Ukraine amends Civil Code to protect bona fide acquisition of state property

23/ 04/ 2025

Ukraine’s parliament recently passed amendments to the Civil Code of Ukraine, which are expected to significantly impact the rights and protections of investors and private companies dealing with immovable property acquired from the central government or municipalities. The amendments now await the Presidents signature. These amendments, draft law 12089 dated 3 October 2024, are designed to address the rights of good-faith (i.e. bona fide) acquirers of immovable property and introduce new restricted procedures for the reclamation of such property. The changes are expected to provide greater security and predictability for investors and private companies that have acquired assets from the Ukrainian government or municipalities. The main idea of the law is to protect businesses in relations with state authorities or local communities. Currently, companies operating in the real estate and construction sectors, as well as those whose production facilities are located on formerly state-owned property, are not protected from the consequences of erroneous or unlawful actions of state or local authorities. There are frequent cases where, after many years, even decades, decisions on the sale of land or other state or municipal property are reviewed in courts without any compensation to the private partner. The reasons for annulment are often the fault of the state. The law aims to put an end to this practice. Moreover, the law retroactively applies to acquisitions that took place ten or more years before. The definition of a good-faith acquirer has not changed with the adoption of the law. A good-faith acquirer is still considered a person who acquired property without knowing and could not have known that the seller had no right to dispose of it. Under the current rule, the owner may reclaim property from a good-faith acquirer if the property was lost, stolen, or left the owners possession against their will. The exemptions from this rule state that property cannot be reclaimed from a bona fide purchaser if it was sold or transferred in accordance with court decisions or through an electronic auction for the privatisation of state and municipal property. Key provisions of the amendments: 1) Ten years for reclamation of the property. An important change is that the law adds a ground where property cannot be reclaimed from a good-faith acquirer: the lapse of more than ten years since the acquisition of state or municipal property by a private owner prevents the former owner from reclaiming the property. 2) Limitation period. The three-year statute of limitations for claims relating to the reclamation of the immovable property that was transferred from state or municipal ownership to private ownership or for invalidation of rights to such property, begins on the date on which the first person acquired the right of ownership. 3) Exemptions to the rules. The new rules have important exemptions. The law retains the right of the state or local self-government to reclaim property even from good faith owners if the dispute is about the following: important objects for critical infrastructure, strategic objects for the economy and defence, environmental protection areas, or certain types of cultural heritage objects. 4) Compensation procedures. If the court reclaims the property in favour of the state or territorial community, it must decide on the compensation to the bona fide purchaser by the state authority or local self-government body. Compensation is to be deposited into the courts account by the claimant before the reclamation decision, and the transfer of funds to the bona fide purchaser does not require a separate claim. The authorities then acquire the right to claim the paid funds from the individual responsible for the illegal disposal of the property. 5) Retroactive effect. The law will have a retroactive effect on the conditions and procedures for compensation by state authorities or local self-government bodies to bona fide purchasers, and the calculation and expiration of deadlines for immovable property ownership acquired before the laws entry into force. The ongoing disputes on the disposal of the state or municipal property, if not decided by the court of first instance yet, should also be resolved considering the new amendments. These amendments are poised to enhance the legal framework for good-faith acquirers, providing them with greater protection and clarity on their rights. The introduction of clear limitation periods, specific conditions under which property can be reclaimed, and streamlined compensation procedures are expected to ease the concerns of investors and private companies. This legislative development is a positive step towards fostering a more secure and predictable investment environment in Ukraine. Legislation: Draft Law No. 12089 “On amendments to the Civil Code of Ukraine to strengthen the protection of the rights of a bona fide purchaser” For more information on opportunities in Ukraine’s real estate sector, contact your regular CMS advisor or local CMS experts:

These amendments, draft law 12089 dated 3 October 2024, are designed to address the rights of good-faith (i.e. bona fide) acquirers of immovable property and introduce new restricted procedures for the reclamation of such property. The changes are expected to provide greater security and predictability for investors and private companies that have acquired assets from the Ukrainian government or municipalities.

The main idea of the law is to protect businesses in relations with state authorities or local communities. Currently, companies operating in the real estate and construction sectors, as well as those whose production facilities are located on formerly state-owned property, are not protected from the consequences of erroneous or unlawful actions of state or local authorities. There are frequent cases where, after many years, even decades, decisions on the sale of land or other state or municipal property are reviewed in courts without any compensation to the private partner. The reasons for annulment are often the fault of the state. The law aims to put an end to this practice. Moreover, the law retroactively applies to acquisitions that took place ten or more years before.

The definition of a good-faith acquirer has not changed with the adoption of the law. A good-faith acquirer is still considered a person who acquired property without knowing and could not have known that the seller had no right to dispose of it.

Under the current rule, the owner may reclaim property from a good-faith acquirer if the property was lost, stolen, or left the owner’s possession against their will. The exemptions from this rule state that property cannot be reclaimed from a bona fide purchaser if it was sold or transferred in accordance with court decisions or through an electronic auction for the privatisation of state and municipal property.

Key provisions of the amendments:

1) Ten years for reclamation of the property. An important change is that the law adds a ground where property cannot be reclaimed from a good-faith acquirer: the lapse of more than ten years since the acquisition of state or municipal property by a private owner prevents the former owner from reclaiming the property.

2) Limitation period. The three-year statute of limitations for claims relating to the reclamation of the immovable property that was transferred from state or municipal ownership to private ownership or for invalidation of rights to such property, begins on the date on which the first person acquired the right of ownership.

3) Exemptions to the rules. The new rules have important exemptions. The law retains the right of the state or local self-government to reclaim property even from good faith owners if the dispute is about the following:

important objects for critical infrastructure,
strategic objects for the economy and defence,
environmental protection areas, or
certain types of cultural heritage objects.

4) Compensation procedures. If the court reclaims the property in favour of the state or territorial community, it must decide on the compensation to the bona fide purchaser by the state authority or local self-government body. Compensation is to be deposited into the court’s account by the claimant before the reclamation decision, and the transfer of funds to the bona fide purchaser does not require a separate claim. The authorities then acquire the right to claim the paid funds from the individual responsible for the illegal disposal of the property.

5) Retroactive effect. The law will have a retroactive effect on the conditions and procedures for compensation by state authorities or local self-government bodies to bona fide purchasers, and the calculation and expiration of deadlines for immovable property ownership acquired before the law’s entry into force. The ongoing disputes on the disposal of the state or municipal property, if not decided by the court of first instance yet, should also be resolved considering the new amendments.

These amendments are poised to enhance the legal framework for good-faith acquirers, providing them with greater protection and clarity on their rights. The introduction of clear limitation periods, specific conditions under which property can be reclaimed, and streamlined compensation procedures are expected to ease the concerns of investors and private companies. This legislative development is a positive step towards fostering a more secure and predictable investment environment in Ukraine.

Legislation: Draft Law No. 12089 “On amendments to the Civil Code of Ukraine to strengthen the protection of the rights of a bona fide purchaser”

For more information on opportunities in Ukraine’s real estate sector, contact your regular CMS advisor or local CMS experts: