Improving property registration system in Ukraine by max or

Ukrainian-European Policy and Legal Advice Centre – Phase V

Survey on: “Improving property registration system in Ukraine: best European practices examples”

Kyiv, January 2011

The Project is implemented by UPMF, PAI, FIIAPP, Louis Berger SAS, KLC and HRTA consortium

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The Project is funded by the European Union

Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19 E-mail: office@ueplac.kiev.ua http://www.ueplac.kiev.ua

The Project is implemented by UPMF, PAI, FIIAPP, Louis Berger SAS, KLC and HRTA consortium

Ukrainian-European Policy and Legal Advice Centre – Phase V EuropeAid/127777/C/SER/UA

The Project is funded by the European Union

SURVEY IMPROVING PROPERTY REGISTRATION SYSTEM IN UKRAINE: BEST EUROPEAN PRACTICES EXAMPLES

January 2011

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CONTENTS INTRODUCTION................................................................................................................................ 4 SOURCES ............................................................................................................................................. 5 PART A – IMMOVABLE PROPERTY REGISTRATION SYSTEMS (IPRS).............................. 7 A.1 THE FUNCTIONS AND BENEFITS OF AN IMMOVABLE PROPERTY REGISTRATION SYSTEM (IPRS)................................................................................................................................... 7 A.2 MAIN SYSTEMS OF IMMOVABLE PROPERTY REGISTRATION................................. 10 A.3 EUROPEAN PRACTICE CONCERNING IMMOVABLE PROPERTY REGISTRATION12 A.4 THE SETUP OF NEW IMMOVABLE PROPERTY REGISTRATION SYSTEM.............. 14 A.4.1 The determination of the needs that the IPRS must serve ............................................... 14 A.4.2 The drafting of legislation on immovable property rights and their registration.......... 15 A.4.3 The administrative structure of the IPRS.......................................................................... 17 A.4.4 The determination of rights over specific immovable property....................................... 18 A. 4.5 Technical issues regarding survey and mapping.............................................................. 20 A.4.6 Public awareness of the IPRS.............................................................................................. 21 A.4.7 Case study: the reform of the Georgian IPRS ................................................................... 21 A.5 ISSUES AFFECTING PROPERTY REGISTRATION IN UKRAINE ................................. 24 A.5.1. Recent developments in the legislation of Ukraine on property registration ................ 24 A.5.2 Problems affecting private property in general................................................................. 25 A.5.3 The issue of separate ownership over land and over the buildings on that land............ 27 A.5.4 Delimitation of territorial communities ............................................................................. 27 A.5.5 The problem of registration of integral property complexes ........................................... 28 A.5.6 Agricultural land .................................................................................................................. 30 A.5.7 Technical inventorying......................................................................................................... 31 A.5.8 The issue of transparency .................................................................................................... 31 A.5.9 Mandatory but sporadic registration ................................................................................. 32 A.6 COMMENTS AND RECOMMENDATIONS .......................................................................... 32 PART B – INTELLECTUAL PROPERTY REGISTRATION SYSTEMS .................................. 36 B.1 INTRODUCTION ....................................................................................................................... 36 B.2 SHORT PRESENTATION OF EUROPEAN UNION PRACTICE ....................................... 37 B.3 INTELLECTUAL PROPERTY RIGHTS REGISTRATION IN UKRAINE ....................... 43

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INTRODUCTION “Modern market economies generate growth because widespread formal property rights, registered in a system governed by legal rules, afford indisputable proof of ownership and protection from uncertainty and fraud. In that way, they permit massive low-cost exchange, fostering specialization and greater productivity. It is law that defines the relationship of rights to people. Civilized living in market economies is not simply due to greater prosperity but to the order that formalized property rights bring.” (Hernando de Soto 1993) This report aims to survey the best European practices regarding the registration of property rights, namely rights over immovable property and intellectual property. On the basis of such survey, this report concludes with comments and recommendations for the reform of the Ukrainian property registration system along the line of such practices. It is important to begin by acknowledging two basic facts: European (and international) practice, especially in the area of immovable property registration, is far from uniform: more or less, each state has established its own system which may share a number of basic principles with the system of other states but frequently has its own characteristics, due to particular traditions, needs and capacities; It results from the previous observation that the Ukrainian system, whatever that may be, may borrow from other systems as much as possible but, in the end, it must correspond exactly not only to the needs but also to the existing capacities of the country itself and not to some theoretical construct of systematic perfection. This report aims to be a useful tool in the hands of policy makers and not simply an academic study of various systems. It is structured on three levels: The first level contains focused comments and recommendations based on the comparison of the current Ukrainian system, on the one hand, and the experience and the trends of European systems, on the other, in order to underline important parameters to be taken into account in the actual implementation of the Ukrainian system and to propose concrete improvements. The second level provides a concise overview of the main systems of property registration in Europe and elsewhere, in order to provide a basic theoretical background to the main international systems and to present in more detail the examples of states with similar characteristics and challenges as Ukraine. Finally, this report is complemented by a recommended list of further sources, for the reader who wishes to delve deeper in the extensive and complex topic of property registration systems world-wide; special reference must be made to the invaluable work by the United Nations Economic Commission for Europe (UNECE) on that subject. The first part of the report deals with immovable property registration systems (IPRS) and is based on a survey of thirty-nine European countries1 as well as Georgia, Armenia, Azerbaijan, Turkey and Canada (a total of 44 states). Throughout this report, the term “immovable property” will be used to include land, buildings and parts thereof (such as apartments), objects under construction and immovable property in general.

Albania, Austria, Belarus, Belgium, Bosnia & Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Former Yugoslav Republic of Macedonia, Malta, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, San Marino, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom.

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SOURCES AUTHOR(S)

YEAR

TITLE AND PUBLICATION DETAILS

2000

“Land Registration Modernization in Developing Economies: A Discussion of the Main Problems in Central / Eastern Europe, Latin America and the Caribbean”, URISA Journal vol. 12 No 4, pp. 33-42

2007

“Benchmarking Land Registration”, UN ECE Working Party on Land Administration Workshop, Dublin 26-28 September 2007 (16 p.)

2007

“Land Registry, Economical Benefits and Legal Certainty in Spain”, Fédération Internationale de Géomètres (FIG) Commission 3 Workshop, Athens (22 p.)

1994

“Land Registration in Germany”, Technical Chronicles 14 vol. 1, pp. 353-373 (in Greek)

1993

“Maintenance and Updating of the French Cadastre”, Technical Chronicles Extra Edition 1993, pp. 119-127 (in Greek)

GIOVARELLI R. and BLEDSOE P.

2001

Land Reform in Eastern Europe, Report to the Food and Agriculture Organization of the United Nations (FAO) (120 p.)

HALDRUP N.

2007

“Land Reform and Land Registration in Development Assistance: Action and In-action”, Fédération Internationale de Géomètres (FIG) Commission 3 Workshop, Athens (10 p.)

HANSTAD T.

1998

“Designing Land Registration Systems for Developing Countries”, American University International Law Review (AmUInt’lLR) 13, pp. 647-503

HAWERK W.

2003

Germany Country Report 2003, Report to the Permanent Committee in GIS Infrastructure for Asia and the Pacific (PCGIAP) (11 p.)

1994

“An Introduction to Cadastral-Registry Systems and their Modernization”, Comparative Juridical Review 3, pp. 3-15

BARNES G., STANFIELD D. and BARTHEL K. CLANCY D. DE LA PUENTE ALFARO F. DIMOPOULOU – VAGIANOU E. DIMOPOULOU – VAGIANOU E. and BADEKAS I.

HENDRIX S. HENSEN J.

----

“Basic Principles of the Main Cadastral Systems in the World”, lecture notes

HM LAND REGISTRY LAW COMMISSION

----

Land Registration for the Twenty-First Century: A Consultative Document (308 p.)

HOLSTEIN L.

1996

“Towards Best Practice from World Bank Experience in Land Titling and Registration”, informal paper presented to the World Bank (26 p.)

KOUSOULA K.

2010

The foi publique of the Cadastre: A Comparative Review of Greek and German Law, Sakkoulas Editions (350 p.) (in Greek)

LARSSON G.

1991

Land Registration and Cadastral Systems: Tools for Land Information and Management, Longman Scientific and Technical (175 p.)

MANIATIS I., BRILLAKI K. and MYLONAS T.

1993

Comparative Review of Characteristic Land Registration Systems (International Experience), Technical Chronicles Special Edition “Prospects of the Greek Cadastre” (383 p.) (in Greek)

PAPAKIRIAKOU

2005

La publicité foncière et le notaire,

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Report for the Union Internationale du Notariat Latin (43 p.)

M. PLOEGER H. and VAN LOENEN B.

2005

“Harmonization of Land Registry in Europe”, Fédération Internationale de Géomètres (FIG) Working Week 2005 “From Pharaohs to Geoinformatics” (12 p.)

STAMO L. and SINGER N.

2007

Albanian Immovable Property Registration system: Review of Legislation, Land Tenure Center of the University of Wisconsin-Madison (25 p.)

STANFIELD D.

2003

“Immovable Property Registration Systems: Hopes and Fears”, Congreso Iberoamericano de Registro de Propriedad, Lima 2003 (11 p.)

2009

Guidance and Good Practice for the Application of Fees and Charges for Real Property Cadastre and Registration Services (15 p.) – in English and Russian*

2005

Social and Economic Benefits of Good Land Administration (Second Edition) (11 p.)

2001

Inventory of Land Administration systems in Europe and North America (223 p.)*

1996

Land Administration Guidelines With Special Reference to Countries in Transition (111 p.)*

2003

Multilingual Thesaurus of Land Tenure (107 p.)*

2006

“Comprehensive Land Registration Reform: Lessons from Georgia”, BizCLIR Issue 3, May 2007 (4 p.)

VAN DER MOLEN, P.

2005

“Unconventional Approaches to Land Administration: An International Research Agenda”, ITC Lustrum Conference on Spatial Information for Civil Society, Enchede, The Netherlands, 1416 December 2005 (13 p.)

ENRICO PEROTTI

March 2001

UN ECONOMIC COMMISSION ON EUROPE – WORKING PARTY ON LAND ADMINISTRATIO N UN FOOD AND AGRICULTURE ORGANIZATION (FAO) USAID BizCLIR PROJECT

Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints, Working Paper No. 379

* These sources are recommended as the most relevant and important.

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PART A â&#x20AC;&#x201C; IMMOVABLE PROPERTY REGISTRATION SYSTEMS (IPRS)

A.1 THE FUNCTIONS AND REGISTRATION SYSTEM (IPRS)

BENEFITS

IMMOVABLE

PROPERTY

One of the most important steps in the transition from a centrally planned to a market economy is the establishment of private ownership in land and immovable property, in general. For investment to take place, the investors must feel confident that the assets that they are developing will be built on land to which there is a secure title2, based on a clear legal framework. Land is a fundamental resource that is most effectively used and exchanged when the rights to land, and immovable property in general, are registered. Designing an immovable property registration system (â&#x20AC;&#x153;IPRSâ&#x20AC;?) requires a prior analysis of why such registration is necessary. Policy makers and implementing government officials should, first of all, examine and understand the potential advantages and disadvantages of such a system, and likely sources of opposition to a new (or improved) IPRS. Generally speaking, a country needs to establish or reform its IPRS where: a. lack of tenure security over immovable property restrains economic development; b. the development of a healthy and reliable immovable property market is desirable but limited in practice; c. there is a high incidence of disputes concerning immovable property; d. there is a need to establish a credit base; e. a redistributive land reform is contemplated. Tenure security (the justified belief that the legal status of a piece of immovable property is clear, full and legally enforceable) requires that a person knows all the relevant facts about that piece of immovable property (such as its rightful owner, its precise location and limits, encumbrances, servitudes, etc.) and can enforce his rights or safely proceed to a legally binding contract concerning this piece of immovable property. It follows from the above that an immovable property register containing all essential juridical information and allowing anyone viewing the system to identify third-party rights, as well as the name of the owner (as a minimum) greatly improves tenure security. Tenure security is provided to varying degrees depending on the legal consequences of registration recognized in various jurisdictions: a. In some systems, the state guarantees the accuracy of the information recorded in the register, so that if a mistake were to occur, compensation would be paid to the person suffering damage. b. In some cases, special compensation funds have been established to cover such incidents. c. In other systems, registration is a prerequisite for the enforceability of the right over the piece of immovable property; in other words, any right or transfer which is not registered is not recognized by the courts. 2

As will become evident later in this report, different states and systems have different legal concepts and terminology, the translation of which is often difficult. Terms often used (and confused) are the following: Tenure: the rules and arrangements connected with the ownership of immovable property, ie. the legal framework governing ownership of land and immovable property; Title: the legal right to own a particular piece of land or immovable property, incorporated in a document; Deed: a legal document which is an official record of an agreement to transfer ownership or interest over immovable property.

