Will the shareholder after the launch of the land market be able to sell the land not to the farmer who is currently leasing it, but to another farmer?
The answer to this and other questions which worry agrarians was given by Oleksandra Fedotova, partner and head of land and agrarian law practice of ADER HABER Law Firm. Read her interview on the main agribusiness website Latifundist.com
Based on the Abolition of the moratorium on sale of land and the Land Lease Law, the tenant has a pre-emptive right to purchase the plot if it is sold and provided that the tenant is willing to pay the price at which such plot is sold. And in the case of sale of that plot at auction, if the lessee’s offer is equal to the maximum offer at that auction
At the same time, in order to purchase an agricultural land plot, the tenant must comply with legal restrictions on the possible owner of such land. He must be a citizen of Ukraine or a legal entity of Ukraine, among the owners of which there are no foreign citizens, foreign legal entities or states. It is also necessary to observe the restrictions on the volume of the land bank owned by the buyer – not more than 10 thousand hectares for legal entities and individuals.
The law also specifies some other restrictions for buyers, but these are rather exotic cases, so we will not describe them in this article (for example, the buyer should not be under Ukrainian sanctions or controlled by a Russian owner).
Tenants who will not be able to buy plots because they do not meet the requirements will be able to transfer this right to a third party.
How to draw up a lease agreement, if it does not exist now, so that the shareholder did not sell the land to someone else after the launch of the market?
I think the answer to this question depends on what kind of relationship exists between the shareholder and the potential buyer. If a potential buyer leases this land plot, but the legal relationship is not properly formalized, it is necessary to sign a lease agreement, which in the future will give the preemptive right to redemption, or an emphyteusis agreement.
If we are talking about the possible acquisition of a land plot that is not currently being used by a potential buyer, then at this stage such an agreement cannot be concluded, since it will be null and void by virtue of the law (clause 15 of Section IX of the Transitional Provisions of the Land Code of Ukraine).
What are the dangers of working on land without a lease agreement?
It should be said that, according to estimates, the shadow turnover of agricultural lands is 28% of their total area. This is about 12 million hectares, for which there are no lease agreements and payments for which are made in cash.
The first and most real risk in this case is that the owner of the crop will be the owner of the land plot. Moreover, if damage is caused by such illegal processing of the site, then it can also be recovered from the one who cultivated the land.
Also, such processing of the site is tax evasion with all the ensuing consequences, up to and including criminal liability.
What are the most common mistakes made when drawing up a rental agreement?
The current legislation (Art. 203 of the Civil Code) contains requirements that must be met in order for the transaction to be invalidated. The most common mistakes are as follows.
In Art. 15 of the Law of Ukraine “On land lease” contains a list of essential conditions that must be contained in a land lease agreement. These conditions must be specified in the contract. You also need to take into account that by the Resolution of the Cabinet of Ministers of 03.03.2004 No. 220 approved model lease… For the parties, this means that when concluding a lease agreement, they can specify the terms of the model agreement, but they cannot deviate from it.
Often, the contract may not contain some of the essential conditions, which gives rise to a reason to challenge it. At the same time, it should be borne in mind that, according to the position of the Supreme Court, which it outlined in 2018, the appeal of the contract on the indicated grounds, if it had been performed without problems for years before, is the unfair behavior of the party, and therefore the rights of such a party are not subject to protection.
If the owner of a land plot is an elderly person, then the most common, oddly enough, mistake is the signing of a lease agreement not by the owner of the plot, but by his relative (daughter, son, husband, etc.). This is due to various reasons (illness, inability to write, etc.). In this case, the contract will not be concluded.
The person who signs the contract must understand what he is signing and under what conditions. Often the owner is given only the last page for signature, and he does not understand on what conditions he signed the contract. In such cases, very often everything ends in court.
How can an agrarian check whether a land lease is properly executed?
I am sure that it is best to contact a lawyer.
If this is not possible, then the minimum “self-medication recipe” is below:
How to protect an agrarian from unlawful transfer of land into the ownership of the bank?
I think such fears are clearly exaggerated. The mortgage of land plots will be regulated by the legislation that is currently in force in relation to other real estate. Attempts of illegal seizure through the institution of mortgage, of course, exist, but these are isolated cases. If there is no violation of payment discipline under the loan agreement, then there are no grounds for foreclosure on the subject of the mortgage. There can be no other logic here.
Accordingly, you can protect yourself simply without violating the loan agreement. Well, contracts should also be concluded only after a preliminary detailed study of them. You should not sign an agreement on terms that the tenant obviously cannot fulfill.