Author Topic: TENANT AND LANDLORD RIGHTS IN UKRAINE ? TIPS for Renting and Investing  (Read 1432 times)

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If you are unfamiliar with Ukraine, renting an apartment for the first time in Kiev or buying an investment property here can seem risky.  But does reality match this perception? Tenant rights can be a key concern for foreign investors from EU countries or US states where tenant rights can be quite strong and fraught with risk for landlords. This article discusses tenant and landlord rights in Ukraine and provides real world broker tips for renting, letting and investing in property as well as an overview of legal issues connected to these rights.

LET?S BE PRACTICAL, TENANTS
Unlike Western countries, Ukraine does not have a strong legal system, where plaintiffs and defendants can reliably expect swift and expeditious justice. So, in most cases using Ukraine?s court system to resolve disputes between tenants and landlords is not a practical solution that can be worth the time and expense. When it comes to rental agreements between tenants and landlords, it?s best to think of these documents as a ?gentleman?s agreement on paper? for a personality-based transaction. For example, if you?re a tenant looking to rent a flat in Kiev, instead of approaching this transaction with a legalistic mindset based on your tenant rights according to Ukrainian legislation, it?s more pragmatic to rely on your intuition and a solid pre-rental checklist. First, go with your gut, do you like the owner or does he or she leave you with a funny feeling? If you?re a little unsure about the owner, but think that he or she would be a ?pain in the neck? consider the owner as an additional expense if you think you?d be getting a really good deal, but be careful. Second, before signing a rental agreement, make sure that you or your broker checks the online registry for scans of the apartment?s ownership documents to make sure that the owner?s info matches that of your potential landlord. These checks can be done online for a nominal fee, just keep in mind that brokers in Ukraine are not legally bound to perform these checks, and not all Kiev brokers are overly concerned with their reputation and won?t go through the trouble of checking ownership documents, even if they tell their client that they did. If ownership documents for the flat of your potential landlord are unavailable online, this could be a potential red flag, so be careful. Third, sometimes landlords will engage a representative to act on their behalf; in this situation, check that the owner?s rep has a valid power of attorney, that this individual is included in the rental agreement, and that the owner?s representative provides his/her passport for inspection. Note that if you or your organization will be renting an expensive flat in Kiev (and perhaps paying several months rent in advance), then it?s also a good idea to check if whether the apartment you?re considering is pledged as collateral, has any liens against it or is subject to any court decisions in Ukraine?s legal system.  Whether or not a flat is pledged as collateral can be checked by your broker in the online property registry, a notary can check whether a property has any liens against it, and verifying whether a property is subject to court decisions can be a bit trickier to check, but can be done by capable lawyer.

If you?re renting an apartment in Kiev, watch out for scams. It may seem obvious, but don?t ever pay for an apartment before viewing it. Don?t accept copies (instead of originals) of ownership documents from someone claiming to be an apartment?s owner. Insist that the owner bring his/her passport to a lease signing. You don?t want the actual owner of an apartment to show up after you have already paid the first and last month?s rent. Oftentimes, an disreputable broker and an owner can even collude in such scams, then ?Ivan Ivanovich? the broker disappears across the Dnipro to Kiev?s Left Bank never to be heard from again?a majority of brokers in Ukraine use emails without their first name and surname and ?disposable phone numbers? are cheap and easily obtained. Sometimes scams of tenants can be hard to imagine; one acquaintance of mine shared his experience of renting a flat in Obolon, where after signing an agreement he moved in to discover that all of the household appliances (refrigerator, TV, etc.) had been replaced with much cheaper ones. It should be mentioned that your risk of being scammed as a tenant drastically increases as your budget decreases and as you move further outside of Kiev?s center, but everyone should be careful.

RENTAL CONTRACT TIPS FOR TENANTS
While tenants in Kiev should consider their rental agreement as a written expression of their verbal agreement with their landlord, to avoid misunderstandings in the future, certain areas should be specifically defined in your rental agreement, which should be a dual language agreement. For example, it can be a good idea to include a clause like ?upon mutual agreement the tenant?s deposit can be used as the last month?s rent.? In Ukraine there is no legal requirement for landlords to put your security deposit in escrow, and often a landlord may not have the money to return your deposit when you move out. Many rental agreements allow for tenants to move out by giving 30 days notice, but also see if you can include a clause that obliges the landlord to return to you any pro-rated, unused rent. Some landlords may try to include clauses that require tenants to pay for deep cleaning and repainting their apartments, make sure that you or your broker resist the inclusion of such unreasonable terms. It?s also a good idea to get a signed receipt from your landlord each time that you pay the rent (if you?ll be paying in cash), since there have been cases when unscrupulous owners demanded a repayment of the rent, because they knew that the tenant did not receive a receipt. If your landlord requires any payments other than rent (damages, increase of fees), then contact a lawyer for advice.

