Head of practice
Attorney. Specialist in commercial and labor law. Over 16 years of experience in legal support of businesses - debt recovery, contract enforcement, recovery of damages, commercial property and lease disputes.
Land lease contract
Ukraine is an agrarian state, and therefore the conclusion of land lease agreements even during martial law is perhaps the most pressing issue. A land lease agreement is a legal agreement under which the lessor undertakes to transfer a land plot to the lessee for a certain fee for possession and use for a period specified in the agreement (from the Law of Ukraine “On Land Lease”). Due to the introduction of martial law in 2022, it can be concluded in electronic form and acquire legal force only after certification with qualified electronic signatures.
The use of land plots requires complete regulation of relations between the lessee and the lessor, prevention of possible legal risks. Therefore, in this article we will consider in more detail the features of developing and concluding a land lease agreement.
Developing a land lease agreement: main nuances
Essential terms of the agreement
The agreement must contain a number of mandatory provisions, which include:
- first, the object, which includes the cadastral number, location, and area of the relevant land plot. The transfer of land to the lessee is considered completed from the moment of state registration of the right in the Land and Property Registry;
- second, the term (the moment of commencement and termination of the relationship). According to current national legislation, the maximum term of a land lease agreement cannot exceed fifty years from the date of conclusion. Moreover, if the lease term expired on or after the death of the lessor, but before the moment of state registration of the right of ownership of the land plot by the new owner, the agreement is automatically considered extended (renewed);
- hhirdly, rent. The relevant agreement must specify its size, indexation procedure, conditions, and methods of calculation, as well as sanctions for failure to fulfill obligations. The minimum annual rent for land shares is established at the law level and must be at least 3% of the monetary valuation of the land plot (for the lease of agricultural land).
In addition to the above conditions, the parties may agree on additional provisions, in particular the purpose of land use, rules for maintaining the plot, the procedure for unilateral termination of the contract at the initiative of the counterparty, etc. It is worth emphasizing that if such an agreement provides for measures to protect or improve the plot, a separate agreement is attached to it, which regulates the procedure for compensating the tenant for the costs of the relevant work. Lawyers “Prikhodko & Partners” recommend using the form of a standard land lease agreement, approved by the Resolution of the Cabinet of Ministers of Ukraine dated 3.03.2004 No. 220, which takes into account the main essential conditions. Although, in order to fully develop a correct agreement, it will also be useful to return for qualified legal assistance.
Mandatory state registration of a land lease agreement
State registration of such an agreement is a mandatory procedure. To carry it out, it is necessary to collect a number of mandatory documents, in particular:
- application for registration actions to a notary;
- a valid document certifying the identity of the applicant, a power of attorney (if necessary);
- a document confirming payment of the administrative fee for registration (set at 0.05 of the subsistence minimum for able-bodied persons, i.e. 151.4 UAH);
- a land lease agreement.
Rights and obligations of the parties under a land lease agreement
Lessee
A person who uses and owns a land plot has the right to carry out economic activities on it in accordance with the terms of the agreement, to construct new facilities with the written consent of the lessor, to receive products and income from the use of the plot. At the same time, he is obliged to comply with the restrictions established by law and the agreement on the use of the plot, to pay the rent in a timely and full manner, and to comply with the established requirements for land safety (if any).
Landlord
The owner of the land, who leases it, has the right to require the tenant to use the land plot exclusively for its intended purpose, to preserve the fertility of the soil, and to pay the rent on time. The landlord is obliged to transfer the land plot in good condition, to guarantee the exercise of the rights of third parties to the leased land plot (if necessary), to avoid actions that may prevent the tenant from full use, to reimburse capital expenses associated with improving the land plot (if necessary), and to warn the tenant about special properties or defects of the land plot that may lead to a deterioration in its condition.
When is a land lease agreement against the law?
There are often cases when a land lease agreement is declared invalid in court, primarily due to its non-compliance with the law. The most common cases are the following:
- first, failure to comply with essential conditions, lack of provisions mandatory for settlement, which significantly complicates the possibilities for protecting the rights and legitimate interests of counterparties;
- second, violation of legislative restrictions, when the agreement contradicts the Land Code of Ukraine and other special regulatory legal acts;
- third, lack of state registration;
- fourth, violation of the rights of third parties (for example, if the agreement is concluded without the consent of co-owners).
Thus, legally correct execution of land lease agreements ensures the legality of land use, protection of the rights of tenants and landlords, and minimizes legal risks. Such a contract must contain all essential conditions, undergo state registration and comply with legal norms. Failure to comply with the requirements may result in the contract being declared invalid in court. To ensure proper legal protection, the parties to the contract must not only be guided by standard forms of agreements, but also seek qualified legal assistance.
Lawyers of “Prikhodko and Partners” will help to prepare a correct land lease agreement, avoid potential risks and guarantee the stability of relations between the tenant and the landlord. To find out the cost of legal support for the development of the transaction, fill out the form below.
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