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d. Finally, in some systems, the registers are treated as simple evidence (which may be countered before a court) rather than absolute proof. It must be underlined that, regardless of the degree of legal importance given to registration under different systems, the mere existence of a sufficiently maintained and integrated IPRS greatly boosts the confidence of immovable property owners in their rights. All the above considerations gain even more importance in the cases of states which are transitioning from state or other public ownership of land to private land ownership, resulting in considerable uncertainty concerning land rights. Increasing security of individual property rights stimulates private investment and agricultural development because the individual is more willing to make long-term investments and improvements. The introduction of an efficient IPRS provides existing and prospective owners of immovable property with cheap and easy access to a reliable and complete set of information, meaning that those who wish to deal in such property can do so with speed and certainty, and those who own such property can be effectively protected. This, in turn, accelerates the growth of a healthy land market. The necessity for a functioning land market will become increasingly apparent as the formerly centrally-planned society is transformed into a market economy. A functioning land market permits economies to use land more appropriately, ease the eventual migration of labor out of the agricultural sector, and generally facilitate the establishment of efficient and consistent land policies. Similar considerations allow increased access to credit, as a bank will easily forward a loan to the registered owner of immovable property, using such property as collateral. The holder of the rights thereby becomes “creditworthy” and can pledge his rights as security for a loan. The bank risk is reduced, thus lowering the interest rate it charges for the loan. The credit infused into the economy in that manner contributes to its growth. In many countries disputes over immovable property give rise to long-drawn litigation, thereby preventing persons who cannot afford it from protecting or ascertaining their rights. Moreover, the courts devote a disproportionate part of their resources and time on such disputes, leading to the congestion of the overall judicial system. Therefore, a standard and clear methodology (“algorithm”) for resolving such disputes is indispensable; such an algorithm would be implemented in practice on the basis of data provided by a solid IPRS. Immovable property cannot be sold or leased or even effectively developed without resolution of the disputes, since no potential investor would commit to developing land where a lawsuit may be pending. The establishment of an IPRS prevents to a large degree such disputes arising in the future, since at the time of first registration formal procedures should be followed that will resolve uncertainties and from then on consecutive owners and other right-holders will be regularly registered. An IPRS is also beneficial to the administration of the state itself. First of all, an IPRS records not only privately– but also state-owned land and immovable property, in general. Thus, it protects state (and municipal) property (mainly land) from encroachment or from attempts by squatters (for example, by businessmen, local officials etc. who have taken over public property for a number of years and then claim that they have legal rights over said property) to settle on vacant property that is being held for future use. The state needs to manage its property assets and to ensure their efficient use and upkeep every bit as much as does the private citizen. An IPRS facilitates this.

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Second, an IPRS (and, more particularly, its cadastral records) provides the basic framework within which rural or urban development schemes can be planned and assessed, and sensitive areas (environmentally, culturally, militarily) identified and effectively protected. Such improved land use can occur through direct action like zoning, protection of ecologically sensitive areas, public urban development, land consolidation, irrigation projects, etc. Other public land policy measures, in particular agrarian reform or land consolidation or even control of foreign ownership of immovable property are very difficult or impossible to implement without the type of organized information provided by an IPRS. Third, an IPRS would help in the development of the local self-government system, improve and increase its efficiency. The Ukrainian citizens, as members of local communities, are co-owners of municipal property, including immovable property. However, most of them do not realise themselves as such co-owners. Moreover, they do not understand that the principle function of the local selfgovernment system is just governing commons. In that regard, it is obviously impossible to govern the resource which consists of nobody knows what. So, the proper IPRS will help co-owners of municipal property to receive information about their resources, necessary to govern them in a more efficient and proper way. Finally, a functional IPRS might be used to facilitate the taxation of immovable property on the basis of transparent and objective treatment. It should be underlined, however, that practice indicates that it is a mistake to design the IPRS around a taxation mission: the IPRS is primarily an instrument to rationalise and develop economic activity, not to tax it. The advantages of an IPRS can be summarised as follows: a. Improved land administration, protection of state and municipal lands and overall public administration b. Development of local self-government c. Reduction in litigation concerning land and immovable property d. Improved basis for immovable property taxation e. Support for environmental management. However, as will be presented in detail in a later chapter, for an IPRS to be successfully established and implemented: a. Clear legislation determining property rights must exist: if such rights are ambiguous, nonexistent, or poorly defined by law, registration of those rights is likely to be an expensive and wasteful exercise. b. Landowners and other stakeholders must generally understand and support the introduction of the IPRS: the demand for immovable property registration should be generated from within and outsiders should not impose the system on a reluctant landholding community. It is important to assess user needs before designing the IPRS and to focus on public education about the IPRS. c. Policy-makers and implementing government officials must realise and accept the scope, expense and duration of the setup of an IPRS: an IPRS represents a very considerable investment of state funds and effort over a period of several years; moreover, it requires steady political will to dispel misunderstandings and outright opposition by parts of the population or existing interests. d. Property rights and property boundaries must be clearly recognizable (to that end, modern map-making and digital storage methods can significantly facilitate the setup and operations of an IPRS) as well as definable and sufficient algorithms for the resolution of related disputes must be in place. e. Qualified survey and registry staff must be available: the system must be operated by qualified staff in order to remain efficient; such staff must be carefully selected and trained, otherwise 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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significant investments in equipment and facilities might be rendered useless. To achieve optimum results, training should occur in the country and environment where the staff will work. A.2 MAIN SYSTEMS OF IMMOVABLE PROPERTY REGISTRATION Land has two unique characteristics: it is immovable and it is permanent (disregarding the limited cases of land erosion or accretion); it cannot be increased, decreased, or destroyed as can all other forms of wealth. To a large degree and to all intents and purposes, the same applies for immovable property, ie. buildings and constructs permanently attached to the land. Public records registering legal rights over immovable property have been developed over the centuries, generally following three major systems which appeared consecutively: registration of deeds, registration of titles and unified cadastres. A.2.i. Registration of deeds involves registering or recording of documents affecting interests in immovable property. It developed hundreds of years ago in several European countries to prevent double selling of land. With registration of the deeds at a government office, the priority of claims could be established in the event of double selling. Under a deed registration system, a copy of the transfer document is deposited in a registry, thus providing evidence of the sellerâ&#x20AC;&#x2122;s right to sell. As a result, by searching the registry for the most recent document of transfer, any potential buyer can examine if the seller has the right to sell as well as the conditions under which the seller acquired the property. However, this does not provide irrefutable proof that the previous transaction was legitimate, hence the transaction before that should be inspected, and so on through a sequence of inspections until the buyer is confident that there is a clear chain of title. The system obviously leads to the storage of large quantities of documents and the prospective buyer is obliged to undertake a complex, tedious, and costly search, especially in the case where the property to be sold belonged to a large number of previous owners (as each relevant deed must be identified and reviewed). It should, however, be pointed out that computer storage and retrieval can greatly ameliorate this particular disadvantage. The main drawback of the deed registration system is that, on its own, this system gives no guarantee of title: it simply invites searchers to inspect copies of documents and to draw their own conclusions as to title, some of which may in practice be missing, especially in the case of disasters such as war or fire. Nevertheless, in some countries following the deed registration approach, the management of the records is extremely efficient and as a result there is great confidence in the system3. While such registries do not actually guarantee title, they provide the most important evidence of ownership that can be assumed to be correct unless proved otherwise in the courts. A.2.ii. An alternative to the registration of transfer deeds is the registration of title (â&#x20AC;&#x153;Torrens systemâ&#x20AC;?4). In this system, each land parcel or immovable property is identified on a map and the rights associated with it are recorded on the register. In addition, the name of the owner is recorded. Thereby, only the ultimate fact or conclusion that a certain named person has title to a particular property is registered, and certificate thereof delivered to him. When the whole of the property is subject to 3

For example, the Italian and the French systems work fine, as they have consistent records going back hundreds of years, they have extensive computerization and efficient administrative and court systems resolving disputes. Thus, it is not a question of what they are doing, it is of how well they are doing it. 4 Named after Sir Robert Torrens, colonial Premier of South Australia, who introduced it there in 1858; the system was consequently adopted in a great number of common law jurisdictions. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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transfer, only the name of the owner need be changed. When part of the property or an associated right is transferred, the plans must be amended and new documents issued. Under such a system the ownership of immovable property can be guaranteed. In the pure form of this system, anyone who is dispossessed of immovable property through the functioning of the registers will be compensated even in the cases where the mistake was not made by the registry but rather was a result of seller fraud. The Torrens system is essentially simple and relatively cheap to operate. The government plays a much larger role in maintaining land records in a title registration system than in a deed registration system. Under title registration, a certificate of title (or the register) provides conclusive evidence of the land rights pertaining to a particular land parcel. A legal interest in land is not created or transferred until the government officials at the land registry office conclusively assess the current state of title. A compromise between the two aforementioned systems is possible, drawing on the strengths of each approach. A number of countries, for example, combine land ownership and mortgage data in one register, while other information such as that relating to property boundaries is recorded in a separate register called the “cadastre”. Such an arrangement, however, frequently results in duplication of effort, additional costs, inconsistencies and, hence, inaccuracies in the data. The cadastre, which should normally cover the whole territory of the state, consists of two parts: a series of maps or plans showing the size and location of all land parcels and other immovable properties together with text records that describe the attributes of the properties. Different countries interpret the term “cadastre” in different ways and this can lead to great confusion when analysing systems. The common understanding is that a cadastre is a form of land information system, specifically focused on the ownership, value or use of land parcels. Neither deeds registration nor title registration systems are concerned directly with land use, though some indication of this may appear in the property description. Furthermore, neither system addresses all of the land rights. Rights restricted by municipalities under development control regulations are rarely incorporated. Similarly, the systems do not necessarily provide information about land values. The declared price may differ from the real price. A.2.iii. States which have recently (ie. in the past 10-15 years) embarked in the establishment or reform of their IPRS on the basis of their own practice and the experience of other states, have opted for the so-called “unified cadastre” system, which -with the aid of technology– integrates more closely the immovable property registry (either deed– or title-based) of the other two systems with the cadastre, providing a multi-layered, multi-mission information system. The unified cadastre approach system: contains a legal definition of immovable property units that accurately reflects conditions on the ground; facilitates immovable property transfer through a system that is simple, secure, and cheap to operate; eliminates the need for extensive searching for a chain of titles; is supported by legislation that requires it to be kept up to date at all times, for example when mutations occur; records specific immovable property rights, ownership and restrictions on ownership that are not otherwise transparent; covers the whole territory of a country, including that held by the state as well as by individual private citizens or institutions.

