UKRAINE Law and Practice Contributed by: Timur Bondaryev, Maryna Sharapa, Andrii Pidhainyi and Olena Yurets, Arzinger
3.2 Typical Security Created by Commercial Investors
each party to pay its own taxes and duties, with notary fees to be paid by both parties equally, and the registration fee is most commonly paid by the buyer. 2.11 Legal Restrictions on Foreign Investors There are no restrictions on foreign investors acquiring bricks-and-mortar real estate (build - ings, etc), but some restrictions apply with regard to land acquisition, which is legally seen and treated as a separate asset in the majority of cases. Foreign investors are banned from acquiring agricultural land in Ukraine, either directly or indi - rectly. The acquisition of non-agricultural land is subject to certain restrictions, in particular: • in settlements – the plot can only be pur - chased along with the real estate located on it, or the plot can be purchased for construc - tion purposes; and • outside settlements – the plot can only be purchased along with the real estate located on it. However, in practice, certain legal structures do enable foreign investors to purchase non-agri - cultural land in some instances.
The most common type of security for the acquisition of existing real estate is a mortgage. Depending on the property’s valuation, the bank may also require additional security. In this case, there are various options, including: • pledge of shares; • pledge of funds on deposit; • mortgage of additional real estate (including a second tier in some cases); • an ultimate beneficial owner (UBO) personal guarantee; and • (third party’s) surety. For the financing of development, the above options are also applicable; however, there are certain peculiarities. In large transactions, the lender will likely be required to provide evidence of the construction in progress – as well as other collateral property in the mortgage, and shares of the developer in the pledge – and to conclude direct agreements with the designer, the gen - eral contractor, etc, to be able to intervene in the transaction instead of the developer in the case of enforcement. In this regard, it is impor - tant whether the land underlying the construc - tion is leased or owned. The owned land plot will also be considered for the mortgage, while the pledge of lease right has certain restrictions and limitations. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Foreign lenders are not entitled to foreclose on agricultural land. That said, agricultural land is not considered as a security for international lenders. Domestic lenders can use agricultural land as a security, subject to certain restrictions.
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
There are no special regulations for the acquisi - tion of commercial real estate; the usual means of financing (ie, equity and debt) are used. Funds legislation is not very advanced in Ukraine.
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