The UNBA has pointed out gaps in the regulation of usufruct rights to land plots

The Ukrainian National Bar Association has submitted comments and proposals on the draft law regarding the introduction of market-based institutions for land use rights. The document is intended to address gaps that arose following the introduction of usufruct as a new type of real right.

The position was prepared by the UNBA Committee on agrarian, land and environmental law in response to a request from People’s Deputy Oleksiy Movchan, who asked the Association to provide a professional assessment of the draft law prior to its submission to the Verkhovna Rada.

The UNBA noted that Law No. 4196-IX of January 9, 2025, «On the specifics of regulating the activities of legal entities of certain organizational and legal forms during the transition period and associations of legal entities», introduced a new type of real right — usufruct.

The need for such an instrument arose from the repeal of the Commercial Code and the institutions of the right of commercial administration and the right of operational management. At the same time, these changes did not account for the need to amend other legislative acts to regulate the application of usufruct. The draft law is specifically aimed at addressing these issues.

Advocates noted that the main feature of the draft is the replacement of the right of permanent use of land plots with the right of usufruct. Crucial in this context are the proposed amendments to Article 92 of the Land Code, which require the regulation of issues concerning existing rights of permanent use of land plots.

These issues have already been partially addressed by Law No. 4196-IX for state and municipal enterprises that hold land plots under the right of permanent use. For other land users, the relevant provisions are set forth in the amendments to Paragraph 6-1 of the Transitional Provisions of the Land Code. Other changes should be viewed as derivative of these provisions.

Overall, advocates have given the draft law a positive assessment and called the abolition of the institution of the right of permanent use of land plots appropriate.

At the same time, in the opinion of the relevant Committee, the proposed introduction of a single installment payment term for the redemption of land plots — 15 years — requires proper justification. Currently, paragraph 6-1 of the Transitional Provisions of the Land Code provides for two different terms: 10 years for agricultural land and 30 years for other land.

The UNBA also proposed to additionally include in the draft law amendments to the Law «On state registration of real rights to immovable property and their encumbrances». This concerns provisions regarding property rights subject to state registration, as well as clarifications regarding the procedure for registering usufruct rights in cases established by the updated paragraph 6-1 of the Transitional Provisions of the Land Code.

The advocates also drew the MP’s attention to the fact that the changes he proposed would require amendments to subordinate legislation, specifically the Procedure for State Registration of Real Rights to Real Estate and Their Encumbrances, approved by Cabinet of Ministers Resolution No. 1127 of December 25, 2015. In this regard, the final provisions of the draft law should include a directive to the Cabinet of Ministers to bring the relevant regulations into compliance with the new legislation.