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A.3 EUROPEAN PRACTICE CONCERNING IMMOVABLE PROPERTY REGISTRATION This section very briefly (mainly through tables compiled from various sources) presents European practice on a number of issues related to the setup and operation of an IPRS. This grouping of diverse state practices under a few terse descriptions inevitably contains generalizations to a significant extent. Much more detailed information on each countryâ&#x20AC;&#x2122;s practices on particular issues is provided in the materials annexed to this report. Only as a systematic distinction, the European states surveyed in this report belong, in general terms, to the following systems: Immovable property registration system followed Title registration Deed registration Unified cadastre Austria, Croatia, Estonia, Albania, Czech Republic, Germany, Poland, Slovakia, Belgium, Bulgaria, FYR of Macedonia, Greece5, Switzerland, United Kingdom France, Italy, Spain Hungary, Netherlands, (England and Wales) United Kingdom (Scotland) It must be pointed out that the grouping of states on the basis of their IPRS (tile or deed registration) is not absolute, as, during the course of time, many states essentially following one system have incorporated arrangements and elements of another system. For example, France (a deed registration country) has adopted a title registration system for its urban areas. Greece (a deed registration country), in order to provide full legal security, has borrowed elements of the title registration system and requires that any transfer of immovable property be registered in order to be legally enforceable. In the title-registering and the unified cadastre countries, the creation or transfer of rights over immovable property must be registered in order to be legally valid or enforceable. This essentially means that registration offers absolute proof of the existence of the right (ownership or other) and the identity of the holder of the right over the particular immovable property. Most European countries have a decentralised IPRS, generally corresponding to the administrative division of the country. Austria, Estonia, Netherlands and Greece also possess a central registry which all the local registration offices report their records, for easy access to records throughout the country. Such easy access is provided in other countries, such as Italy, Hungary and parts of Germany, thanks to the electronic networking between local registration offices. ADMINISTRATION AND MAINTENANCE OF IMMOVABLE PROPERTY REGISTER Centralised (16) Decentralised (24) Austria, Azerbaijan, Belarus, Belgium, Albania, Armenia, Finland, Iceland, Bosnia & Herzegovina, Bulgaria, Croatia, Ireland, Latvia, Liechtenstein, Cyprus, Czech Republic, Denmark, Estonia, Lithuania, Luxembourg, Malta, France, FYR of Macedonia, Germany, Moldova, Russian Federation, Greece, Hungary, Italy, Netherlands, Slovenia, Sweden, Turkey, United Norway, Poland, Portugal, Slovak Republic, Kingdom Spain, Switzerland

Greece is currently transitioning from the old deed-registration system to a unified cadastre system.

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In most countries, the IPRS is under the oversight of the Ministry of Justice, whereas in a significant number of countries, the system is under the purview of the Ministry of Finance or another Ministry. It is important, however, to note that almost all of the states which recently commenced the creation or reform of their IPRS (and are adopting the more “modern” unified cadastre system), have chosen to entrust the setup and/or operation of the system to an autonomous entity, following the pioneering British example. IMMOVABLE PROPERTY REGISTRATION AGENCY Ministry of Justice (21) Ministry of Other Autonomous Finance (4) Ministry (6) Entity (10) Austria, Bosnia & Albania, Armenia, Herzegovina, Bulgaria, Azerbaijan, Czech Croatia, Denmark, Estonia, Republic, FYR of Belarus, Finland, Germany, Ireland, Macedonia, Iceland, Italy, Cyprus, Malta, Latvia, Liechtenstein, Greece, Moldova, Luxembourg, Turkey, Norway, Poland, Portugal, Netherlands, San Marino Hungary, Romania, Russian Slovak Republic, Lithuania Federation, Slovenia, Spain, United Kingdom Sweden, Switzerland, (England and United Kingdom (Scotland) Wales) Public access to the immovable property registry is in most cases allowed to any member of the public without any limit to the level of access. In other words, any person may have access to all the information maintained in the registry (usually by paying a fee), even if it regards another person’s property. In several countries, however, this free access is tempered by considerations of the protection of personal information, and a balance is achieved, usually by requiring a person seeking access to the records of another person to demonstrate a legitimate interest justifying this access. It is noteworthy that this restriction applies not to the central registry book but to the underlying documents (such as deeds, contracts etc.). PUBLIC ACCESS TO THE IMMOVABLE PROPERTY REGISTRY Any member of the Any member of the public public with restrictions Professionals without restriction as to the as to the level of access only (1) level of access (22) (15) Bosnia & Herzegovina, Croatia, Albania, Armenia, Cyprus, Czech Republic, Azerbaijan, Estonia, Denmark, Finland, Greece, Germany, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Luxembourg, FYR of Lithuania, Moldova, Austria Macedonia, Malta, Netherlands, Poland, Russian Norway, Portugal, Romania, San Federation, Slovak Marino, Slovenia, Turkey, Republic, Spain, Sweden, United Kingdom Switzerland All the states surveyed have computerised (in most cases, to a full degree) their IPRS. In many states, notaries and, to a lesser degree, other parties may access the IPRS registries electronically (for example, in Germany, Austria, Bulgaria, Hungary, Italy, Netherlands). Austria and France are already taking steps to allow the electronic filing of notarial deeds. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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From the above, several observations and conclusions can be drawn: a) There exists a wide variation of principles, systems and procedures among even neighboring European countries, largely due to different legal cultures and the absence of common legal principles and terminology (which is, in turn, due to the parallel existence of the common law (“anglosaxon”) and the civil law (“continental”) legal systems in Europe and the world, in general). Harmonization between the two is being sought, especially in the context of the EU common market, with limited progress. b) Regardless of their legal systems, all the EU countries have in place a largely efficient IPRS which guarantees, in law or in fact, the protection of the owners, the buyers and the lenders of immovable property through a system of registration and publicity of existing rights. c) States which have recently embarked on the establishment or reform of their IPRS invariably follow the unified cadastre structure, with full computerization of records and input/output, on the basis of a digitally-mapped cadastre (achieved largely through aerial / satellite photography), managed by an autonomous entity whose operation is maintained through fees paid by the users of the IPRS.

A.4 THE SETUP OF NEW IMMOVABLE PROPERTY REGISTRATION SYSTEM When setting up a new IPRS, the first task is to investigate and understand the current situation on three broad issues: (1) existing tenure forms and legal structure; (2) existing land records and maps; and (3) available resources, both capital and human. Without a solid understanding of the current situation in these areas, it is difficult or impossible to assess needs or design an efficient IPRS. Then, the need for change must be evaluated, taking into account the factors listed previously, such as current insecurity of tenure, lack of a functioning land market, unavailability of banking credits, excessive litigation and disputes relating to immovable property, need for an equitable land tax, unavailability of an information base to facilitate land use planning and administration, etc. The mirror side of the needs is a list of expected benefits, which should be valid within the specific country context. These benefits should be evaluated, both in general terms and, where possible, in monetary terms. A.4.1 The determination of the needs that the IPRS must serve The assessment of user needs should be made prior to the design and establishment of an IPRS but also throughout its lifetime. As pointed out earlier, the users of the system are many and diverse: owners, buyers and sellers of immovable property, credit-extending banks and even the state and municipal administrations itself. All their needs must be identified, prioritised and served efficiently. This may require a change in the mentality of public administration staff which will operate the IPRS, as the notion of measurable standards of public service must be introduced (for example, time limits for the issuance of certificates, provision of assistance etc.). Moreover, in many cadastral systems that have been based on the old Soviet model, a great variety of data was collected (for example, on the quality and use of the soil), much of which is irrelevant for a market-driven economy. In determining the type of data that the IPRS will record, the following questions must be posed: What information do state planners and land managers require? Which ministries, local self-governing bodies and departments use land-related data? Which of these are providers of data and which are users of data? 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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Who in central and local government will require access to land-related data? What types of data will they require? Are any taxes based on the value of the land owned or is any tax imposed when a property is sold? If so, on what basis is the value of the land or property assessed? What quasi-government and private sector institutions such as banks, finance and utility companies, surveyors and valuators will require access to land-related data? What types of data will they require? What members of the general public – private citizens, farmers, property developers, etc. – will require access to land-related data? What types of data will they require? How much are they willing or able to pay for the data? From the analysis of the above needs, priorities may be determined, as the means and resources available for the setup of an IPRS seldom match all the needs to be served. Policy makers must define the principal goals of the IPRS. Is the system to be used simply as a legal record of land rights? Will it also serve the purposes of taxation and tax collection? Or will the information base be organized in a way to serve additional purposes? For that reason, a step-by-step, modular approach may be more cost-effective. Setting up a theoretically perfect and all-inclusive IPRS which will ultimately fail halfway due to the lack of funds or resources is much worse that starting with a modest IPRS which will flourish and lead to its further, self-financing development in the future. For example, it would be more useful to devote available funds to start a systematic rather than sporadic registration, financing the initial registration from public funds, rather than use these funds to develop taxation operations of the IPRS from the very beginning of its operation. Similarly, if the IPRS is primarily aimed at solving agricultural problems, rural areas with intensive, commercial farming might be considered first for its initial implementation. If the primary goal is to facilitate an urban land market, effort might be directed toward major cities. If the primary goal is to reduce disputes, then areas with high degrees of litigation or unregulated squatting might be chosen first. In any case, it is wise to delay implementation in areas that pose difficult conditions with regard to such factors as land tenure or survey methods until the process is well established. A country, introducing an IPRS not only as a new mechanism but as a new concept, should pace its efforts carefully; it does not need to set up from scratch an IPRS that will do everything at once. As one experienced commentator puts it, ‘too much action leads to inaction’. A.4.2 The drafting of legislation on immovable property rights and their registration An IPRS is a tool: it does not create or change rights, it simply registers them and makes them more easily enforceable. An IPRS, however perfect it may be, cannot cover the gaps and inadequacies of the legislation concerning rights over immovable property; on the contrary, it suffers if such inadequacies exist. It is absolutely vital that, prior to the establishment of the IPRS, the legislation concerning immovable property and its tenure be carefully analysed and amended, if necessary. For example, in order to efficiently regulate rights over apartments in a multi-storey building, the concept of property in strata must be sufficiently developed and provided for in the legislation. Another example is adverse possession6, which directly affects if and when a possessor gains title over a property. Without a clear 6

Possession is the physical power to control an object and involves the ability to enjoy the use of the land and, in some circumstances, to exploit the products on or below its surface. Possession may be illegitimate (called “squatting”, where the possessor occupies the property arbitrarily and contrary to the wishes and the interests of the owner) or

