On main problems in state registration: partner’s review

Interfax-Ukraine, July 23, 2019.

Today, July 23, 2019, Illya Kostin, partner, attorney-at-law at Legal Alliance Company, special for Interfax-Ukraine, outlined the main problems in state registration and related raiding and fraudulent actions. In the light of the latest news, namely the signing by the President of Ukraine of the Decree "On Measures to Counter Raiding,” this topic is becoming increasingly relevant.

Everyone knows the main problem is fraudulent actions in relation to property rights. That is, at one point, you, as the owner of the corporate rights of the enterprise or the owner of real estate, will find out that you are no longer the owner and that someone already manages the property as his own. This situation has become so widespread that it affected all sectors of society. The issue of course can be resolved very quickly, the entry in the registry can be canceled, but there is always a long legal way ahead for the recognition of fictitious transactions invalid.

The major pre-conditions for the existence of problems in state registration, which Illya Kostin outlined in the detailed commentary for the news agency, are as follows:

The lack of inevitability of punishment for persons entering into a criminal conspiracy, especially for state registrars, because without them it is impossible to implement a fraudulent scheme. Qualification of the actions in question usually occurs under Article 190 of the Criminal Code of Ukraine “Fraud”. This is one of the most difficult categories of criminal cases. The main problem hereis the proof of intent, that is, a person who must understand the consequences of his actions, carry out them intentionally and the investigation must have evidence for this. This is intent. Then it can already be argued about the seizure of someone else’s property or the acquisition of the right to property by deception or abuse of trust, by a group of persons on a particularly large scale. However, it is hard to prove, no matter how obvious it looks. In the register of court decisions you can find very few court sentences on this issue. This confirms the complexity of this category of cases. If we take into account the state of the pre-trial investigation, and this is police jurisdiction, we can state a critical situation with the inevitability of punishment for this type of crime. Therefore, in the Criminal Code there should be a norm that would provide for criminal liability of the state registrar, where the evidence of intent would be precisely the actions of the registrar that entailed grave consequences.

Lack of clear and essential requirements for state registrars of communal ownership, requirements for the premises where registration actions should take place, documents are kept, paperwork is conducted. Let us draw analogy with notaries, such requirements exist, and if fraudulent actions on the hand of notaries occur, then this is an exception, not a practice. Regarding communal state registrars, it has become widespread. Imagine it is enough to have a higher legal education to be a communal registrar, and now compare with the path that a notary must go in order to obtain the right to carry out notarial actions. Such a situation could not have arisen intentionally. That opportunity was foreseen in advance and is being managed now, it also has a management structure.

For example, the executive authority, Berezan village council creates a branch of a communal enterprise in Kyiv that performs registration actions, as provided for by the Laws of Ukraine “On State Registration of Corporeal Rights to Real Estate and Their Encumbrances” and “On State Registration of Legal Entities, Individuals Entrepreneurs and Public Organizations.”

At what cost does this enterprise exist? The cost of registration actions is approximately 580 UAH, of which 40% belongs to the budget. So, money is tight, but there is a registration action that it needs to do. Sometimes, if everything is done right, the registrar spends half a day on one action.

The terms of the registration action are established by the law in the amount of 24 hours. Given that 12 hours is a non-working time, approximately 12 hours remain for the entire array of registration actions provided for in Article 18 of the Law of Ukraine “On State Registration of Rights to Real Estate and their Limitations”.This includes scanning documents, entering into the register, checking documents for reasons to suspend consideration of the application, analyzing the documents submitted, and this is without taking into account the complexity and volume of the documents submitted, forming a search for applications in the database by identifier, etc. If in one day there will be several registration actions, then in such a situation, you still need to simultaneously carry out all these actions in order to meet the legislative time allotted by the legislator for the 24-hour closing period actions. Many experts think that the existence of such a 24-hour period was created specifically for the possibility of the existence of mass fraud or even raider schemes in this area.

The judicial system makes it possible to protect property rights, but the question is different, a person should spend a lot of money and time in the courts to prove that he is the owner. The same is in the case of the existence of the Anti-Raider Commission under the Ministry of Justice, which is effective, but after the fact. After all, a citizen still needs to go to court and to the police to resolve their issues.

Contact the author: Illya Kostin, attorney-at-law, partner of Legal Alliance Company, kostin@l-a.com.ua.