Purchase of agricultural land by an individual

Buying Agricultural Land by an Individual

Registration and Contracting of Agricultural Land Sale-Purchase Agreement by an Individual involves the following stages:

1. First stage. Proper confirmation of the seller's ownership right to the land plot.

At this stage, the landowner or persons authorized for this purpose (citizens representing the interests of the owner by power of attorney certified by a notary) acting on behalf of such owner, need to determine whether data about their land is entered into the State Land Cadastre (StateLandCadastre).

If there is no data about the plot in the StateLandCadastre, the seller must register the land plot in this cadastre.

In case of registration of the plot in the StateLandCadastre, the following documents need to be prepared:

• application for state registration of the land plot;
• a document confirming the authority to act on behalf of the applicant (in case of submission of the application by a person authorized by the applicant);
• the original of the agreed land survey documentation, which is the basis for forming the land plot, in paper or electronic form, in accordance with the requirements of the Law of Ukraine "On Land Management";
• an electronic document containing information about the results of land survey works that need to be entered into the State Land Cadastre, in accordance with the requirements of the Law of Ukraine "On the State Land Cadastre".

2. Second stage. Compliance with legislatively defined requirements, actions, and procedures regarding the preferential right of the lessee to purchase the land plot.

This stage concerns land plots transferred into lease.

According to the Law "On Amendments to Certain Legislative Acts of Ukraine Regarding the Conditions of Circulation of Agricultural Land" No. 552-IX (hereinafter also referred to as Law No. 552), amendments have been made to Article 131 of the Land Code of Ukraine, which provides for the sale of land with observance of the preferential right to its acquisition. The preferential right may also be transferred by its subject to another person, about which the subject must inform the landowner in writing.

The necessary actions include:

• writing a letter to the lessee informing about the intention to sell the land plot, specifying the price and conditions of sale,
• the letter should be sent by mail with a notice of delivery and a description of the enclosure or delivered by courier with the lessee's receipt for receiving such letter,
• providing a one-month period for response (regarding the exercise of the preferential right/refusal of it or transfer to a third party).

Law No. 552 does not clearly prescribe the mechanism for transferring the preferential right, so in case of such transfer, it is necessary to conclude an agreement on the transfer of the preferential right in the same form as the lease agreement was concluded. In case of refusal of the person to exercise the preferential right to purchase, the landowner has the right to sell his share to a third party on the same terms and at the price offered to the lessee.

3. Third stage. Buyer Verification.

It is mandatory to verify the source of funds of the individual buyer, namely how the buyer gathered funds for purchasing the land plot.

Thus, it is necessary to provide supporting documents:

- if it is a salary, relevant information on the salary is provided, for example, a contract, bank statement;
- if these funds are from the sale of specific property, inheritance, stocks, dividends, or from other lawful activities, relevant documents confirming the ownership right to this property, receiving funds legally after its realization are provided.

But what if you don't have documents confirming the origin of funds? The vast majority of funds held by individuals do not have a legal origin, and these funds may originate from: corrupt activities, conducting economic activities to avoid paying taxes, embezzlement of funds, or engaging in unlawful economic activities.

For example, declared income from the activities of an individual entrepreneur who is in the 2nd group of taxpayers. Accordingly, the maximum annual income that can be declared by an individual entrepreneur being in the 2nd group is about 150,000 dollars. If the value of the land plot that needs to be purchased is 1 million dollars, of which about 150,000 dollars are officially declared, then the rest (about 850,000 dollars) should also be officially confirmed.

Thus, before concluding a land purchase agreement, the notary is obliged to:

• establish the identity of the buyer;
• verify if any sanctions are imposed on the person;
• verify the source of funds;
• check if the land plot is not located near the State Border (within 50 km zone);
• calculate the maximum concentration (up to 10,000 ha).

According to the Law No. 522, settlements related to the payment of the price of agricultural land plots under civil-law contracts are made in non-cash form.

Thus, the settlement between the buyer and the seller is conducted through a banking institution.

The bank may request the following documents to confirm the source of funds and tax payments:

• tax declaration with all attachments and supplements (if any) for the periods for which information on the individual's income is provided, together with a certificate of submission of the property and income declaration (tax declaration) issued by the supervisory authority;
• certificate of paid salary;
• document on the sale of property;
• certificate from the competent authority of the country where the individual is a tax resident, regarding the fulfillment by the individual of obligations to pay taxes, duties, and other mandatory payments as of the relevant date;
• credit;
• dividends;
• insurance payments;
• financial assistance (in extreme necessity, as the bank will verify the relationship between the provider of assistance and the recipient, the provider's ability to provide such assistance, analysis of the provider's activities);
• etc. (royalties, winnings, awards).

An individual who, according to the legislation, has not filed tax declarations for any of the periods for which information on income is provided, has the right to submit to the National Bank instead of tax declarations an extract (information) from the information fund of the State Register of Individuals - taxpayers about the amounts of income paid to the individual and taxes withheld from them, duties, and other mandatory payments, or information from the supervisory authority containing such information.

4. Fourth stage. Formalization of the sale-purchase agreement.

For the execution of the sale-purchase agreement process, the notary needs to be provided with:

• legal documents for the land;
• extract from the State Land Cadastre (indicating the cadastral number assignment);
• document on the monetary valuation of the land plot;
• receipt for tax payment;
• payment for notary services/state duty (1% of the contract amount).

If the necessary documents are available and taxes are paid, the notary certifies the agreement and conducts state registration of ownership rights to the land plot, as a result of which, the new owner is provided with an extract from the State Register of Property Rights to Real Estate.

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consultations: seven days a week 09:00АМ - 7:30РМ

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Registration for admission is carried out on the following contacts:

Phones:

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 +38 (098) 1891818
 +38 (099) 5182838

Messengers: WeChat ID: eurovector2008

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Online  

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Registration for admission is carried out on the following contacts:

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 +38 (093) 1907047
 +38 (098) 1891818
 +38 (099) 5182838

Messengers: WeChat ID: eurovector2008

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