Doctor of Law , Associate Professor, Head of the Department of Analytical and Legal Work of the Grand Chamber of the Supreme Court, Lyudmila Kozlovska, spoke about the state registration of real rights to real estate and their encumbrances in the practice of the Supreme Court during an event to improve the professional level of lawyers, which took place at the NAAU Higher School of Advocacy.
The lecturer, together with the participants, analyzed in detail the state registration of real rights to real estate and their encumbrances in the practice of the Supreme Court, namely:
- 1. Disputes about state registration of real rights in the practice of the Grand Chamber of the Supreme Court.
- 2. Application of methods of protection established by special legislation (Law No. 1952-IV) in disputes without property claims about real rights and their encumbrances.
- 3. The legal significance of state registration of property rights and the protection of rights violated by illegal registration.
- 4. Application of the principle of jura novit curia (“the court knows the laws”) in the practice of the Supreme Court. Change of the subject and grounds of claim in disputes about state registration of real rights.
- 5. State registration of property rights and their encumbrances during the period of validity of legislative and judicial prohibitions on the alienation of property rights.
Within the framework of the description of the practice of the Supreme Court on state registration of real rights to real estate and their encumbrances, the following is emphasized:
1. Disputes about state registration of real rights in the practice of the Grand Chamber of the Supreme Court
Resolution of the Supreme Court of Ukraine dated September 4, 2018 in case No. 823/2042/16:
The Grand Chamber has formed a general approach that state registration of a real right in favor of a third party is a violation of the plaintiff’s real rights, and therefore, any dispute about state registration with a third party is a dispute about law.
In the resolution of the Supreme Court of Ukraine in case No. 823/2042/16, it was determined that since the plaintiff was not the applicant for the contested registration actions, that is, the latter were committed upon the application of another person, such a dispute is a civil law dispute regardless of whether the state registration of rights to real estate was carried out in compliance with the requirements of the law by the state registrar and whether, in addition to the claims for the cancellation of the contested decision and entry in the state register of rights, claims for the invalidation of the transactions on the basis of which the contested decision was made and the contested entry was made are also filed.
The recognition as unlawful and the cancellation of the decision, the entry on the state registration of the right to lease a land plot in the State Register of Property Rights to Real Property by a third party is the protection of the plaintiff’s rights to the land plot from their violation by another person, under whom a similar right to the same real property is registered.
2. Application of methods of protection established by special legislation (Law No. 1952-IV) in disputes without property claims about real rights and their encumbrances
In its ruling of December 5, 2018, the Grand Chamber emphasized that following the legal positions expressed in cases No. 823/2042/16, a person may challenge state registration without presenting property claims only if the decision on state registration concerned the registration of the rights of the plaintiff, and not another person.
In the judicial practice of the Supreme Court and the courts of cassation, different approaches have developed regarding the application of the provisions of para. 3 hours 3 Art. 26 of Law No. 1952-IV regarding the adoption by the court of a decision to cancel the decision of the state registrar on state registration of rights, to recognize as invalid or cancel the documents on the basis of which the state registration of rights was carried out, as well as to cancel the state registration of rights exclusively with the simultaneous recognition, change or termination by this decision of real rights, encumbrances on real rights registered in accordance with the legislation (if such rights exist).
Disputes in which only a claim is made to cancel the decision of the state registrar: practice of the Supreme Court:
The Supreme Court of Ukraine considered it necessary to depart from the conclusion set out in the resolution of the Supreme Court of Ukraine dated October 27, 2021 in case No. 545/1883/20, which established that satisfying the requirement to cancel the decision of the state registrar on state registration of property rights will lead to the restoration of the violated rights of the plaintiff and does not require the application of additional methods of protection, such as the restoration of property rights on such grounds. This was once the position of the Supreme Court of Ukraine, which referred to p. 4 hours 2 Art. 16 of the Civil Code.
In the opinion of the panel of judges of the Supreme Court of Ukraine, satisfying the claimed claim without resolving the merits of the property dispute between the parties will not only not result in the restoration of the plaintiff’s rights, but will also lead to a state of legal uncertainty regarding the disputed real estate.
The reasoning of the cassation court concerned the interpretation of Part 3 Art. 26 of Law No. 1952-IV. “If such rights exist” is a clarification that allowed the CCC to decide cases exclusively on requests for cancellation of registration.