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resolution of these substantial issues, the issue of registration becomes essentially irrelevant, as there are no clearly defined rights to register, in the first place. An IPRS functions within a legal environment which must effectively include: Basic land laws defining what rights and tenures exist, including easements and overriding interests, and how these rights are transmitted through sale, gift or inheritance; Immovable property registration and what rights are to be included (for instance, short-term leases); Procedures for the initial creation and determination of rights in immovable property; Laws regarding transition arrangements; Mortgaging of land and property; Conduct of surveys and the regulation of surveyors; The use of land including controls stemming from physical planning; Data protection. The IPRS should as far as possible be designed to be independent of political and legislative changes once the initial legal framework has been put in place. Consideration should be given to: What constitutes the root of any title? Under what circumstances can new land parcels or items of immovable property be created? Will the state guarantee title to immovable property? Should there be a legal requirement to register any sale, gift or other transfer of rights in immovable property, in whole or in part? What would be the sanctions of non-registration? Will there be a central register or will there be local court registers of deeds and other documents that relate to the ownership of rights in immovable property? Is there a system of local land charges covering such matters as: planning restrictions imposed by local municipalities; orders designating specific types of land use; and compulsory purchase orders? Are strata titles (relating to the ownership of apartments, etc.) to be recognized? What rights exist below ground level, such as mineral rights? Is there to be a formal procedure for the adverse possession of land? Is there a statute of limitations, that is a law limiting the time during which claims can be made, and if so how does it affect immovable property rights? What procedures are to be followed when a landowner cannot be traced? Will there be a formal requirement to monument property boundaries? What procedures will there be for resolving disputes over land or boundaries? Most of these issues are better addressed in a single, clear and simple land code together with a set of rules that cover procedural matters.

legitimate (through formal agreements such as leases or rental agreements that protect the rights of the true owner). Land may also be subject to “adverse possession”, when the occupation is contrary to the interests of the true owner who, nonetheless, does not object to the possession. Adverse possession often takes place where the true owners cannot be traced-they may be absentee landowners, deceased, ignorant of their ownership (as is often the case with state land), or else unwilling to challenge the persons in occupation. Ownership is a matter of “right”, while possession and occupation are matters of fact at any one time. In some countries, such as Greece, there is a process whereby the peaceful adverse possession of land can, after a specified period (for example, 20 years), lead to the acquisition of full title to the land. Wrongly described by some as land stealing, the prescription of rights through adverse possession is a legitimate process for bringing security to those unable to prove original ownership. It is based on the rationale that land is a resource that should be used and that by allowing squatters to gain title, the society as a whole benefits. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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A.4.3 The administrative structure of the IPRS Although good use can be made of past structures, practices and data, it is best to design the administrative structure of the IPRS from scratch, knowing that the organization that has managed the cadastre in the past is not necessarily the best candidate for managing the new system. The agency administering and operating the IPRS should: Be able to work across ministerial boundaries and operate at the highest possible political level, as it will be called to co-ordinate activities pertaining to several principal ministries, such as the ministries of justice, finance, infrastructure and environment, etc. Develop a mentality of a market service provider by setting up its own performance standards and procedures; Be staffed with personnel having the required technical, legal and administrative skills to achieve their mission. The issues which affect the overall setup of the IPRS administrating and operating agency are: Intergovernmental coordination; Centralization and decentralization; Status of the registration offices; The role of the public and private sectors; Mechanisms to ensure that user needs are met; Administration of cadastre data; Management of cadastral organizations; Management of human resources; Research; Education and training; Consultancies and technical aid; International cooperation. In practice, evolving IPRS have often been driven more by the strength of the personalities of those involved than by an objective assessment to determine the best institutional arrangements. The overall control of the IPRS is often a controversial issue since the control of information provides a degree of power to those responsible for managing the system. It should be borne in mind that the establishment of the IPRS takes several years, greatly outlasting the term of any government, and therefore its setup and staffing should be based on a mediumâ&#x20AC;&#x201C; to long-term approach rather than short-term political gain. In principle, however, the agency that is chosen to lead the IPRS must be able to: Meet the needs of all users in both the public and private sectors without bias or favour; Develop land information management policies in line with those of the national government; Set and monitor technical standards, especially for data capture, including field survey, data processing and data exchange; Provide â&#x20AC;&#x153;methodological guidanceâ&#x20AC;? to ensure that all procedures are well understood and new opportunities for improvement are identified; Make recommendations for improving the efficiency of all land administration processes in the light of changing circumstances; Recommend changes to the law where these will improve the service to be provided; Archive data that are needed in the long-term national interest; Undertake production work where it is in the national interest for that work to be undertaken by a government agency, for example where military matters are involved; Address matters of personal privacy and the confidentiality of data in order to protect the interest of private citizens; and

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Define the legal liability of public sector and private sector data providers and ensure that title to land is guaranteed. Provided that such activities are undertaken, it is then a matter of political judgement as to which ministry or institution can best fulfil the lead function. One mechanism for ensuring closer intragovernmental cooperation is to establish an IPRS coordination board; another, more “trendy”, is to create a quasi– or totally autonomous IPRS agency and equip it, through the appropriate legislation, with the powers and competences to collect necessary resources from the various ministries involved. The latter option is increasingly used, within the relatively recent trend of creating autonomous agencies, independent from the government itself, to oversee and operate functions of particular importance (such as radio and television, consumer protection, etc.), as a guarantee of non-interference by the central government (for example, by having a board of directors whose term is longer than the term of the members of the parliament, in order to disengage the appointment of the directors from the party in power at the time). The single most important factor in the success or failure of land administration systems has been the quality of their management. Managers must address matters of policy, of institutional arrangements and the consequences of reorganization and change that are inevitable in the implementation of IPRS reform. Managers must set reasonable targets for the performance of their staff and be able to monitor their success. They must understand the processes of marketing so that they can persuade their political and financial masters of the need to invest in and sustain the new techniques and technologies that are available. They must further recognize that personal power and status result from the control of information. One of the major elements of an efficient IPRS is computerization, in order to: Ensure standardization in the collection and processing of information; Speed up the registration process; Decrease the cost and space required for storing records; Prevent unnecessary duplication; Simplify the preparation of “disaster” copies of registers; Facilitate access to land-related data and improve their distribution; Reduce the time and cost involved in transferring property rights and in processing mortgages; Facilitate the monitoring and analysis of market and rental values of land and property; and Provide built-in mechanisms for quality control. Finally, the establishment and operating expenses of the IPRS must be addressed from the start. For reasons largely dependent on the systematic adjudication approach, discussed below, and the need to make registration more affordable, international experience clearly advocates that owners should not be charged (at least, not at the full cost of the operation) upon the initial registration of their property. After the IPRS has been established, further registration fees (for example, in case of transfer of the already registered property) should be imposed at a fixed, low level to support the operation of the IPRS. A.4.4 The determination of rights over specific immovable property To register title for each item of immovable property, one must ascertain who holds what rights to that property and then define or describe the property. In general, in countries that are transitioning from state ownership of land and other immovable to the privatisation of such rights, ascertainment of title is relatively simple because the time proximity is closer to the original clean slate. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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Establishing an IPRS register consists of four main operations: (1) adjudication, i.e. the initial determination of existing rights over the property in question; (2) demarcation, which is the marking of the limits of each property on the ground; (3) survey, which involves measurement and mapping; and (4) description of the property and its tenure rights, which entails entering relevant information into the IPRS register. Adjudication does not aim to alter existing rights or create new ones, but merely ascertains what rights exist, by whom they are exercised, and to what limitations they are subject. One major decision to be made by policy-makers establishing an IPRS is the method of adjudication; in other words, how to register immovable property into the IPRS for the first time (â&#x20AC;&#x2DC;to bring the land into the systemâ&#x20AC;&#x2122;, as one author puts it). It is assumed that the registration of immovable property is compulsory, as international experience has shown that voluntary registration results in an effectively useless IPRS, as the registered properties are only a tiny percentage of the overall immovable properties within a country. The question is whether the first registration of a particular immovable property will be sporadic or systematic. The sporadic approach is to adjudicate whenever or wherever there is a demand or other reason for determining the precise rights concerning a particular immovable property. For instance, some countries have required registration only when that property is transferred. In that way, all properties are slowly entered into the register. The main drawback of the sporadic approach is that it is very slow: in England and Wales, which follow that approach, less than 75% of the estimated registrable properties have been registered since 1926. On the other hand, it allows the IPRS to operate on minimum budgets, as the cost of the whole operation may be passed directly to the beneficiaries, who can be charged an appropriate fee for having their property registered. The systematic approach is more methodical and rapid, and is typically compulsory. Adjudication proceeds one area at a time, and all parcels within a given area are entered into the land register at the same time. In the long term, the systematic approach is preferable because It is less expensive overall due to economies of scale in most operations of the registration process, including: wide publicity, maximum community participation, adjudication of rights, survey and mapping, documentation production, declaration and appeals process, and filing in land offices. It is safer because it gives maximum publicity to the determination of land rights within a given area. It is more certain because adjoining land parcels are investigated simultaneously. It provides the opportunity to quickly and completely identify disputed areas and to deal with them in a uniform manner. It provides full examples of a quickly-functioning IPRS over a specific area, thereby increasing public awareness of the operation and benefits of the system. Nonetheless, it requires more resources up front, which often is a limiting factor. This problem, however, can be tempered in two ways. First, foreign aid can help fund the establishment of the IPRS, as they which typically must go toward specific projects that can be accomplished in a relatively short time period, and are thus more likely to be used for a systematic method of establishment than a sporadic method. Second, systematic registration can be restricted to specified areas identified in reference to the priorities of the IRPS and extended only as fast as resources become available.

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The systematic approach requires the government to be pro-active and take the initiative by essentially obliging all immovable property owners within a specific area to register within a specific deadline. In order to attract, or even to allow, owners to register at a time of the government’s choosing, all the countries which have proceeded to systematic registration have elected not to charge the full cost of first registration, subsidizing it instead from the state budget. Cost recovery is generated from fees on subsequent transactions (every 10 years on average). Where systematic adjudication of title to land takes place there should be: A law that gives authority for the adjudication to take place; Selection of priority in accordance with need; for example, areas that are to be subject to land reform, are under rapid development, have a high level of disputes, or where there is need for credit, etc.; Wide publicity concerning the areas and the dates on which the claimants must appear to give evidence; Procedures for the appointment of an adjudication team; The determination of the rights in accordance with prescribed procedures; The publication of the results and the hearing of appeals within a specified time-limit, such as 30 or 60 days; The formal entry of the results into the registers of title that should be guaranteed from then on. It is extremely important that maximum publicity is given when adjudication work starts in a given area, that the parties are kept well informed throughout the process, and that adjudication officers work with a committee of local residents. Maximum publicity includes informing those parties with immovable property interests when adjudication will occur to allow them sufficient time to collect evidence and make their claim. The adjudication results should be displayed in a public place and interested parties should be permitted a limited period in which to appeal the decisions. Once any appeals are settled, the results can be entered into the register as a definitive statement of the official rights concerning immovable property in the area. Another issue to consider is that a balance must be sought between having a “perfectly” accurate system, including several possibilities to appeal and a formal judicial handling, and a rapid process with limited appeals, in which the adjudication team's decisions are considered final. The former can impede and, at times, stop the work of title registration. It is mentioned that, in international practice, several methods have been used to cut down the cost of setting up an IPRS, such as using old documentation and cadastres to limit the need for field surveys, using aerial photography for the same purpose, and even issuing – on the basis of limited evidence – provisional titles, which become valid as a formal guarantee within a stated period of years if no valid claims are asserted against them. A. 4.5 Technical issues regarding survey and mapping The temptation to set high technical standards for a new IPRS are understandable, but may lead to waste of available resources. Especially regarding IPRS mapping standards of accuracy and scale, it has been widely pointed out that they should not be determined primarily by standards used in more developed countries or by a desire for technical perfection, as even relatively large-scale maps can be sufficient for most purposes. Aerial and satellite photography should also be used to the largest extent possible, due to their relatively low cost, especially when fairly large areas can be systematically treated at the same time 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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and when the terrain (open country with fields having physical boundaries) avails itself to these methods. High-precision surveys are often unnecessary provided that there is suitable monumentation of real-property boundaries. The establishment or upgrading of a geodetic control network is necessary to ensure that all land and property-related data can be spatially referenced, if possible by linking to the European Reference Frame7. A uniform and unique spatial referencing system for the identification of all land parcels and other real-estate units should be introduced. A.4.6 Public awareness of the IPRS Last, but certainly not least, it is essential that the public be well informed of the establishment, role and operations of the IPRS, as the people affected must be actively involved. Public meetings need to be held to explain what is going on and the media such as radio and television may be used to broadcast details of the reform programmes. When such programmes are complete, however, there is still a need to inform the public of their rights and obligations, for example through the distribution of leaflets explaining the system, how it works and how the public should use it. More detailed information booklets may be issued for the benefit of lawyers and notaries who are unfamiliar with any new legislation so that they understand the procedures that they must operate. The public must also understand and accept the level of information that is placed in the public domain or else people will find ways to avoid information appearing in the registers. This will then destroy the confidence that others have in the system and hence significantly reduce the benefits of secure land titles. A.4.7 Case study: the reform of the Georgian IPRS Special reference to the example of Georgia must be made due to the similarity of its old cadastral system with the existing Ukrainian one and to the internationally-acclaimed success of this recent effort. The Government of Georgia has implemented extensive reforms for the economic development of the country. With the fast growing immovable property market in Georgia, the establishment of a more effective and flexible registration system became essential. The Law on State Registry was adopted in June 2004; the Law on Registration Fee for Services of National Agency of Public Registry was signed in December 2004. The National Agency of Public Registry (NAPR) â&#x20AC;&#x201C; a legal entity of Public Law under the Ministry of Justice of Georgia, was created. After the liquidation of the State Department of Land Management, NAPR became the authority responsible for the land administration function, and the land management functions were transferred to the Ministry of environment and Ministry of Agriculture. Customer orientation required changes of the existing registration system and introduction of a number of innovations to simplify registration procedures and provide public access to the system. For this purpose NAPR implemented a significant reform in four main directions: institutional, legislative, administrative and technological. The results of the reform are 7

