle to renewal.
For example, the lack of agrochemical soil certification, which should be carried out regularly, non-compliance with the conditions for using the land plot, or the lack of necessary permits for special water use,
– says Lyubov Polishchuk.
Therefore, the main advice for tenants is quite simple. Before the end of the contract, it is worth carefully re-reading all its terms and conditions and making sure that each of them has been fulfilled throughout the entire lease period. It is this, and not a formal renewal letter, that most often determines the further fate of the contract.
The state act on the land has disappeared or burned down: how can the owner restore the document?
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The state land act confirms the right of ownership to the plot and was issued until 2013; now this right is confirmed by an information certificate from the State Register of Real Property Rights to Real Estate.
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To obtain a copy of a lost or damaged state act, you must contact the territorial body of the State Geocadastre with the relevant documents, and the copy will be issued within 15 days.