On 12 March 2025, the Verkhovna Rada of Ukraine adopted the Law “On Amendments to the Civil Code of Ukraine on Strengthening the Protection of the Rights of a Bona Fide Purchaser” No. 4229-IX (the “Law”), which aims to improve the protection of individuals in disputes with state authorities or local governments regarding the vindication of property acquired from state or municipal property.
STATUTE OF LIMITATION FOR VINDICATION OF PROPERTY
The Law establishes a 10-year limitation period, after which the state or a territorial community loses the right to vindicate property from a bona fide purchaser.
This period is calculated from the date of registration of the first purchaser’s ownership of the real estate or its transfer unless state registration was required by Law at that time.
This rule also contains certain exceptions that relate to specific categories of property that are particularly important for the state, such as critical infrastructure facilities, facilities of strategic importance, defenсe facilities and land, nature reserves, hydraulic structures, and cultural heritage sites.
PROCEDURE FOR THE CALCULATION OF THE STATUTE OF LIMITATIONS
The Law provides for a change in the approach to the commencement of the statute of limitation period if a state authority, local self-government body or prosecutor files a claim for vindication of property transferred from state or municipal ownership to private ownership.
Under the new rules, such a period starts to run from the date of state registration of the first transferee’s ownership of the property or from the date of transfer of the real estate to the first purchaser, if registration of the right or transaction was not required by Law at the time of such transfer.
Thus, the Law provides for an “objective limitation period” that does not actually depend on the moment when the relevant state or local government body became aware of the disposal of real estate from their possession.
COMPENSATORY MECHANISM FOR VINDICATION OF PROPERTY
The Law introduces a mechanism for simultaneous compensation to a bona fide property purchaser in the event of satisfying a claim for property reclamation filed by a state or local government body or a prosecutor.
When deciding to satisfy such a claim, the court is simultaneously obliged to order the transfer of compensation for the value of the vindicated real estate in favour of the bona fide purchaser. The property’s value determines the amount of compensation as of the date of filing the claim for vindication of the property based on the appraisal.
Once the state or territorial community makes compensation for the vindicated property based on the court’s decision, they automatically acquire the right to claim against the person responsible for the illegal alienation of such property.
AMENDMENTS TO PROCEDURAL LEGISLATION
In the event of a claim for vindication of property, a state authority, local self-government body, or prosecutor shall deposit funds in the amount of the disputed property’s value into the court’s deposit account as compensation if the claim is satisfied.
TEMPORAL EFFECT OF THE LAW
The Law expressly provides that its provisions on payment of compensation, as well as the calculation and running of the deadline for vindication of property, have retroactive effect in cases where the court of first instance has not decided to vindicate property from a bona fide purchaser as of the date of entry into force of such Law.
The Law was signed by the Chairman of the Verkhovna Rada of Ukraine on 17 March 2025 and sent to the President of Ukraine for signature. The provisions of the Law provide that it shall enter into force on the day following the day of its publication.