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- introduction of “One-stop shop” principle; - centralization of registration and decentralization of customer service throughout Georgia; - simplification of immovable property registration procedure; - reduction of registration terms. One of the important outcomes of the legislative reform is annulment of the requirement of mandatory notarization of the sale-purchase agreement and recognition of legal force of the electronic abstract without seal and signature of the registrar, elaboration and adoption of the single Law on public registry encompassing all aspects concerning property registration and NAPR activities. Within the technological reform, NAPR: - created the unified electronic database, developed well-operating IT infrastructure; - established the unified computer network connecting all territorial registration offices of NAPR; - fully computerized the document flow system; - developed various web-based software (for registration of applications and rights, liens and encumbrances, etc.) for ensuring transparency of the system, providing easy access to the NAPR electronic database via internet and introducing e-services to customers. The creation of NAPR practically provided basis for establishment of a new registration system. NAPR’s main functions are: - Registration of the Immovable Property Rights, Encumbrances and the Tax Lien/Hypothec; - Recording of the cadastre data on immovable property; - Registration of pledge on movable things; - Ensuring accessibility to the data concerning registered rights and right identification documents. NAPR operates on self-financing principle. The main source of financing is income received from fees from the registration and information services. Before the Reform the document flow in the Registration office was quite complicated and time consuming. There were 67 stages of document flow. This long chain and the interferences of the customers in the registration process created conditions for corruptive deals between the customers and Registry personnel. The current document flow structure in Registration offices now has clearly defined tasks and responsibilities for the personnel. Physically separated Front and Back offices helped to eliminate the interference of the customers in the registration procedures. Besides, that greatly helps to accelerate the working process and removes possibilities for corruptive deals. The 68 local offices were retained to provide service at the local level. There are two main database storages: a) Legal information – Number of registration databases; b) Spatial information – Cadastral data on registered objects. These two databases are linked through cadastral codes with the data being in synch. Now citizens have several options for registering property. They can either apply directly to a registration office of NAPR through authorized users or via the Internet. The authorized users are the entities involved in immovable property market (banks, notaries, brokers, real estate agencies, etc.), that concluded a Memorandum of cooperation with NAPR and became partner organizations of NAPR 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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with access to the NAPR web-based software. These entities have access to input and retrieve information they need to conduct their business in a fast, efficient and reliable manner. Currently, about 350 physical and legal persons (private companies, notaries, etc.) are authorized users actively cooperating with NAPR. The current system made the NAPR data available â&#x20AC;&#x201C; providing equal, open and transparent access to property-related information for all land-market participants. The customers can easily get propertyrelated information and service. It enabled NAPR to introduce e-services. The partner banks of NAPR can conduct online registration of hypothec. This supports bank activities, as they can issue loans in shorter terms and offer one-stop-shop service to the customers. Also, surveying companies have online access to the cadastral map. It is possible to apply for and receive an abstract or a cadastral plan as well as to obtain documents about Lien and Tax Lien/hypothec Registry, cadastral map and documents from the BTI Archive via the Internet. It is also available to register an immovable property located in the cities connected to the unified centralized network of NAPR, without visiting registration offices of those cities. The number of registration procedure steps has been reduced. Now there are only two and in case of banks one procedure for registering property rights. It is also very important that the term for registration has been reduced. Now it is possible to register property in 3 to 4 days, and in case of expedited service, even in the same day. Simplified and streamlined property registration procedure has a positive influence on the business climate. As the fast and simple property registration procedure can offer additional security for crediting, improve credit terms and thus increase access for borrowers to affordable financing. Currently, renewal of abstract` or Cadastral Plan can be done through the web-site. It is an extremely easy procedure. A customer may apply for obtaining an abstract, cadastral plan or as well as for correction of an error in already issued documents (the last one is free of charge). A customer chooses the type of a new application, indicates his ID data (name, ID number), address of the registered real estate, cadastral code (not mandatory) and makes an appropriate payment using the credit card. A registrar prepares the required document and uploads it, within the terms defined by law (1 day or at the same day). When the process is finished, the applicant may print out the abstract or cadastral plan. As it was mentioned earlier the electronic documents without the signature of a registrar and the seal of NAPR have legal force and can be used by any administrative authority or private company. The currently applicable registration procedure from the beginning till the end: - All applications are filled in the software for Registration of Applications and Rights â&#x20AC;&#x201C; NAPRweb, as all registration offices of NAPR and all authorized users are connected to this program. The submitted documents at the front-desk are scanned and attached to the application in the same software along with the digital form of cadastral survey plan (if necessary). An applicant will receive a paper proving submission of an application, with a unique application number. NAPRweb is front-end web-based software - Front-end is firmly linked to the back-end â&#x20AC;&#x201C; NAPRreg, which is a desktop application for Registration of rights and restrictions/encumbrances on immovable property, used only by the NAPR staff. The registrars (back office staff) gets all submitted and scanned documents electronically through NAPRweb, they review the case and if everything is ok, make registration in NAPRreg, in other words put records regarding the legal rights on a property in textual part of the database, also cadastral clerk puts graphical information of boundaries on the digital cadastral map (GIS format).

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- The graphical information is linked to the textual information. You can easily move from one to another. Synchronization of the process gave possibility to reflect full information concerning the real estate (land, building) in the NAPR unified database. Information stored in the database is permanently updated. The centralized processing of cadatsral data has many benefits, it enables the Geo database to be constantly updated, and the quality and efficiency also are increased. Besides, all data is processed according to one standard, which is a prerequisite of the unified system. 1) Cadastral data created by private surveyors is handed over to Cadastral office via tha Internet. 2) GIS operator inserts data in SDE server, makes a situational map, exports it in the PDF format and uploads it onto PDF server. 3) Registration office makes a decision on registration following the PDF map and legal documentation updates data on NAPR WEB and it becomes accessible to any interested person through this web-based software. NAPR has been actively cooperating with donor organizations. They provided extensive support for the creation and development of the registration and cadastre system in Georgia and vastly contributed to the implementation of reforms at NAPR, and continue supporting NAPR for sustainability and further development of the cadastre and registration system. According to the World Bank's Doing Business Survey 2009, 2010, 2011 Georgia was ranked 2 in the world in property registration sphere. This confirms the fact that Georgia has made a considerable progress in this sphere. So, coming out of the aforementioned, the notable aspects of the reform include: - International funding and technical support played an important role in the reforms. - Georgian leadership generally took the lead in debating the strategies and designing responses. - A Georgian model taking into account various aspects of Georgian reality was developed. - Sustained leadership in the responsible organizations has provided a consistent, stable framework for policying. A.5 ISSUES AFFECTING PROPERTY REGISTRATION IN UKRAINE A.5.1. Recent developments in the legislation of Ukraine on property registration The new wording of the Law of Ukraine “On state registration of property rights to immovable property and of their limitations” of 11 February 2010 No. 1878-VI and “Temporary regulations on the procedure of state registration of ownership and other property rights to immovable property” of in general correspond to the practice of developed countries. From the beginning of 2012 the practice of separate registration of land and real estate by distinct bodies (BTI and land resources administration) will be stopped. All objects of immovable property will be registered solely by a state enterprise under the jurisdiction of the Ministry of Justice of Ukraine. The state register of rights belongs to the state, constitutes a part of the National Archive Fund and is subject to perpetual preservation. Withdrawal of any documents or parts from the state register of rights is prohibited. State registrars must be citizens of Ukraine, who have legal education, a minimum of two years of experience, have passed the needed training in state bodies of registration for at least six months. A 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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state registrar “... independently takes a decision on state registration of rights or denial of such registration. Interference with duties of state registrars connected to their responsibilities by any bodies, officials or state servicemen, citizens or their unions, is prohibited and is subject to lawful prosecution”. The law provides for compulsory registration of rights as regards all owners, but only of those property rights that will appear after the law is in effect (which means sporadic registration). State registration of rights is declared in the law as public, although in reality access to that information is very limited, whereas the term “legitimate interest” is not appropriately described. State registration of rights and limitations thereof is carried out in the order of their appearance. Any deed in regard to immovable property (withdrawal, mortgage etc.) is concluded only if the title is duly registered according to the provisions of the law. State registration of rights is carried out locally in accordance to the placement of immovable property within the jurisdiction of the local state registrar. Such material rights on immovable property as right of possession, right of use (servitude), right of use of land for agricultural purposes (emphyteusis), right of building on land, right of utility use, right of executive management, right of perpetual use and right of rent of land, right of use of buildings or any other capital constructions (or their parts), mortgage, trust use of property, are defined by the law as derivative and are subject to registration after the state registration of such property itself. The state register of rights registers rights on immovable property, which is defined as an object located on a parcel of land, that cannot be moved without a loss of value or a change of designation – a house, building, lodging, construction (engineering, hydrotechnical) or any improvements to the land parcel that belong to constructions or lodgings, used for conduction of special functions. Property rights on residential house, building, construction or a flat can be registered regardless of whether or not the rights for the land where they are located are registered. Exeptions from this rule is the registration of the said objects belonging to the same owner as the land. The intentions of the lawmaker are understood – to protect the owners of buildings located on unregistered parcels of land. But this undertake may be treated as an under-measure. If buildings are already recognised by the provisions of the law as unalienable from the land of their location, then it would make sense to at least demarcate the boundaries of the unregistered parcels of the land, where such constructions stand. That would make registration and formalisation of relations easier for future potential owners of such land. Absence of such a regulation continues the practice of existence of the right to build “in default mode”. Cartographic data of state register of rights includes index cadastral maps and cadastral maps of land parcels. This data is intended for identification of immovable property, depiction of cross location of immovable property objects, carrying out of information control and controlling of conducting of state registration of rights.

