Property Sale Overseas: Ukraine Property Buyers Guide
Despite the fact that the free real
estate market in Ukraine is relatively young and immature, the
property buying process in Ukraine is quite well documented and a
foreign buyer’s rights are protected; having said that, the lack of
sophistication in the marketplace means that it is not a place for
the risk averse.
If a potential property investor follows the general rules and
guidelines as laid out in this article, most should avoid the well
documented traps and pitfalls associated with buying and owning land
and property in the Ukraine.
As stated the property market in the Ukraine is immature and there
is a lack of transparency to it which restricts a buyer from easily
valuing property and assessing the potential of a particular piece
of real estate – but with sufficient due diligence and a good estate
agent and solicitor, foreign buyers in the Ukraine can make a
successful investment.
In 2004 Ukraine adopted a new Civil Code, this together with the
Constitution, the Law of Ukraine on Property and the Land Code
govern the rights of a foreign citizen wishing to own residential or
commercial property and land in the Ukraine.
Currently foreigners are not restricted in their purchase,
ownership, use and resale of property and certain types of
non-agricultural land. Some foreign buyers prefer to purchase in the
Ukraine by means of a local Ltd company type structure to protect
their privacy and assets from unwanted attention. Whether or not
this approach suits the individual investor is something to discuss
with a lawyer in the Ukraine.
The services of a decent lawyer should be secured as soon as an
investor sets foot in Ukraine and well before any offer to purchase
real estate is made. The next person an investor will need to assist
with the property buying process is an estate agent. Ukraine is a
country where there are both incredibly good estate agents and
incredibly corrupt agents who attempt to charge both the buyer and
vendor and potentially resell the same piece of property repeatedly.
If at all possible a property investor should seek the advice and
recommendations of trusted sources over which agents can be trusted.
Decent estate agents in the Ukraine are well worth doing business
with as they will know about properties that are for sale before
they are ever marketed, but their fees and who actually pays them
should be negotiated in advance.
Once a piece of property or land has been identified as meeting an
investor’s objectives an offer to purchase it can be made which, if
accepted, will result in the buyer and vendor entering into a
conditional preliminary sale-purchase agreement. This contract
should be checked by the buyer’s solicitor and then signed in front
of a notary and notarized.
At this stage a non-refundable deposit should be paid by the
property investor and the investor’s solicitor should begin doing
their due diligence on the property, the vendor and the title deeds
of the real estate. There is usually at least a 14 day gap between
the preliminary contract being signed and the signing and
registration of the final contract to allow searches and surveys to
be carried out.
To aid the buyer’s solicitor in his searches the vendor should offer
the following documents up for scrutiny: -
1) the certificate of privatization or a previous purchase contract
or proof that the vendor owns the property as a result of
inheritance
2) a certificate from the Unified Register of Prohibitions on the
Disposal of Immovable Property to prove that there are no
outstanding debt or legal issues against the property being offered
for sale
If all is found to be in order with the investment property in
Ukraine the final sale-purchase agreement will be signed and
notarized and the notary will register the document with the State
Registry. This process can take a few days and it is at this point
that occasionally an unscrupulous agent or vendor will resell the
property on to another third party before the registration of the
sale appears in the public records. To get around this issue an
investor should insist that a final balance of money is withheld
until the registration process is complete.
In terms of the fees, charges and taxes that a property investor in
the Ukraine may incur these include the solicitor’s fees, estate
agent’s fees, property registration fees, pension fund duty and
notary fees. Those who allow for between 5 and 7% of the purchase
price for these extra costs should find themselves well covered.