On December 21, 2022, in case No. 914/2350/18 (914/608/20), the Supreme Administrative Court decided on the issue of methods for protecting property rights violated by illegal state registration. During the consideration of the case, the wording of Part Art. 26 of Law No. 1952-IV was amended three times.
3. The legal significance of state registration of property rights and protection of rights violated by illegal registration
The Central Committee of Ukraine in part 1 Art. 182 defines: “Property rights and other property rights to immovable property, encumbrances of these rights, their emergence, transfer and termination are subject to state registration.”
Also part. 4 Art. Article 334 of the Civil Code determines that rights to real estate subject to state registration arise from the date of such registration in accordance with the law.
In accordance with Part 2 of Article 3 of Law No. 1952-IV, real rights to real estate, an object of unfinished construction, a future real estate object and their encumbrances, subject to state registration in accordance with this Law, arise, change and terminate from the moment of such registration. (Part 2 of Article 3 as amended by Law No. 3588-IX dated 02/22/2024).
These norms determine the constitutive meaning of state registration and confirm the final transition in Ukraine to the established “title” system of registration of the acquisition of real rights.
The traditional construction of civil law contracts, their real-consensual nature, has long ceased to fulfill the functions of ensuring civil turnover. This is what led to the establishment in the legislation of a registration system for the emergence of real rights and their encumbrances and, as a consequence, the legal significance of state registration.
State registration of property rights:
Registration of ownership of real estate is only an official recognition of ownership by the state. In itself, state registration of ownership of a certain person is not indisputable confirmation of the existence of ownership rights by this person, but creates a rebuttable presumption of ownership rights of such person.
If there is state registration of ownership rights for a certain person, state registration of ownership rights for the same property for another person may be carried out with the consent of this person or by a court decision that has entered into legal force regarding ownership rights to real estate. Resolution of the Supreme Court of Ukraine dated March 12, 2019 in case No. 911/3594/17.
Under the current legislation of Ukraine, a person acquires the right of ownership of real estate and has the opportunity to fully exercise it, in particular by disposing of his property, after state registration of the right of ownership of real estate, i.e., adoption of a decision on state registration of the right of ownership of real estate, entry and further preservation (availability) of the corresponding registration record in the State Register of Rights.
Decision of the Constitutional Court on the compliance with the Constitution of Ukraine (constitutionality) of a separate provision of Article 37 of the Law of Ukraine “On State Registration of Real Rights to Real Estate and Their Encumbrances” (regarding the inviolability of the right of ownership):
The conclusion of a contract or the performance of another transaction aimed at a person acquiring ownership of real estate is not a sufficient legal fact for the emergence of ownership rights.
Acquisition of ownership of real estate is based on several legal facts: the basis for the emergence of ownership within the meaning of Article 11 of the Code (contract and other transaction, etc.), a decision on state registration of rights, a corresponding registration entry in the State Register of Rights. These legal facts taken together constitute a legally valid complex legal fact.
Under the current legislation of Ukraine, a person acquires the right of ownership of real estate and has the opportunity to fully exercise it, in particular by disposing of his property, after state registration of the right of ownership of real estate, i.e., adoption of a decision on state registration of the right of ownership of real estate, entry and further preservation (availability) of the corresponding registration record in the State Register of Rights.
Decision in the case on the constitutional complaint of PJSC “Odesteplokomunenergo” No. 9-r(II)/2022 dated 11/16/2022.
4. Application of the principle of jura novit curia (“the court knows the laws”) in the practice of the Supreme Court. Change of subject matter and grounds of claim in disputes about state registration of real rights
If the plaintiff files one of the claims that, in terms of legal consequences, correspond to the methods of protection established in Part 3 Art. 26 of Law No. 1952-IV, in terms of appealing state registration, (“cancellation of the decision of the state registrar on state registration of rights, recognition as invalid or cancellation of documents on the basis of which state registration of rights was carried out, as well as cancellation of state registration of rights”), such requirements may be qualified by the court as an appropriate method of protection.
The question arises of the court’s distinction of the legal qualification of claims and changes in the subject and grounds of the claim, the application of another method of protection.
