Oleksandr Polivodskyy presents validity checklist in respect of land lease contracts

The agricultural land lease makes Ukrainian agribusinesses look for other instruments to create a land fund. Land leases have proved to be one of the most convenient solutions. However, it also has some weaknesses ranging from terminological ambiguity to controversial caselaw.

Sofiya Law Firm partner Mr Oleksandr Polivodskyy has told about conceptual and practical problems involving the invalidity of land leases in light of judicial practice at the 3-rd Agrarian Forum.

According to Mr Polivodskyy, the most common practical weaknesses related to the execution of land leases and potentially resulting in further claims include the absence of the lease contract as such or other documents, failure to have the lease contract and rights registered properly, failure to spell out material conditions in the lease contract and the absence of relevant details in the state land register/state register of transactions. There are cases when a registered lease contract can expire inadvertently due to inattention of the parties.

Tax offices and, sometimes, raiders, file their claims seeking to prove that:

- the land use is illegal;

- there are (officially) no manufacturing facilities

- the existing criteria applicable to farmers are not satisfied (this could give rise to the termination of simplified taxation and special VAT regime);

- a taxpayer was expected to pay taxes under simplified taxation rules; or

- all previously paid taxes should be recalculated under general taxation rules.

To avoid future problems and not waste their time on unnecessary legal proceedings, land users are therefore recommended to have a look through their land lease contracts and to check whether:

- the contract bears a valid signature of the authorised signatory;

- the contract contains all necessary material conditions: the leased property (cadastral number, address and size of the land plot), the contract term; the rent amount, indexation, the manner of payment, payment dates, procedures for paying and revising the rent, and liability for failure to pay the same;

- there are any conditions that would affect (breach) the interests of the state or any third parties;

- whether the procedures for the execution of contracts as set forth in Article 210 of the Ukrainian Land Code have been complied with; and

- whether the right has been registered.

In addition, Mr Polivodskyy has presented a list of judgments made by the European Court of Human Rights and key conclusions expressed by the ECHR that could be of help in the substantiation of legal positions on matters involving the invalidity of land leases.

The event organised by the Ukrainian National Bar Association takes place today (13 April) on the premises of the Ukrainian Chamber of Commerce and Industry.

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