QUICK SUMMARY OF TENANT RIGHTS AND OBLIGATIONS IN UKRAINE
Tenant rights in Ukraine are pretty standard, including: the right to lodge others for permanent residence with the consent of the landlord; to lodge others for temporary residence, with prior notification of the landlord?consent by the landlord is not stipulated but Ukraine?s Civil Code contains provisions that require the tenant to evict those persons permanently residing with him from the premises within 7 days from a demand for eviction by the landlord; a tenant has the preferential right to sign/extend the lease agreement for a new term; and he has the right to sublease the property (with the landlord?s consent). Tenant obligations in Ukraine are also straightforward, including: not renovating the flat without the landlord?s consent; making timely rental payments and for utilities/communal charges (unless otherwise specified in the rental agreement); specifying in the agreement those persons who will be living with the tenant (such persons have similar tenant?s rights and obligations regarding use of the property); carrying out maintenance of the housing (unless otherwise stipulated in the agreement). One tenant obligation in Ukraine that can have tricky real world consequences is that tenants are obliged protect the housing and maintain it in good condition?in fact, in the same condition that is was at the time the rental agreement was signed. Kiev landlords are not always reasonable when it comes to taking into account the effects of the normal ?wear and tear? on their apartment and may try to aggressively overcharge you for ?damage? that did not result from your negligence. As a tenant, the best way to mitigate this and other possible risks is to use your intuition before you sign a rental agreement with a landlord?ask yourself, ?Does this person seem reasonable??

If a conflict with your landlord does arise, it?s is always better to negotiate with him or her to resolve it. Negotiations with your landlord can be based on the non-disclosure your dispute (in order not to damage your landlord?s reputation) and not reporting your dispute to the tax authority (it?s not a secret that Ukrainian landlords often do not pay taxes on their rental income). If your dispute with your landlord goes to court, then it won?t be cheap?it?s necessary to pay the court fee (at least 1 percent of the amount of the claim) and for the work of your lawyer. Also, the court process will take a lot of time?at least half a year.

LANDLORD RIGHTS, TIPS FOR LANDLORDS AND WOULD-BE OWNERS
In everyday conversation landlords get about as much sympathy as bosses and just a touch more than politicians. But consider this, in Kiev a nicely-renovated small flat in the center that rents for $600 per month can be worth $100,000 to $150,000. And in Ukraine it?s rare that a tenant pays first and last month?s rent AND a security deposit. So in this situation a negligent tenant could potentially cause far more damage and lost income to landlord than could be covered by the prepaid last month?s rent. And negligent expat tenants can just leave Ukraine, leaving landlords with zero legal recourse to recover their losses.  Often landlords will insist that tenants are not allowed to smoke in their apartments, or live with people who are not listed in the rental agreement, but these things and other tenant behavior can be hard to control. On paper, landlords in Ukraine do have certain rights. For example, a rental agreement may be terminated by a court: (a) if a tenant fails to pay the rent for six months if the lease does not set a longer period, and in the case of short-term rentals, if the tenant fails to pay more than twice; or (b) in the case of destruction or damage to the property by the tenant or other person for whose actions he is responsible. In such cases, eviction from the housing in the event of termination of the lease agreement can be made only by a court decision. But as a practical matter, in Ukraine there?s a greater risk of a tenant not paying, damaging a property and disappearing than there is of him or her continuing to live there while acting in bad faith.

Background checks of potential tenants that include proof of employment and employer information can be a good idea for landlords. In Kiev one way to filter out potentially unsavory tenants can be to insist that rental payment be made by bank wire transfer. Many Kiev landlords don?t declare their rental income for tax purposes, while several international organizations are required to pay for housing by bank transfer for their employees. So Kiev landlords with nice flats downtown who insist on payment by bank transfer can often demand a 5-10% premium over market rental rates, which could be more profitable for them depending on their tax structure (i.e., they are registered as a private entrepreneur or ?FOP? in Ukraine).

If you will be letting your flat in Ukraine to a foreign citizen who will be registering in your apartment for his/her residence permit, then always include a clause in the rental agreement that provides for the right to cancel the tenant?s registration upon termination of the lease agreement. In the agreement it should also be noted that in the event that the tenant?s residence permit is cancelled, he or she must immediately notify the landlord and the landlord may then terminate the lease. Otherwise, a landlord may be threatened with assisting a foreigner who is illegally staying in Ukraine. Also, as sponsor for your tenant?s place of residence, you as his landlord can demand a power of attorney from your tenant?s employer to unregister him from the place of registration. Having implemented these simple steps, the owner of an apartment can safely register a foreign citizen as a tenant in his apartment and there are no negative consequences for doing so.

THE BOTTOM LINE FOR TENANTS, LANDLORDS, AND INVESTORS
For investors who are considering buying investment properties in Kiev, you should be aware that while rental agreements in Ukraine can be moderately ?tenant-friendly,? most risks can be mitigated by carefully screening your tenants, and tenant rights in Ukraine do not resemble the strongly tenant-friendly rights in found many EU countries and US states. Like most things in Ukraine, whether you are a tenant who is considering signing a rental agreement with a Kiev landlord or an owner who is considering letting out his or her flat, never forget to take into account the ?human factor? and make this the chief basis for your decision-making.

(A special thanks to attorneys Vasyl Cherednichenko and Tetiana Yashchenko at the law firm ExpatPro for their contributions to this article. Please note that this is article not intended to replace qualified legal advice; you should also bear in mind that your specific circumstances may differ from the assumptions used here.)

About the author: Tim Louzonis (tim@aimrealtykiev.com) is a co-founder of AIM Realty Kiev and AIM Realty Lviv, real estate agencies that specialize in real estate for foreign investors and expats. Tim is a long-time expat with Ukrainian roots; he first came to Ukraine as an exchange student in 1993 and returned in 2008.

A version of this article originally appeared in the April 2018 issue of Business Ukraine magazine.

https://www.aimrealtykiev.com/tenant-and-landlord-rights-in-ukraine-tips-for-renting-letting-and-investing-in-property-in-kiev/

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