Ukraine's government and the World Bank on Oct. 17 signed a $195 million loan agreement to fund implementation of a nationwide registry for all plots of land in the country. The registry would ease property transactions and increase transparency in the real estate sector.
Luca Barbone, the bank’s regional director for Ukraine, Belarus and Moldova, and First Deputy Prime Minister and Finance Minister Mykola Azarov signed the agreement, which Ukraine’s parliament must approve before it can be implemented.
Interfax cited Azarov as saying that implementation of the agreement would speed up the allocation of land parcels to individuals, broaden the tax base, raise the level of property rights and attract new investments into the country.
The loan is repayable in 20 years, including a five-year grace period. The total cost of the project is $359.5 million. The State Land Resources Committee will be the beneficiary of the loan under the project.
By creating a system to record land ownership, transfers and mortgages, the program aims to help farmers gain access to bank loans and insurance, which have been largely unavailable in Ukraine, the Associated Press reported.
Pavlo Kulinic, a legal expert on Ukrainian land issues who provides consulting services to Chemonics, the company managing the United States Agency for International Development’s Land Titling Initiative project for Ukraine, said the World Bank loan would facilitate completion of land deed issuance in the country.
Kulinic, whose main affiliation is with the Institute of State and Law under Kyiv’s National Academy of Sciences, said that approximately 6.8 million people have received land share certificates, which are only conditional land deeds. He said that about half have exchanged their certificates for deeds, giving them title to actual land parcels.
“But this is only part of what the World Bank loan is meant to do,” Kulinic said. “The loan also aims to create a state real estate registry that operates on the ‘one window’ principle. That means that if I buy a building on a land plot, I should be buying a single object of legal ownership, not two, as is currently the case,” he said.
Kulinic said that separate state agencies are currently in charge of registering land and the buildings on them, complicating the land and property ownership and registration process. Currently, there is no single database registry in Ukraine.
Kulinic said, however, that the World Bank took the decision to provide the loan without fully considering the consequences of bringing administration of the project under the State Land Resources Committee, since the committee is currently in charge of recording land parcel measurements, partitioning land and registering land ownership rights.
He said the committee’s combined duties create fertile ground for conflicts of interest, when the committee registers property rights on the basis of incorrect land measurements to cover its mistakes.
“I believe that the land registration system should be placed under the control of an independent state body with no vested interests in land and a strong legal staff, such as the Justice Ministry,” Kulinic said.
“The registration system was originally going to be placed under an independent state body, but the committee appears to have convinced the World Bank otherwise. While the system can be run on this basis, nevertheless, the committee needs to resolve these conflicts,” he said.
