New procedure of state registration of ownership rights to property could cause splash of frauds from Jan 1

Kyiv, December 24 (Interfax-Ukraine) –At the stage of introduction of a new procedure for the registration of ownership rights to property there is a high risk of appearance of a large number of frauds and illegal schemes due to the fact that the registration has not yet been well-oiled, which finally will result in many court litigations, according to Head of Realtors Union Oleksandr Rubanov.

"There are risks that fraudsters could use the badly-adjusted registration system. It will turn out that persons who will register ownership rights to property first will be owners. You will have to prove that you are a real owner for a long period of time only in court," he said at a press conference at Interfax-Ukraine on December 21, 2012.

He recommends everyone who has ownership rights to property to register them as soon as the new state registration system starts operating.

Deputy Director of the department for state registration of ownership rights to immovable property at the State Registration Service of Ukraine, Anatoliy Leschenko, said that each citizen has the right to re-register their ownership rights to property appeared before January 1, 2013 free of charge.

"If the citizen from January 1, 2013 wants to carry out any legal action with property (sell or present property)… he goes to the notary and the notary puts data on the new register, endorses the deal and put the information about the new owner to the state register," Leschenko said.

A partner of the Pavlenko & Poberezhnyuk Law Group Larysa Poberezhnyuk said that it is likely that illegal schemes could appear, as this concerns not only apartments, but also property of companies.

"A situation when information on the improper owner will be put on the state register illegally could be seen. One person could be the owner, while information on another person could be put on the register, which will force the owner to protect their rights in court," Poberezhnyuk said.

In turn, a managing partner of the OL&RUST Law Firm Roman Khrustenko, said that the issue of technical inventory under the new registration procedure has not been settled.

"Any property should be indentified in a proper way [the address, residential or non-residential area, parameters of walls, etc]. Under the existing scheme, technical inventory preceded each registration. The Technical Inventory Bureau's specialists went to the facility, made measurements, calculations and confirmed that the facility exists and has certain parameters, and then notaries endorsed the deals. I don’t understand what will happen now," Khrustenko said.

He said that practice will prove the necessity to return to technical inventory, as there is a large likelihood of frauds.

"One can simulate the situation when an apartment of 120 square meters with 60 square meters of residential area under the documents is sold, and then it is revealed that the apartment of 110 square meters with 56 square meters was sold… Finally this will result in court litigations, which will increase the cost of the registration procedure, especially at first stages when technical errors could occur both with registrars and owners who will not understand how to behave in certain situation," Khrustenko said.

He said that any request to the electronic state register is monitored and each owner can check who expressed the interest to his property.

The lawyer mentioned the institute of protection of the ownership interests.

"Here the single state register is useful. It is positive both for persons seeking the exaction and state bodies, in particular, the tax service. It is enough for the executor to apply to the single state register and obtain information required and impose bans ruled by court to achieve the exaction of certain sums from debtors," Khrustenko said.

Poberezhnyuk expressed doubt that there is point to create the State Registration Service of Ukraine as a separate body which registers ownership rights to property.

"It's unclear what the purpose of the creation of the new body was. This requires hiring employees and allocating the additional financing. The Technical Inventory Bureau could have the function of state registration and it can be given the access to the state register," the lawyer said.