On August 12, 2020, Ukrainian Government adopted a resolution (hereinafter referred to as the "Resolution"), which approved the forms of new template agreements for the lease of the state owned property. In the nearest future, we expect the publication of the final official text of the Resolution on the Government website.

In fact, with the adoption of the Resolution, two new templates of contracts were approved:

- lease agreements for state-owned real estate, as well as

- lease agreement for a single property complex or its structural unit owned by the state.

According to the State Property Fund of Ukraine, the main changes introduced by the Resolution to the templates of contracts are:

-        The emergence of a third party – a person on whose balance sheet is the property. Now the asset holder will be able to protect the property from illegal actions of the tenant, or legally demand to use the property correctly.

-        Definition of concepts such as advance and security payments paid by the lessee to the lessor and the asset holder. Previously, there were no such provisions, and they are borrowed from the commercial leases of privately owned property.

-        Granting the tenant with the right to terminate the contract unilaterally in the event the conditions of the real estate do not allow to use of the leased object for its intended purpose and/or start the repair works. This situation partially corresponds with the provision of paragraph 4 of Part 2 of Art. 768 of the Civil Code of Ukraine. However, this provision should be further tested in practice. The termination of such an agreement is most likely to take place exclusively through the courts, therefore, the relevant practice should be further formed.

In general, the adoption of new templates of agreements and bringing it into greater conformity with both new legislative requirements and market practice is an extremely positive development.

From the moment of the Resolution publication, the lease process will finally be launched according to the new procedure stipulated by the Law of Ukraine "On the Lease of State and Municipal-Owned Property" dated October 3, 2019 No. 157-IX (hereinafter referred to as "Law No. 157"), which came into force on February 1, 2020.

The novelties introduced by Law No. 157, as well as the new Procedure for the lease of state and municipal owned property, approved by Resolution of the Cabinet of Ministers of Ukraine "Certain Issues of State and Municipal Property Lease" dated June 3, 2020 No. 483, are taken into account in the structure of new template agreements.

According to the official reports of the State Property Fund of Ukraine, the fund is already preparing 4262 real estate objects for lease under the new procedure. At the same time, with the entry into force of the Resolution and with the end of the technical entry of data on objects into the Digital Trading System, online auctions should start within 20-35 days from the date of publication.

For more information, please contact Asters Counsel Anzhelika Livitska