“The subject of the claim is a certain substantive claim of the plaintiff against the defendant, in respect of which the plaintiff requests a court decision. The grounds of the claim are the circumstances by which the plaintiff justifies his claims for the protection of a right or an interest protected by law. The grounds of the claim should be distinguished from the legal grounds of the claim (legal justification of the claim) – the legal qualification of the circumstances by which the plaintiff justifies his claims.
At the same time, the court’s disagreement with the legal justification provided in the statement of claim regarding the disputed legal relationship is not a basis for rejecting the claim, since the court, according to the principle of jura novit curia (“the court knows the laws”), must independently carry out the legal qualification of the disputed legal relationship during the consideration of the case. Similar conclusions in content were formulated in the Supreme Court’s Decision of 04.12.2019 in case No. 917/1739/17 (paragraphs 81, 83, 84).”
In the practice of the CCS of the Supreme Court, in cases of appealing state registration, instead of the principle of jura novit curia, another approach is applied, according to which the formulation of claims that is inaccurate from the standpoint of the law is a linguistic issue, and not a matter of applying appropriate methods of protection.
The CCS believes that the determination of the defendants, the subject and grounds of the dispute is the right of the plaintiff. However, establishing the belonging of the defendants and the validity of the claim is the duty of the court, which is performed during the consideration of the case. Resolution of the CCS of the Supreme Court of September 15, 2021 in case No. 372/2583/18
5. State registration of property rights and their encumbrances during the period of validity of legislative and judicial prohibitions on the alienation of property rights
According to p. 6 hours 1 Art. 24 of the Law of Ukraine “On State Registration of Real Rights to Real Estate and Their Encumbrances” state registration of rights and their encumbrances may be refused if an application for state registration of rights related to the alienation of real estate is submitted after state registration of encumbrances established in relation to this property.
If there was an entry in the Unified Register of Prohibitions on the Alienation of Real Estate Objects on the Prohibition of the Alienation of Disputed Property, the state registrar did not have the right to carry out registration actions until such encumbrance was removed.
Resolution of the Supreme Court of Ukraine dated April 3, 2019 in case No. 755/5072/17.
With the opening of proceedings in a case of insolvency of the debtor, in view of the purpose and objectives of the KUzPB, those actions regarding the enforcement of the debtor’s property that will be carried out within the framework of the bankruptcy proceedings can be considered legitimate. The presence of proceedings in bankruptcy cases indicates the existence of a dispute over the right to the debtor’s property, and therefore excludes the filing of independent claims to challenge the state registration of real rights and their encumbrances on the debtor’s property. Resolution of the Supreme Court of Ukraine dated December 21, 2022 in case No. 914/2350/18 (914/608/20).
Another category is disputes based on independent claims for the recognition of the state registrar’s decision as unlawful and annulment, in which the general legislative prohibition applies to the imposition of foreclosure on the debtor’s individually identified property, for example, established by the Law of Ukraine “On a Moratorium on the Foreclosure of Property of Citizens of Ukraine Provided as Security for Loans in Foreign Currency.”
Illegal state registration of real rights and their encumbrances during the period of legislative and judicial prohibitions on alienation indicates the absence of a dispute over the right, therefore, the appropriate method should be considered the cancellation of state registration.
Registered encumbrances of real rights to real estate as grounds for refusal of state registration of the relevant rights:
One of the grounds for refusal of state registration of rights is the existing registered encumbrances of real rights to real estate (clause 6 of part 1 of article 24 of Law No. 1952-IV). Refusal of state registration of rights on the grounds specified in clause 6 of part one of this article shall not apply in the case of state registration of the right of ownership to real estate by a mortgagee – a financial institution in the manner provided for in articles 33-38 of the Law of Ukraine “On Mortgage”. The presence of encumbrances registered after the state registration of the mortgage, other real rights, including mortgages, on the property transferred in mortgage is not a ground for refusal of state registration of the right of ownership by the mortgagee (clause 7 of part four of article 24 of Law No. 1952-IV).
Encumbrances on the mortgaged object registered after the state registration of the mortgage with a bank or other financial institution are not an obstacle to the mortgagee filing a claim against the mortgaged object and to the state registration of the ownership right to this object by the mortgagee (including the new creditor who acquired the rights of the mortgagee from the bank or other financial institution) in accordance with the procedure established by Article 37 of the Law of Ukraine “On Mortgage”.
Resolution of the Supreme Court of Ukraine dated June 8, 2021 in case No. 346/1305/19.
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