AUTOMATIC PROLONGATION OF LAND LEASE AGREEMENT

 In the conditions of modern Ukrainian realities and creation of the land market the question of renewal of land lease agreements remains actual. The legislator is constantly making changes to land legislation. Both the tenant and the landowner must know the terms and conditions for the extension of land lease agreements.

 On December 5, 2019, the legislature adopted amendments to a number of regulations (Law № 340-IX) governing land relations. On July 16, 2020, innovations related to the renewal of the land lease agreement came into force.

What exactly has changed?

 The relevant law supplemented the Land Code of Ukraine with Article 126-1, which regulates the issue of automatic renewal of a land lease agreement. In the lease of land for agricultural purposes or development, the parties may provide for the condition of automatic renewal of such an agreement.

What are the exceptions?

 Conditions for automatic prolongation of the contract may not be provided for in agreements on land plots of state or communal ownership, except in cases where these land plots contain buildings or other structures of land users.

How is the land lease automatically renewed?

 When concluding a new contract or making changes to the existing contract, it is necessary to add a condition on such prolongation of the contract. Changes to the extension of the contract must be registered in the register of real rights to immovable property.

 After the expiration of the contract in the presence of the above condition, the contract is extended for the same period and on the same terms. No transactions are required or any action is taken to renew the lease.

How to cancel the condition on prolongation of the contract?

 If the landowner wants to stop the automatic renewal of the lease agreement, the latter must apply to the state registrar with a request to exclude from the state register information about the renewal of the agreement. Such an application must be submitted no later than one month before the expiration of the contract.

How is the term of the contract concluded before the entry into force of the Law № 340-IX renewed?

 In this case, the renewal of the lease agreement is subject to the rules in force at the time of such agreement.

Is it obligatory to prescribe a condition on automatic renewal of the contract when concluding a new term?

 Yes, of course. If the term of the contract is extended by concluding it for a new term, it is necessary to indicate the condition of automatic prolongation of the contract.

 As we can see, land legislation has undergone significant changes. The order of automatic prolongation of the land lease agreement has been radically changed. To analyze the risks for both the tenant and the landowner when concluding or amending the land lease agreement should consult a specialist. Prikhodko & Partners Law Firm will always be happy to help you!