A.5.2 Problems affecting private property in general As a background for the comments and recommendations concerning the existing immovable property registration regime in Ukraine, it would be useful to briefly address a number of more general legal and social issues directly affecting the setup and operation of a solid IPRS, in order to highlight not only particular challenges but also significant opportunities related to the Ukrainian IPRS. Private property is a relatively new concept for Ukraine and, to this date, its effective protection and efficient operation has been hampered to a large degree for a number of reasons. It is not uncommon for private property to be “raided”, ie. to be taken from its rightful owner through abuse of power and/or law, coercion, intimidation and even physical violence. The existing legal and administrative system has not proven that it can effectively protect from such raids because 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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c) bureaucratic and court processes are overly long, costly and, in the end, do not provide adequate guarantee of objectivity and non-interference8; d) people are not fully aware of the legal recourses available to them and, as a result, do not trust them as they should; e) the relevant legislation and regulations are frequently unclear and/or complex, providing fertile ground for uncertainty and dispute. Therefore, people tend to believe that their greatest protection is not the legal system but simply to lay as obscure as possible, in order to prevent attracting attention from potential raiders to their property. In essence, the mentality prevalent in Ukrainian people today (“hide your property as much as possible”) is contrary to the principal tenet of an IPRS (“publicize your property so everyone knows it is yours”). That’s why Ukraine has an immensely low level of property formalization (7-10%, depending on the calculation technique), thus only a very insignificant percentage of material objects has the corresponding «titles» (in fact, simply registered deeds). A second major challenge is posed by the lack of effective algorithms to resolve disputes between coowners of a single property. The absence of clear rules favours confusion and disputes, the number of which is exceedingly high9. This lack of effectiveness of the formal institutions has eaten away not only the people’s confidence in their operation but also their willingness to conform and support such institutions: as a result, a very large part of the overall economy remains in the shadow, disputes are resolved outside the framework of the laws and the court system, taxation is not imposed efficiently and properly, etc. People have come to accept that it is more or less normal to operate outside the law. This vicious circle strangles the economy and the overall prospects of Ukraine. The lingering insecurity discourages any long-term planning and any significant investment, while it is not evident that the immovable property invested upon is undisputably “clean” (ie. it undisputably belongs to the owner/seller and is not subject to somebody else’s claim), capable of being used in the way intended by the owner and effectively protected from encroachment or other violations by third parties. Moreover, the current situation drives owners and investors toward short-term profit, to the detriment of the final consumer. The acceptance of this unsatisfactory state of things in the sphere of legal regulation of the institution of property is not accompanied by a strong demand for effective steps to change it for the better. Such a situation is not an unexplainable paradox: economists call it an institutional trap. Bad institutions result in significant economic losses and burden people, but society has adapted, in general, to them. Moreover, part of the society has learned to extract relative benefits out of the malfunction of institutions. The other part doubts its own competitiveness in the unfamiliar and difficult conditions and prefers to remain in an unsatisfactory, yet familiar, environment. In this situation, the costs of reforming the institutions seem to be too high for the society and the benefits are not immediately 8

According to statistical data of the European Court of Human Rights as of 31 December 2009, among all 608 Court’s judgments finding violation by Ukraine of its obligations under the European Convention for the Protection of Human Rights and Fundamental Freedoms, 396 judgments (65%) found violation of the right to fair trial under Art. 6, 133 judgments (29%) found violation in excessive length of judicial proceedings under Art. 6, 122 judgments (20%) found violation of the right to an effective remedy under Art. 13 and 289 judgments (48%) – the right to protection of property under Art. 1 of Protocol 1. (See ECHR. Violation by Article and by Country – 1959-2009, http://www.echr.coe.int/NR/rdonlyres/E26094FC-46E7-41F4-91D232B1EC143721/0/Tableau_de_violations_19592009_ENG.pdf). 9 According to different statistical researches made by the Ministry of Internal Affairs, Public Prosecution Officer and judicial system, about 20-30% of the cases, which could not be resolved a priori in a satisfactory way, are connected with the disputes over co-owned immovable property. The algorithms for solving such disputes, contained in the Civil Code of Ukraine, are not attractive for litigants or could not be realised in practice because of various procedural inconsistances and impediments. It leads to a high level of relevant criminality – from fraud to bloody murders, as a result of reluctance or inability of co-owners to solve their disputes in a legal way. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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obvious. This determines the choice in favour of maintaining the established order, despite of its perceived faults. Unfortunately, this state of play has a significant potential for self-reproduction and viability suppressing possible development. From the standpoint of economic efficiency it seeks to balance “a little above zero”. Such a state with the suppressed growth potential can be maintained for a long time, which is observed in Ukraine for 20 years. In that light, a solid IPRS is an indispensable (but, admittedly, not sufficient in itself) condition for escaping from the institutional trap mentioned above. A.5.3 The issue of separate ownership over land and over the buildings on that land Historically, unlike in other countries, where estate constitutes a parcel of land with inseparable elements on it (houses, plants etc), in Ukraine the words “immovable property” (or estate) is primarily understood only in the meaning of “a house”, “a building”, while “land” exists separately. In particular, this perception is based on the fact that land and buildings are registered by different institutions — land is registered by the land resource administration offices, while buildings are registered by the technical inventory bureaus. Integral property complexes – either an enterprise or a condominium – are not registered as integral objects at all. According to the new Law of Ukraine “On state registration of immovable property rights and restrictions” only as from 2012 land plots and buildings will be registered by single authority10 (provided the Law would not be amended in that respect). Ukraine has an old and ineffective deed registration system, meaning the state merely keeps the books on deeds, applied for registration. During the registration the official body does not take a decision if the deed is legal or not. According to Art. 2(1) of the new Law, the state registration of rights is defined as «...the official government recognition and acknowledgment of the facts of the change or termination of rights to immovable property, the restrictions of such rights by making a corresponding entry in the State Register of rights to immovable property». Also the legal mechanisms for solving disputes, when the land and buildings on it have different owners, are absent. This leads to law enforcement bodies and courts being overloaded with civil cases, which are legally impossible to solve. So most of the owners or tenants of buildings located on the “nobody`s” land prefer to never remind the state about themselves. Even in the centre of Kyiv there are a number of non-registered apartment buildings built on land not registered in the cadastre. A.5.4 Delimitation of territorial communities Ukrainian lands are still not properly delimited, even between the administrative-territorial entities, not to mention the land of territorial communities or housing territories. This refers not only to territorial communities in understanding of the Law of Ukraine “On Local Self-Government in Ukraine”, but also to the community in a wider sense, i.e. any group of people who possess land in common ownership/common use. It is impossible to manage/dispose/control effectively the territory with the borders undefined, not reconciled with the neighbours and not fixed by land-marks, installed in accordance with the applicable law.

Under Art. 1(1) of the Law, it is the specifically authorized central executive government body for issues of state registration of rights – i.e. the Ministry of Justice of Ukraine, which ensures implementation of government policies in the field of the state registration of rights, and its territorial bodies, which are bodies for state registration of the rights.

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A.5.5 The problem of registration of integral property complexes The Ukrainian legislation defines the term “integral property complex” as “...an economic object with a complete product (service) manufacturing cycle located on a dedicated land parcel alongside with autonomous engineering communications and energy supply systems. A dividing balance is concluded if a structural division is led out of an integral material complex”. Jurisprudence of the Ukrainian courts uses exactly that term. Registration of property rights to multi-apartment buildings shows the range and depth of the problems arising in the course of registration of property rights to the integral property complexes 11. According to current statistics 87% of housing in Ukraine is privatized. Having 13% of non-privatized housing is an essential obstacle to the widespread establishment of condominiums (associations of coowners of apartment buildings). In order to effect the privatization of an apartment where residences of several people are registered with the local government flat fund, each of these registered persons must give his consent. If such consent has not been given (for any reason), a court may order the privatisation, but only if the share of the non-consenting person is physically separate from the others’ one (by a wall). This situation has effectively stopped the privatisation process and is, indirectly, posing problems for the registration of immovable property. For condominiums to exist and be able to conduct proper management of their joint property, the legal documents specifying their rights must be at their disposal. The lack of these documents, which is very common, is the reason, why there aren’t as many condominiums as there should or could be. Even the ones that exist are not very effective, when the member co-owners don’t have the passport of their building, the description of territories and other technical information. As the result of the Law “On privatization of the state housing fund” of 1992, apartment buildings were legally transformed into a collection of separate flats, cut off from the building as a whole, and from land parcels, on which they built. Only by the decision of the Constitutional Court of Ukraine of 02.03.2004 Z 4-[\/2004 all apartment buildings were recognized as integral property complexes, with the owners of all the premises recognized as co-owners of the estate in general. The Law of Ukraine “On Union of the co-owners of a multi-apartment building” of 29.11.2001 Z 2866-III (condominiums) recognized the right of a condominium as a legal entity to get the land, upon which the building is built, along with the adjacent grounds into a permanent use or property. However, in practice the right for getting the land is practically a fiction, as it is under the discretionary power of the local authorities to give this land. Local authorities have no interest in such free giveaways of the land, especially in the centres of big cities. Besides, a vast number (about 8,000 of apartment buildings in Kyiv alone) of attics and cellars, which should have belonged to the co-owners as common indivisible property, were – regardless of the law – proclaimed local communal property and alienated. At the moment, each court has hundreds of cases where tenants demand the return of these premises, with no end in sight, as the Civil Code of Ukraine provides that the limitation of actions does not cover unlawful governmental acts if they violate property rights. Moreover, the grounds adjacent to apartment buildings as integral property complexes but not allocated specifically, in the last fifteen years were developed a lot, posing similar problems. This legal ‘delay-action bomb’ will explode when – sooner or later – the process of defining specific borders of land parcels begins. 11

Another example of the problem is registration of unalienable parts of enterprises belonging to integral property complexes and located far off to the main facilities. For example, refinery facilities that are mandatory for the proper operation of an enterprise can be located close to a water basin, connected to the main enterprise by a pipeline, crossing the land parcels belonging to a farm. During the last few years, in the process of chaotic privatisation, such particularities were not accounted for and registrations of servitudes and other obstructions were not conducted.

