Lease of state property: procedure, features, contractual provision

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Ланткевич Кирило

Lawyer

Ukraine / Dnipropetrovsk Oblast

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Publication date: 25.07.2024

I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.

General aspects of leasing state property:

Leasing of state property is a process of transferring the use of state-owned objects to private entities under certain conditions and for a specified fee. The transfer of property for rent is carried out by conducting an auction in electronic form. This rental format is provided by the Electronic Trading System (ETS).

The main characteristics and functions of ETS include:

• Two-level system: ETS consists of a central database and electronic platforms (platforms) that interact through a special application programming interface (API). This structure allows for interaction between all bidders through a single platform.
• Creation and posting of trade offers: Participants can create and post their trade offers on the ETS platform electronically.
• Publication and exchange of information: ETS provides the possibility of publication and exchange of various information and documents necessary for conducting an auction or bidding in electronic form.

Possible rental objects:

According to the above-mentioned Law of Ukraine "On Leasing of State and Communal Property", the leased objects are the following categories of property:

1. Single property complexes of enterprises: This means that the lease can refer not only to individual assets, but also to property complexes that include different types of assets that function as a single organizational or production unit.
2. Real estate: Includes buildings, structures, premises and their separate parts. It can be large industrial complexes, office buildings, warehouses, etc
3. Other separate individually defined property: This includes various types of property that may be defined by a specific lease agreement and are not included in the previous categories.
4. Property that was not included in the authorized capital of economic companies created during privatization: Includes property that was not included in the authorized capital of privatized enterprises or property that was prohibited before privatization.
5. Property, in respect of which the right of economic transfer has been added to the authorized capital: That is, property that is under the management of a certain enterprise, but is not its property.
6. Property secured by the right of economic trust for joint-stock companies and their subsidiaries: This is property that is used to ensure the operation of the enterprise, but remains the property of another legal entity.
7. Property of state bodies, institutions, Armed Forces, law enforcement agencies and other organizations: Includes property that is not used to perform their functions and can be leased.
8. Non-Privatizable Property: Such property may be leased without the right of redemption by the tenant and transfer to sublease.

Therefore, the lease objects specified in the legislation of Ukraine allow landlords and tenants to regulate relations regarding different types of property according to clearly defined conditions and obligations.

Entities that can rent state property:

According to the Law of Ukraine "On Leasing of State and Communal Property", tenants can be various subjects, in particular:

1. Natural persons: These are individuals who can be tenants of the property under the terms of the agreement.
2. Legal entities: Include various enterprises, organizations and institutions that have the right to lease property.
3. Legal entities of foreign countries: Representations and companies from other countries can also be tenants of property in Ukraine.
4. International organizations: Various types of international organizations are included, which have the status and right to use property in Ukraine through lease.
5. Stateless persons: These are persons who do not have the citizenship of any country, and they can also be tenants of property in Ukraine.

Thus, the Law defines a wide quantitative and categorical spectrum of persons who have the right to lease state and communal property in Ukraine.

The initiators of the lease can be the following entities:

• Potential tenant: This is a person who shows interest in receiving a certain real estate or individually defined property for rent. She submits an application to the lessor regarding the inclusion of this property in the relevant list, which is determined by the procedure for transferring the property for rent.
• Lessor: This is the entity that owns the property and has the right to lease it.
• Balance keeper: This is an organization that stores and manages property on behalf of the state or communal property.

The procedure for initiating a lease includes the following steps:

1. A potential tenant submits an application to the landlord to include a specific property in the appropriate list for rent.
2. The lessor has the obligation to transfer the received statement to the balance keeper of the property within three working days.
3. The balance keeper considers the application and, within 10 working days, makes a decision regarding the intention to transfer the property for rent or refusal to include the object in the relevant list, if there are grounds provided for by the Law.

Conclusion of a contract for the lease of state property:

Ukrainian legislation provides that a lease agreement can be concluded on the basis of a model lease agreement. A sample lease agreement is a typical document that contains general conditions that can be used by the parties when concluding the lease agreement for a specific property. Key clauses often found in a sample lease may include:

• Identification of the parties: Identification of the lessor and the lessee.
• Description of the property: A clear definition of the subject of the lease (real estate, movable or other property).
• Lease term: Determination of the lease term or the terms of contract extension/termination.
• Rent: Determining the amount and order of rent payment.
• Rights and obligations of the parties: Responsibility for property maintenance, insurance, repairs, etc.
• The procedure for changing the terms of the contract: The procedure for making changes to the contract.
• Liability of the parties: Terms of damages, breach of contract.
• Other conditions: Depending on the specifics of the leased property or the terms of the contract, other provisions may be included.

A model rental agreement can serve as an initial template for the conclusion of an agreement between the parties, taking into account their specific needs and conditions.

Lawyer services in the process of renting state property:

The types of legal services when leasing state property is key to ensuring legal security and compliance with all legal requirements. Here are the main aspects to which legal support can be provided:

• Legal analysis of the situation: The online assistance of a lawyer conducts an analysis of the charter of the lessor (for example, a state-owned enterprise or a communal institution) and the legislation regulating the lease of state property. It determines exactly what types of property can be leased and what the restrictions are.
• Preparation of documents: The lawyer helps to prepare all the necessary documents for the conclusion of the lease agreement, such as the lease agreement, acts of acceptance and transfer of property, rent collection protocols, etc. It also ensures the inclusion of all necessary conditions that meet the requirements of the law and the interests of the client.
• Participation in negotiations: The lawyer represents the interests of the client during negotiations with the landlord. It helps to reach mutually acceptable terms of the agreement, including the rent, the term of the lease, the terms of use of the property and other key aspects.
• Risk protection: A lawyers online identifies potential risks and suggests strategies to prevent or minimize them. This may include the development of dispute resolution mechanisms, property insurance and other security measures.
• Consultation of a lawyer on legal compliance: The lawyer services online makes sure that all the actions of the parties comply with the requirements of the law regarding the lease of state property, including the requirements for the preparation of documents, payment of taxes and fees.
• Post-contractual support: After concluding a lease agreement, a lawyer can provide advice and assistance in eliminating unforeseen situations, changing the terms of the contract or resolving disputes through a court proceedings, or through pre-trial conflict resolution.

Legal services in this process allow you to ensure legal certainty and protect the interests of the parties as tenants of state property. The cost of legal services will depend on the rental object, the complexity of the necessary documents and the duration of the procedure.