The Model (Mandatory) Provisions of a Land Lease Agreement Have Been Elaborated

On 29 November 2017, Resolution of the Cabinet of Ministers of Ukraine No. 890 dated 22 November 2017 (the "Resolution"), which amended The Model Land Lease Agreement approved by Resolution of the Cabinet of Ministers of Ukraine No. 220 dated 3 March 2004 (the "Model Agreement"), came into force.

The Resolution has added new provisions to the Model Agreement and elaborated the existing model provisions that are mandatory for inclusion into land lease agreements.

Key Novelties

Introduction of a fine for failure to pay rent on time

• Each lease agreement must include a condition for the lessee's civil liability in the form of a fine amounting to 100% of the annual land rent for delayed rent payment (previously, the requirement to include such fine in each land lease agreement was not provided for by law).

A number of supplements to the terms of lease of state and municipal lands have been added

• For agricultural lands – each lease agreement must include the information on the land plot from its agrochemical passport and provide for the lessor's right to check the relevance of such information at least once every three years.
• For land lease rights acquired at auctions – the lease agreement must include a direct prohibition to reduce the amount of rent, which is fixed at the auction. In addition, the changes to the Model Agreement specify the deadlines for the payment of rent.

Anticipated Effect

The Resolution is aimed at improving the protection of rights of landlords and preserving the fertility of soils, as well as reinforcing the liability of lessees for breach of the land lease agreements.

Additional notes

This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.