Rental of real estate during martial law

With the start of the armed aggression of the Russian Federation against Ukraine, companies in the war zone were forced to change their location and move their offices and production facilities to other parts of the country. ‘Ukraine. Such relocation aims to create the greatest possible security for employees and their families, as well as to ensure the possibility of continuing economic activities during martial law.

In this regard, Ukrainian and foreign companies have faced the problem of appropriate rental of offices, industrial premises or other business premises in different regions of Ukraine.

We have looked at the key points to consider when choosing a new property for the business and entering into rental agreements during martial law.

1. Verification of real estate ownership

With the imposition of martial law in Ukraine, the work of the State Register of Rights to Real Estate (hereinafter – the Real Estate Register) was suspended. As a result, it is currently impossible to obtain up-to-date information on the owner as well as on the technical characteristics of a property, its destination.

However, tenants always have the opportunity to make sure that they are negotiating with the real owner of the property by checking the documents on the basis of which the owner acquired ownership of the relevant objects. These documents include in particular:

  • notarized sale and purchase agreements, less often – gift agreements, lifetime maintenance agreements, exchange agreements;

  • ownership certificates, inheritance certificates;

These documents will confirm the ownership of real estate to a particular person, as well as its characteristics, including type, area, address, destination, etc. Also, the technical details of the property, as well as a description of its components are contained in the technical passport, which is drawn up for each property object.

In addition, the tenant may offer to include in the rental agreement an assurance that the landlord is the owner of the property. If such assurance proves to be false, the tenant will be entitled to claim damages from the dishonest landlord.

2. Establishment of the identity of the owner of the property

Identification of a private owner of real estate is usually carried out on the basis of a passport of a citizen of Ukraine or a foreign state. In addition, citizens of Ukraine have the opportunity to identify an individual on the basis of electronic documents contained in the “Diia” application.

With respect to a legal entity, the documents identifying it are an extract from the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations. Said register contains information about the manager of this entity.

In order to check whether the director (manager) of the legal entity is entitled to conclude a lease agreement, we recommend analyzing the content of the charter of the legal entity. In particular, it is important to pay attention to whether the charter contains any restrictions on the disposition of property.

A similar approach should be followed in cases where the lease is signed not by the landlord but by his representative. In this case, it is important to check the extent of the powers of the representative and whether the power of attorney is correctly formulated. If the power of attorney is issued in the name of an individual, it must be notarized.

3. Conditions of the rental agreement

In order to reduce future risks that may arise regarding real estate, we recommend documenting all agreements between the parties in the text of the contract.

At the same time, the rental agreement must contain the following terms:

  • conditions on the precise amount of rent payment and a clear procedure for the payment procedure, as well as the absence of payment if the tenant is unable to use the rented property;

  • provisions relating to the duration of the lease and the reasons for its extension. Please note that lease contracts with a lease term of more than 3 years are subject to notarization and the lease right must be registered. Thus, provided that the Real Estate Registry is not currently functioning, the duration of the lease contract cannot exceed 3 years;

  • transparent scheme for reimbursement of operating costs and utility costs;

  • obligation of the landlord to provide a suitable arrival/departure route to/from the rented property on the land on which the property is located (this will allow the tenant access to the rented property, as well as the possibility of transporting goods );

  • the procedure for carrying out integral repairs and improvements to the rented property;

  • provisions relating to the compensation of losses by the owner if it appears that the latter does not have the right to rent a property.

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