Nobles' Senior Associate Olena Stanishevska has contrinuted to the July issue of Yuridychna Gazeta. Below is the English version of the article.
The Commission on the issues of handling complaints relating to the state registration, also known as Anti-raider commission, functions at the Ministry of Justice since 2016. As everyone knows, currently the issues of corporate raiding and real estate fraud are extremely acute, and the Anti-raider commission often is the first body on the way of protection of property rights for many injured parties. However, is it always necessary to apply to the commission?
Human factor helps raiders
After the reform of the system of registration of proprietary rights and legal entities, the right to be a registrar (a person who is entitled to carry out registration acts and make changes to the registers) has been granted to notaries and employees of the local municipal councils and municipal companies accredited by the Ministry of Justice of Ukraine. To become a notary one should pass a sophisticated qualification procedure, while there are no qualification requirements for other people, who are appointed as a registrar. Furthermore, people without qualifications comprise the majority of such registrars. On top of that, even a person without legal education may become a registrar. Although the situation is not grievous in the large cities because of the wide access to the information and professional events. But still the registrars in the provincial areas of the country especially in small villages are underqualified. As a result, raiders use such registrars who may not even be aware of their participation in illegal activities.
Anti-raider commission was created in the first place to counter exactly this type of raiding. The commission checks the registration acts on the formal grounds, such as provision of necessary documents, technical and legal mistakes. However, if the claim to the commission is satisfied, the injured party must be ready for further actions as there have been cases when raiders continued their illegal registration activities after taking into account commission’s comments and, as a result, the Anti-raider commission could no longer remedy those situations.
The registrar’s abuse and negligence of the registration system is directly tied to the absence of a threat of a real punishment for such illegal actions. Therefore, the only type of punishment which is used in practice, is a restriction on access to the register, imposed by the Anti-raider commission after inspection. Despite existence of the relevant article in the Criminal Code of Ukraine no registrar has ever been prosecuted.
If there is a suspicion about forgery the injured party should bring an action before the court
Currently the most common raider’s tool is forgery. Contrary to popular opinion, the Anti-raider commission examines neither validity of documents nor their signatures that were provided for registration. In case you have suspicions that raiders used forged documents, you should immediately apply to the court and prove your case using an expertise or apply to the law enforcement authorities. However, experience has shown that in such cases responsiveness of the law enforcement authorities leaves much to be desired.
What to expect further from the Ministry of Justice
One of the successes of the Ministry of Justice in terms of reducing the abuses in registration of proprietary rights on land (especially rights related to lease) is the data synchronization of the State Land Cadaster and State Register of Proprietary Rights to Immovable Property. For instance, if the land lease agreement was concluded before 2013 then it is possible to get information about the existing lease only from the State Land Cadaster and such information must be checked as well. As a result, there have been frequent instances of double land lease due to malicious acts. Now the registrar automatically checks the data from the State Land Cadaster at the moment of receiving the registration application and, if the registrar identifies any issues with regard to legality of the registration activity, then the registrar requests additional information from the State Land Cadaster.
In addition, Ms. Olena Sukmanova, the Deputy Minister of Justice on issues of state registration, assures that in the near future the registrars when conducting registration will automatically receive information from the Unified State Register of Court Decisions. At present for the purpose of real estate fraud court decisions is the most frequently forged type of documents
To remedy the insufficient qualification of the registrars, the Ministry of Justice carries out work in the regions and organizes working meetings on a regular basis. In the future, the Ministry of Justice plans to complicate access to the profession of state registrar, so that at least users of the administrative services would not encounter complete absence of competence from the registrars.
Primary mechanisms of self-protection against raiders
1. The Ministry of Justice supported by Liga-Zakon provides SMS-Beacon service. Persons and legal entities can track the changes to the status of any land plot they own or use or changes to the status of any real estate object with a reference to a number in State Register of Proprietary Rights to Immovable Property.
The service provides an opportunity for the owner of the immovable property to receive messages about any registration actions with regard to his immovable property at early stages. The SMS-Beacon will inform of the fact of application, the gist of application on the change of the object’s status, and the decision on the change of the status. To install this function, a user will need to utilize an electronic digital signature.
The indisputable positive feature of this function is the fact that the owner receives on his phone notifications on the stage of execution of the registration act which may be illegal, thus giving him at least several hours to prevent such illegal actions. Unfortunately, the SMS-Beacon service, for now, is only available with regard to immovable property. At the same time, tracking the changes in the register of the legal entities is possible only post factum by using various data platforms (for instance, Liga-Zakon Contr Agent or OpenDataBot).
2. In case you have become aware of an attempt to make illegal changes with regard to your immovable property (for instance, using SMS-Beacon), you may apply to registrar for prohibition on execution of registration procedures with regard to the owned immovable property. The registrar imposes a block immediately after accepting the application which will last 10 business days. During this period the owner may either apply to the court for prohibition on execution of registration procedures (preliminary injunction for instance) or after 10 business days submit another application to the registrar for prohibition on execution of registration procedures. Ukrainian law does not impose a limit on the number of repeat applications to the registrar.