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Since 2004 nothing was done to implement the decision of the Constitutional Court: no changes to the Civil Code of Ukraine or to the Law of Ukraine on condominiums, so that at least the legal condition which existed in 1989-1992 could be reinstated, as is: • issuing the rights-setting documents, where an apartment was defined as an ideal share of the whole housing estate; • ordering the plan of the whole building in the technical inventory offices. Apartment buildings are not registered now in technical inventory bureaus as integral property complexes, and their lands and adjacent grounds are registered (if registered at all) by other bodies (land resources administration). It comes as no surprise that a lot of apartment buildings are not registered anywhere at all. Thus the level of formalization in this kind of property reaches zero. This problem should be also addressed on the legislation level – with an implementation of the world expertise, adapted to the Ukrainian reality. In legal sense, joint ownership of an apartment building is not different from a joint ownership of a car or an apartment, because a number of co-owners is really not important. It is obvious that, the greater the number of joint owners, the more complicated decision-making on the control and usage of the object will be. Unfortunately, the current legislation provides to co-owners of apartment buildings only inapplicable algorithms for making decisions regarding usage and maintenance issues. Moreover, the establishment of a condominium in Ukraine is not mandatory, resulting in apartment buildings being in fact non-formalized and, in practice, uncontrolled. If the condominiums are not established in large numbers and do not get these ancillary properties (attics, cellars, adjacent grounds) into their formal ownership or possession, it will be impossible to create maps of urban lands, where private land plots would be separated from state and municipal ones. The main hindrance to the creation of condominiums is that, according the current legislation, every owner on the assembly has one vote, regardless of the area and number of apartments or premises he owns. This rule means that even to find a quorum, one need to know the exact number of co-owners for every apartment building. Practically every house has about 10-15% of non-privatized flats (this problem is mentioned above), owned by a local community represented by a local self-government body, and also large number of co-owners who don’t have separate titles for their shares — like a spouse or heirs. Such legacy holders own a share after inheritance, but sometimes for decades cannot get the ownership certificate etc. Clearly it is practically impossible to calculate a general amount of co-owners in buildings with the flat fund of 50 apartments and more. The practical inapplicability of this rule also lies in the logical principle that co-owners who have unequal shares in the integral housing estate cannot have equal rights. The zero level of formalization of apartment houses as integral property complexes leads to inability of solving global issues with maintenance for apartment houses. But the unconditional connection between formalization of apartment houses as integral property complexes and success in housing reform is unfortunately not obvious for the majority of the population, and even for the specialists, because the chain of arguments is too long. The result is a waste of social resource and budget money on inadequate housing reforms. Defining the owners of the service lines and dividing responsibility between them is a separate issue of the problems concerning both formalization and dividing. Formalization of apartment buildings requires defining borders not only for adjacent grounds (which often overlay or have useless gaps — caused by chaotic allotments), but also the «crossing points» of service lines — i.e. which length of piping or line is the part of housing estate (while the maps or plans are often lost!), and which is the property of municipal enterprise or local community. Defining the owner of the service line is crucial for finding out who is responsible for their condition and who handles emergencies and leaks. Usually urban areas have systems of service lines that 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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include many different objects. In a typical Ukrainian residential district it was common to build a single service trunk for a number of houses or even for the whole block. The adjacent grounds sometimes can be common for several buildings as it is impossible by the building regulations to distinguish separate allotments. In this case, there is no other choice but to formalize the adjacent grounds of several houses as joint property, though current legislation does not contain algorithms of ownership of this authority at all. A city in general consists of equities which form a strict cellular structure where each cell is a separated property: a parcel of land with all the structures on it. But each cell is connected to the common system of life support. These service lines and networks, roads and streets etc, are the objects of common use and are in communal property. Each object of common use is a line in the city budget and maintenance money, which should be appropriated. Obviously, it’s impossible to control the budget on the city level without formalizing the communal equity. Reality shows that until reaching a substantial (25+%) level of formalization of 1st and 2nd level of property, i.e. individual apartments and parcels of land (1st level) and apartment buildings with adjacent grounds (2nd level) — the citizens en masse will not even understand the essence of problems with property of 3rd and 4th level, i.e. communal and state property, will not associate this property with themselves, and will not consider themselves as co-owners of communal and state assets, meaning they would let misappropriators of these assets use the profits from this asset with impunity. This means, citizens will not be able to form a corresponding social request for politicians. The current status of non-registration of communal property leads to maintenance funds being misappropriated with impunity, and to proper maintenance itself being the exception rather than the rule, especially concerning service lines in the cities, which are worn out in 70 – 90 % of the cases, according to specialist estimates. A.5.6 Agricultural land Private land owners (owner of “land shares”) of the formerly big agricultural enterprises appeared after the Ukrainian reforms in the agricultural sector (1999 – 2005 years). But these “shares” in the absolute majority of cases are “virtual” because they are not delimitated/marked “on the ground”. Owners of such “virtual” land can only lease it out, as sales of agricultural land in Ukraine is currently not allowed. In practice, the lease of agricultural land in most cases is not registered by virtue of the following circumstances: a) long procedure of preparation of technical documentation prior to registration of lease agreements on agricultural land (in some cases – a year or more), long queues at certain stages of the preparation of technical documents and, therefore, a need to “accelerate” the process for a bribe; b) substantial cash costs of production of technical documentation required to sign lease agreements for agricultural land; c) significant costs for registering in the department of land resources, and for entering the information to the land cadastre; d) complicated procedure of state registration of lease agreements for agricultural land registration; scheme varies for different regions of Ukraine. There is, therefore, a conflict of interests between tenants and owners. An owner wants to lease the land for the shortest time possible to be able to change the terms of agreement (lease fees), or enter into an agreement with another tenant, which might offer better terms of the lease. Tenant wants to avoid unnecessary delays in the registration of a new contract (after the previous is terminated) and

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additional expenditures to register the land lease agreement (all costs of registration, usually, the tenant bears). That makes him seek to negotiate a lease for the maximum possible term (10-15 years). As a result, most lease agreements on agricultural land are not legally registered. On the one hand, it makes both parties vulnerable: owner (who doesn’t always receive money) and tenant (that may not get his contract extended after having invested a significant amount into the land, usually abandoned for several years and uncultivated). On the other hand, doing business on leased land without registration of the contract is officially perceived as squatting of land and leads to problems with the law enforcement bodies. A.5.7 Technical inventorying Simultaneously, according to Art. 15(3) of the new Law of Ukraine “On state registration of immovable property rights and restrictions”, “... in cases stipulated by legislation of Ukraine [in practice, absolutely every case], state registration of rights must be done after the technical inventorying of the immovable property, rights for which are subject of the state registration”. It is rather common in Ukraine that a person cannot register a court decision that declared his ownership of, say, part of an apartment due to a lack of possibility to provide access to the apartment for a technical survey, because the co-owners (who lost the court case) obstruct it. Similarly, registration and legalisation of changes (not affecting the load-bearing structure of the building) are also unduly complicated, expensive and therefore ignored by people. A.5.8 The issue of transparency In Ukraine, average people still don’t recognize the principle that owning property cannot be totally secret (as immovable property cannot be hidden) and, thus, information about the immovable property should be easily and openly accessible for everyone. The more open the information is, the less space for corruption remains in disclosure procedures. When information is freely available, the related shadow trade and corruption simply cease to exist. Registers and cadastres (as any other database) gain value if the data therein becomes more complete and reliable (like a “completed puzzle”). Complete and reliable registers and cadastres make corruption and unlawful acquisitions almost impossible. It must be also noted that any move towards transparency will face not only the passive indifference mentioned above but also stubborn opposition from strong vested interests, ie. people who have obtained large properties in unclear and illegal manner. Formalization without transparency and real publicity, at least as regards state and communal immovable property, makes almost no sense. Co-owners of commons, either actual or legal, i.e. all the Ukrainian citizens in relation to the state immovable property; residents of local communities in relation to property of the relevant city/town/village; owners of apartments in multi-storey building in relation to that building – must be granted with an access to relevant information about that property. Any other approach is absurd, though many people in Ukraine just do not treat themselves as coowners of public/communal property, with all the inherent rights (like to benefit from such a property) and duties (like to manage it through the elected bodies). This passive mentality cannot change without easy access to transparent records. Even the current Law is unclear on whether any Ukrainian has a right to obtain information on public property or any member of a local community – on municipal property as well as an owner of an apartment in the multi-storey house to get official information about the owners of neighbouring apartments. Surely, entrepreneurs (including foreign investors), business in general and the public are (or should be) interested in getting access to reliable information on registered property titles. If this is not 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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granted, under a clear and user-friendly procedure, at least to those who demonstrate a legitimate interest, Ukrainians will have no motivation at all to register their property unless the title is being transferred. To ensure such access technically, a unified automated system must be implemented for state registration of titles and to develop electronic exchange of information between registers, inventory records and revenue authorities (however, it would be much better if registration and inventory authorities were just the same bodies). Such a complex information system should cover the Ukrainian territory entirely. A.5.9 Mandatory but sporadic registration The registration of immovable property rights under the current Law is mandatory only in cases of transfer of said property. This is the “sporadic” method of registration, described earlier12, which effectively waits for a transaction in order to enter a particular property in the registry. Apart from the obvious problem of needing too much time (measured in decades) in order to slowly build a reasonably complete IPRS, the disadvantages of such approach are manifold (in view of the problems concerning technical inventorying): a) Registration will be avoided until the transfer of property; b) Registration of state and municipal property is quite unlikely to happen at all; c) The official status of currently incomplete objects will not be changing even when they become inhabited or otherwise used in practice; d) Even for the registered objects the recorded information will not match the real object’s parameters; e) Disputes in a particular area will become evident over a period of many years, thereby increasing insecurity of the title.

A.6 COMMENTS AND RECOMMENDATIONS In the light of the points made in the previous sections, it must first be said that the current Law 1878VI setting the general framework of an IPRS13 is a major step towards the setup of a solid IPRS in Ukraine along the guidelines followed internationally. Worth mentioning is the basing of the system’s cadastre on digital maps and the adoption of the unified cadastre system, an approach which follows the most modern trends in IPRS. However, a lot remains to be done (and, maybe, go wrong). The setup and operation of a solid IPRS takes many years and usually requires amending legislation and redesigning procedures along the way. For example, Greece began reforming its IPRS more than 10 years ago, with adequate funds and transfer of know-how from abroad, and still its IPRS is not ready to function autonomously (it is now operating along with the old deed registration system until the adjudication procedures are finalized). It is, therefore, useful to look at the example of Georgia, a state which had a very similar system to Ukraine’s (based on the Soviet structures) but managed in less than 10 years to establish and operate a

See Section A.4.4. Along with the Provisional Regulations on the procedure of state registration of ownership and other property rights to immovable property approved by Order of the Ministry of Justice of Ukraine of 07.02.2002 No. 7/5 (as amended by Order of the Ministry of Justice of Ukraine of 28.07.2010 No. 1692/5) and registered with the Ministry of Justice of Ukraine on 30 July 2010 under No. 582/17877

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solid IPRS. As the related chapter indicates14, it took sweeping political will along with technical know-how and assistance to set up and jump-start a system which has nothing to envy from any other IPRS around the world (quite the contrary, in fact). Having ascertained that the current Ukrainian law is a good start in the right direction, several comments and recommendations can be made with a view to facilitating and accelerating the IPRS establishment. First of all, international experience strongly suggests that the Ukrainian IPRS must be set up on the basis of a systematic adjudication. As discussed in the relevant chapter15, it is much better to determine particular areas and invite immovable property owners in that area to register their property within a specific deadline rather than wait for registration only in the case where a property is transferred or where encumbrances (such as hypothecs) are levied on the property. The latter, sporadic process (currently envisaged by the Ukrainian law) is too long: a period of decades during which the IPRS is not really functioning. The authors of this survey strongly suggest that a systematic adjudication approach be designed and followed. It must be noted that initial registration, in that case, should be free of charge or of a low cost for the registering owner, and that the process should have extensive publicity and adequate support for sensitive parts of the population (such as elderly or poor people). But the systematic approach would be almost impossible to apply in Ukraine due to the reasons described in the chapter «A.5.6 Technical inventorying»: the technical inventorying regulations are so hard to meet that people who ever committed any changes to the property they have old technical passports for (or don’t have), will not be able to register their immovable property without substantial bribing. That is why a blindly started systematic registration process will do more harm than good: before that process can be commenced, the technical inventorying regulations must be changed to restrict registration only of the changes that introduce danger to welfare of the owner and the neighbours. All other harmless replannings must be explicitly allowed at a written concent of coowners and neighbours. No sense at once to determine all the demarcation lines and install all the land-marks with millimetre precision. It should start with the application to open and publicly available cadastral maps of those boundaries, for which there is no and there cannot be dispute. Usually it is the natural boundaries (cliffs, rivers, old trees and the like) or artificial – roads, buildings, etc. And then, on the basis of these unconditional marks, it should be required to reconcile all neighbours’ land owners/tenants frontier disputes, if the definition of these boundaries is important for the rights and/or obligations of these entities (tax or other). But it shouldn`t in any way be an interference to transfer ownership of immovable property, as a current situation is taking place, because it leads only to an increase in the number of hidden or nonformalized transactions. Owners and tenants should have a guaranteed right to transfer their property in the state as is – unformalised, undemarcated etc., if the obtainers of such property agrees to buy it just so, and subject to the further actions of the registration laying on them. It should define a clear algorithm for establishing the real boundaries in the case of mismatch of the limits of adjoining land contained in the current cadastral plans / public acts / court decisions – with the reality “on the ground”. World practice says it is usually calculated based on proportions of the squares of the possessed land in question, i.e. the squares of the neighbouring parcels under question are divided proportionally to the difference in their squares. The absence of such an algorithm in the current Ukrainian legislation leads to the fundamental impossibility of distinguishing adjacent land and to the conflicts on this basis, which lasts for decades.

