Sale and purchase of real estate resumes for the first time since the start of martial law in Ukraine

The Cabinet of Ministers of Ukraine finally issued Resolution No. 480 of April 19, 2022 (the “Resolution”), which, among other things, renews the state registration of real estate titles. It was officially published in the Uriadovyi Kurier newspaper and therefore entered into force on April 28.

The resolution provides for a number of restrictions which, as the Minister of Justice has stated on several previous occasions, are intended to prevent unlawful interference and misuse of immovable property under martial law:

  • not all notaries will be authorized to perform notarial acts;
  • notaries are prohibited from performing notarial acts by virtue of a power of attorney in the name of individuals;
  • it is prohibited to contribute assets to the share capital or to withdraw assets from a company during a withdrawal from it;
  • a new alienation of real estate is allowed no earlier than within a month; and
  • notarial deeds can only be performed within regional boundaries.

In particular, not all notaries will be able to perform notarial deeds in matters of real estate, social rights, securities, matrimonial interests, powers of attorney issued to access a safe deposit box – which are described in more detail in the resolution as notarial deeds concerning property of value. The Ministry of Justice of Ukraine compiles a list of notaries authorized to perform notarial acts on valuable property, in particular on real estate, under martial law, depending on whether or not they have already committed violations listed in the resolution. Some notaries will also be limited in the notarial acts they can perform and in relation to the type of property qualified by the Value Resolution. The prohibition to carry out certain notarial acts is specified in the respective reservation entered on the list of notaries to be drawn up by the Ministry of Justice.

In addition, the resolution prohibits notarial deeds and registrations, including to alienate real estate or change the list of participants of a company, under a power of attorney in the name of an individual. New powers of attorney to dispose of real estate must always be issued on notary’s letterhead.

In addition, real estate cannot be contributed to the authorized capital of a legal person or received in connection with the withdrawal of a participant. Such a restriction may be aimed at preventing circumvention of other trade restrictions and raids.

As a general rule, real estate can be alienated at least one month after its acquisition. This should prevent chains of bona fide buyers from forming over a short period of time, often to complicate the recovery of illegally transferred real estate. Thus, this rule is not applicable in particular to the sale of property inherited or received by allocation of shares in co-ownership, which sale does not normally generate such a risk. However, given the operating difficulties currently encountered by the courts, such chains can just as well be created for a period of more than one month.

A sale, mortgage or property management agreement entered into in relation to real property may be certified only in the region where that property is located. A similar restriction has been in place since 2016, when the possibility of registering rights to real estate anywhere in Ukraine, wherever located, was dropped under the guise of preventing raids. As an exception, the resolution introduces the principle of extraterritoriality with respect to real estate located in Kyiv and the Kyiv region, allowing notarial deeds and state registration with respect to such property within of Kyiv and the Kyiv region, apart from state registration resulting from acceptance inheritance.

The resolution establishes a procedure for requesting and completing registration actions that were requested prior to the introduction of martial law and are still pending.

It is hoped that once real estate transactions resume, this will facilitate market recovery in martial law and enable businesses and citizens to manage their property and better meet their needs.