The Land Code of Ukraine acknowledges the state, communal and private ownership of land. As a rule, land for celskohozyaystvennogo use, rented from private individuals who have received land rights after the acquisition of Ukraine's independence.
In a situation where an investor intends to use the land for crop production, the latter should distinguish between rent land from the lease of land shares.
Rent land share is different from the land lease. In the first case the contract is with respect to shares, the right to which the certificate is confirmed in the second case - the contract is in relation to a particular parcel of land with clear and defined borders. Certificate holder to land (share) has no rights of the owner of land that is subject to specific lease agreement. According to the Land Code of Ukraine the only document which confirms the ownership of land, is a public act. Therefore, the certificate holder to land share has no right to dispose of a specific plot. Moreover, the legislation that regulates rental in Ukraine, provided that the object of the lease is a specific, clearly defined object. If the object is to rent the land, it must be a plot of land with certain limits, isolated in nature, and in case of lease of the land unit, land is not allocated in kind. Given this argument, we can conclude that the object of lease for rental of land share does not exist.
There are precedents in Ukraine, where the lease of land shares were invalidated as a result of the above reasons. Despite the fact that this attitude is understandable to a certain extent, each case must be resolved separately, we do not agree with the idea that all leases of land shares (stocks) are de facto void. There are a number of normative legal acts, which include the possibility of signing such a contract, and we believe that up until the court decides that a particular treaty is invalid, a lease of land share can exist and be valid.
In practice, situations arise when the owner of the land share by entering into a lease with respect to a land share, will legalize their right to land and receives a state certificate of title to land. In this case, it is debatable about whether the remains valid lease a land share, and whether the tenant is entitled to use the land. In accordance with the typical lease a land share, approved by the State Committee of Land Resources № 5 dated 17 January 2000: In case of allocation of land share in kind, the obligation of the parties to the contract shall terminate, such provisions are generally observed in all existing contracts lease of the land unit.
Given this contractual provision, the owner of a land share certificate may terminate the lease at any time, by legalizing the right of a specific plot.
In this case, the tenant loses the right to use the land since the issuance of a state act, and the use of land without a properly executed documents expressly prohibited in the Land Code of Ukraine.
In the case above, we believe that the tenant of the land unit should have an overwhelming right to conclude a lease agreement with respect to the land allocated to nature, and this situation must make to lease a land share.
If the landlord refuses to enter into a lease with respect to land, the tenant will be entitled to claim the lease contract through the courts.
Taking into account mentioned above, the conclusion of the lease of the land unit provides certain legal consequences, in order to effectively govern the relationship between the parties, we recommend to legalize the ownership of land and ensure its selection in nature, and subsequently enter into a lease a specified plot.
Dmitry Kiselev, Senior Associate BEITEN BURKHARDT