Lease agreement for state real estate

Under a lease agreement for state real estate, the lessor undertakes to transfer property from the state fund to the lessee for a fixed-term paid use for the purpose of carrying out his own economic activity. The Law of Ukraine “On Lease of State and Municipal Property” contains a list of cases when the relevant objects can be transferred for such use to enterprises, institutions or organizations. As a general rule, such agreements are concluded on the basis of and according to the results of an auction in the Prozorro system. We will discuss this in more detail in the article below.

Who can lease state real estate?

It is worth emphasizing that the legislation of Ukraine does not establish significant restrictions on the circle of potential tenants. The main conditions are winning the auction and meeting the criteria. Most often, today, state property is received for use by:

• state and municipal institutions (museums, libraries, educational institutions);
• various social institutions (rehabilitation centers);
• religious organizations;
• public organizations and others.

For what purposes can state-owned real estate be used for lease?

The use of property owned by the state depends on its intended purpose, determined during the auction. There is another option when the state establishes general rules for its use (any purpose), but with certain restrictions on activities. For example, a ban on gambling and others.

More serious restrictions apply to the lease of land plots in state ownership (on the right of permanent use). In particular, its use is allowed within the framework of social activities, such as:

• ensuring educational activities (accommodation of classrooms, laboratories, sports halls, etc.);
• accommodation of administrative premises for the purposes of state institutions;
• ensuring the implementation of statutory activities (for public organizations);
• accommodation of property necessary for religious activities (temple, prayer room, etc.).

The procedure for concluding a lease agreement for state-owned real estate: what are the features?

The procedure for concluding such an agreement provides for the mandatory use of the forms of model agreements provided for in Resolution of the Cabinet of Ministers No. 820. At the same time, the agreement may differ from that proposed by the legislation, but only in the case when the leased object is transferred with additional conditions (for example, carrying out repair work). In accordance with current national legislation, such an agreement is also subject to state registration and notarization (in particular, for those agreements whose term of validity exceeds five full years). In addition, if the agreement is concluded on the basis of a won auction, then data about it and an electronic copy are published in the Prozorro system.

Moreover, amendments can be made to the agreement in the event of obtaining the consent of both parties and for the purpose of:

• changing the intended use (provided that this does not lead to a decrease in the rent);
• choosing a different method of indexing the rent (at the same time, changes in the amount of the rent reduction during the term of such an agreement are not allowed);
• extending the term of the contract (by signing an additional agreement), etc.

When can a lease agreement for state-owned real estate be refused?

Refusal to continue legal relations between the parties is allowed in accordance with Article 19 of the Law of Ukraine “On Lease of State and Communal Property” when:

• the leased property is necessary for use by the authorized management body (for example, use of the facility for defense needs during martial law);
• the lessee has committed serious violations of his obligations under the agreement (in particular, does not cover the rent arrears, does not use the premises for the appropriate purpose);
• the lessee provides a price offer that is not lower than the highest price offer of the auction winner (in the case of an auction for property after the expiration of the contract).

This list is not exhaustive and includes other cases. To learn more, we recommend that you order a consultation with our real estate and land law lawyer.

Legal support for the development of a lease agreement for state-owned real estate: what services do our specialists offer?

Qualified specialists of the company “Prikhodko and Partners” offer a full range of services for legal support for the lease of state-owned real estate — from consultation to the conclusion of the contract itself. This involves the following stages:

• first, pre-contractual work (analysis of the legal status of the property; assessment of legal risks; study of the intended purpose);
• second, the registration procedure (preparation of documentation for participation in the auction, assistance in submitting an application, support during bidding);
• third, support for the development and conclusion of a lease agreement for state-owned real estate (agreement and finalization of the text, introduction of additional conditions, negotiations, support for state registration and notary certification);
• finally, post-contractual legal support (extension of the contract term, introduction of amendments, support for appealing against illegally charged penalties, etc.).

Do you have any questions? We suggest you fill out the form below, get a consultation, and find out the cost of our lawyer's assistance in drafting a real estate lease agreement for you.