Land share lease by farmers-entrepreneurs is a common practice in Ukraine. For using land for its own purposes, a landholder must pay land rent and properly formalize this activity. Let’s consider legal aspects of land share lease.
Land share and its lease
The objects of land regulations in Ukraine are land within its territory, land plots and land title which includes, in particular, land shares.
These objects are not equaled but divided into separate categories in p. 3 art. 2 of the Land Code of Ukraine (hereinafter – LCU). Thus, the accounting of land and land shares operations differs.
A land share is only the right to a land plot allocation in kind, i.e. on the field, from the land possessed by the collective agricultural enterprises. A land share certificate does not constitute the physical entity’s property right but gives an opportunity to obtain appropriate land share on the field and subsequently title to land after conducting respective activities.
Lease agreement
The farmers conclude the land lease agreement with physical entities in writing. The agreement may be notarized at the will of one of the parties (art.14 of Law of Ukraine “On land lease” No. 161-XIV of October 6, 1998; hereinafter – Law No.161). The standard form of land share lease agreement is approved by the State Committee on Land Resources Order “On approval of Standard land share lease agreement” No. 5 of January 17, 2000 (hereinafter – Order No.5).
Duration of the agreement is defined on mutual consent of the parties (art. 19 of the Law No.161). To identify the duration of the agreement the parties should comply with maximum and minimum duration terms. The maximum duration term of the lease is 50 years for all kinds of land. As to the minimum duration term for the lease of land shares designated for agricultural use it should be no less than 7 years. And in case of reclaimed lands the minimum term of duration is 10 years.
The agreement must include in addition to physical entity, who grants a lease of the land, information the number of a certificate, an issuing authority, and the date of issue.
Instead of land plot a land share is a conventional proportion of land, so its size should be established in conventional land register hectares. Physical location and borders of land plot are not defined (Letter by State Registration Service No. 10-06-15-13 of January 15, 2013). Thus, the agreement indicates the size of land share in conventional land register hectares, information on land register and other specifics of a land plot. A land register plan which indicates land share’s location should be enclosed to the agreement.
How to register
The land shares do not belong to items of real estate, so property rights are not subject to state registration (Law of Ukraine “On state registration of proprietary rights and their overburdening” No.1952-IV of July 1, 2004; hereinafter – Law No.1952).
The registration of lease agreements is performed by an executive committee of village, town and city council at the place of land shares location (i.2 of Order of registration of land shares lease agreement No.119 of January 24, 2000, approved by the Cabinet of Ministers of Ukraine; hereinafter Order No.119).
To register a lease agreement a physical entity-landlord should submit to the municipal authority the following documents:
- Lease agreement in duplicate;
- land share certificate.
The submitted documents are examined by an executive committee within two days. Given the outcomes of the examination the executive committee either registers the agreement or provides a conclusion that justifies refusal to register.