14 15

See Section A.4.7. See Section A.4.4.

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A second point concerns public access to the IPRS records. Easy access means transparency and transparency means less room for corruption. Many jurisdictions consider free access to the records to be a sign of democracy and good public administration. An equal number allow access to the records to those who can demonstrate a legitimate interest to access a particular record. In the opinion of the authors of this survey, a balance between the need for transparency and the need to protect personal information (of the property owners) can be struck with the following, broadly described system: a) IPRS records should be accessible to any person having a legitimate interest. b) The law should provide an indicative (but not exhaustive) list of who has such interest: for example, neighbors, public authorities, recognized environmental and cultural protection associations, creditors, etc. All the Ukrainian citizens as to the state immovable property, residents of local communities as to property of the relevant community, owners of apartments in multi-apartment building as to that building have also be in that list. Other (not listed) persons could have access, provided they state and substantiate their legitimate interest. c) The person requesting access should file and register a written request to that effect. The owner of the property can be informed of who and when has requested information pertaining to his property. d) If the Registrar denies access, he must do so in writing, stating the reason for his refusal. Such refusal is subject to judicial review. A third point concerns the â&#x20AC;&#x153;ownerâ&#x20AC;? and administrator of the IPRS. Although it is understandable to wish to base the operation (registration offices, technological support, staffing) of a new IPRS on existing administrative structures to save on costs, it must be pointed out that the latest trend is to establish an autonomous entity to do the job16. Such autonomy means that the IPRS operator has its own staff and facilities, its own budget, its own income (from registration fees) and is, to a very large extent, independent of other branches of the government. While such autonomy is not a prerequisite for a successful IPRS, it nonetheless has many arguments in its favor. Apart from the above comments on the structuring of the IPRS itself, it must be underlined that the greatest challenges to its successful establishment in Ukraine come from gaps and inadequacies in the legislation concerning immovable property rights themselves. In other words, major problems in the underlying legislation concerning immovable property must be addressed, otherwise the IPRS will not be able to function properly, simply because the rights to be registered will not be clear themselves. It is not within the scope of this report to go into detailed proposals for amendments to the Civil Law of Ukraine and related legislation concerning immovable property. However, the report would be incomplete if not some recommendations are not made in order to secure the solid operation of the IPRS: a) Condominiums: the present bottlenecks must be overcome in order to allow for condominiums to form and operate effectively as soon as possible. The authors consider that the only way to improve the situation is to oblige co-owners of apartment houses to create condominiums. Co-owners should have votes corresponding to their corresponding share (in terms of area) over the whole property, not equal rights, as they do now. Decisions of the condominium should be taken by majority and be mandatory for all co-owners. The necessary legislative amendments can be based on related practices of other civil-law states17. 16

See Section A.4.3. The required amendments would essentially be the following: Further development of the concepts of ideal share and real share. Joint property shares can be ideal or real. Ideal is an abstract share in joint property, which is defined as a fraction. Real share can be separated specifically and may correspond or not correspond to the ideal share.

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b) Privatization of housing should proceed on the basis of ideal shares of each owner, regardless of the other co-ownerâ&#x20AC;&#x2122;s consent, within a specific deadline. Those missing the deadline would risk eviction (as the non-privatized ideal shares would remain the property of local communities). c) Technical inventorying procedures should be simplified. It could be provided that the required measurements of the property should only be made only for the external walls with the measurements of the internal structures being made upon a request of the owners / for court decisions, etc. Last, but certainly not least, is the issue of public awareness concerning the IPRS. International experience demonstrates that it is absolutely essential for the general population to be adequately and systematically informed (through the press, the electronic media and other methods), in a clear and accessible manner, of what the IPRS is, what it does, how it works and why it is to the benefit of the people. Ignorance causes indifference and even breeds mistrust. You cannot have a solid IPRS if the people, the real users of the system, do not actively accept and support it.

Guaranteed issuing of a right-setting document for a share. Each co-owner has the right to get from the corresponding state body, which registers equity rights, a formal title, e.g. e separate right-setting document on property that belongs personally to him, which indicates his ideal and/or real share in joint property. Introducing an algorithm for solving disputes on owning and usage of shared property. Co-owners own and use a common object by agreement and by decision of the majority of co-owners, if this majority has the bigger part in a shared object. Introducing an algorithm for solving disputes when splitting the object. If the co-owners can't agree on the way to split a shared object, the court decides depending on the circumstances. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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PART B – INTELLECTUAL PROPERTY REGISTRATION SYSTEMS B.1 INTRODUCTION Intellectual property rights protect originality and innovation, which are fundamental tenets of progress. International practice concerning intellectual property and its protection on a legislative and procedural level is, to a large degree, uniform, thanks mainly to a network of international conventions and organisations and, as far as the European Union is concerned, a series of harmonising Directives and centralised institutional structures, such as the Office for the Harmonisation of the Internal Market (OHIM) and the European Patent Office (EPO). Very briefly, it is reminded that intellectual property consists of two broad categories: copyright and industrial property (patents, trademarks and designs). Copyright grants to the creator of an original piece of work exclusive rights to his/her work for a certain period. It is not necessary to register pieces of work to be entitled to protection. This intellectual property right is, in fact, automatic. A patent confers the sole right to exploit an invention commercially for a limited period of time. During this period, others can be prevented from producing, importing or selling the patented invention. A trademark confers the sole right to use the trademark as a characteristic sign for goods or services. The sole right entitles the holder to refuse others from using signs for goods or services that can be confused for the original. Design refers to the appearance and form of a product or part of a product. A registered design confers the sole right to exploit the design commercially during a limited period of time. Patents, trademarks and designs are protected by registration schemes. This type of registration gives sole rights to these intellectual rights that can be documented. It is noteworthy that, notwithstanding the striking similarity of the intellectual property registration structures and systems within the European Union, some states offer extended protection either through the registration of additional forms of intellectual property (such as the utility patent in Germany) or through the procedural facilitation of registration (such as the Portuguese “Trademark on the Spot” and the Benelux i-DEPOT registration of early ideas). A short presentation of each EU Member-State’s intellectual property registration system follows. For more extensive coverage, the reader is directed to the European Commission’s “Your Europe” website18.

http://ec.europa.eu/youreurope/business/competing-through-innovation/protecting-intellectual-property/index_en.htm

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B.2 SHORT PRESENTATION OF EUROPEAN UNION PRACTICE AUSTRIA The central authority for patent and copyright protection in Austria is the Austrian Patent Office. It holds documentation on over 40 million patents from 38 countries and provides access to technical information, legal databases, international patent directories as well as online research on patents, certification and patent approvals. The Austrian Patent Office is also a source of advice and information for patenting issues and also organises regular seminars and information events for interested companies. Before applying for patent or trademark protection, it is necessary for the Austrian Patent Office to carry out a search to determine whether the invention or trademark has already been registered. In addition to administering and approving patents, the Patent Office can also test inventions in order to determine whether they are patentable with regard to the current state of technology. Besides the process for granting patents, the Austrian Patent Office can also assess creative services of a technical nature in order to determine whether they are patentable. It issues certificates of patentability. BELGIUM Copyright arises automatically on the creation of an original work. Therefore, administrative formalities are not required to acquire this right. It may be useful, however, to register a work in order to prove its existence on a specific date. A date can be established in one of the following ways: application to the registry of the Federal Public Service Finance; engaging a notary to draw up a duly authenticated document establishing the existence of the work; using an i-DEPOT envelope to file with the BOIP. The Belgian Office for Intellectual Property (OPRI) is the official body for the registration of trademarks, designs and models within the Benelux area. Patent applications (including plant breedersâ&#x20AC;&#x2122; rights) are filed with the filing fee at the Belgian Office for Intellectual Property (OPRI). The registration of trademarks and processing of fees is handled by the Benelux Office for Intellectual Property (BOIP), which is also responsible for the registration of designs and models. BULGARIA The Bulgarian Patent Office is responsible for assessing and deciding on matters related to the protection of intellectual property. It also issues patents for inventions and certificates for industrial design, trade marks and service marks, designations of origin and other documents concerned with protecting intellectual property. Electronic applications are considered if the original application is handed in within one month following the electronic submission. The fee may be paid in the Patent Office itself or by bank transfer. Copyright does not require registration. CYPRUS Trademarks are protected through recording in a register kept by the Registrar of Companies and Official Receiver. The process is conducted with an application and payment of the required fees. Applications for patents are submitted to the office of the Registrar of Companies and Official Receiver. The European Patent Office conducts technical research for the patent within a 16 month time period, following a special settlement within the Republic of Cyprus. It issues a report that is delivered to the applicant, who then submits it to the Registrar. The Registrar proceeds, in accordance with the report, with the registration of the patent. Application for revocation of a patent is made to the Supreme Court. Otherwise, the patent remains at the register of the Registrar for up to 20 years, renewable on an annual basis, for which the relevant fee is paid. Copyright does not require registration. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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CZECH REPUBLIC The Industrial Property Office collects all applications for intellectual property rights and decides on their eligibility. It keeps records of all products covered by industrial property rights. The list of products is published in the Official Gazette and in its public registers. Copyright grants to the creator of an original piece of work exclusive rights to his/her work for a certain period. It is not necessary to register pieces of work to be entitled to protection. This intellectual property right is, in fact, automatic. DENMARK Copyright originates when the work is created and the legal protection comes into force without any formal requirements having to be met. There is therefore no public register in which copyright is registered. Applications for Danish patents, utility models, trademarks, collective marks and designs are submitted to the Danish Patent and Trademark Office. ESTONIA Copyright is applicable from the moment of creation of a work; thus registration or other formalities are not required. Copyright is also applied to the interim stages of a work (sketches, drafts, designs). For the protection industrial property the registration of an invention, trade mark or industrial design must be filed with the Patent Office, which maintains intellectual property databases, where information can be found on registered industrial property. FINLAND Copyright comes into being when the work is created. Acquiring copyright does not require registration, notification or the fulfilment of any other formal requirements. In Finland, copyright issues are the responsibility of the Ministry of Education. The National Board of Patents and Registration (PRH) promotes technical and economic development and intangible rights, both in Finland and internationally. Companies' registration notes, rules and regulations (such as articles of association), trade register notifications and their annexes, and accounts statements can be obtained from the PRH trade register . The Finnish Business Information System (BIS) is an information processing system jointly maintained by the National Board of Patents and Registration and the Tax Administration which enables the required information to be submitted to both authorities using a single notification. FRANCE In France, businesses are advised to register and protect innovations with the National Industrial Property Institute (INPI). Procedures can be completed online (filing patents, registering trademarks, etc.). Copyright does not require registration. GERMANY The German Patent and Trademark Office is the central body for filing patents, utility patents, design patents and trademarks. Whether or not industrial property rights apply, and if so, which ones, depends on the rules governing the relevant industrial property rights and how the applicant intends to protect these. All industrial property rights can be registered online via DPMA Direct. A German peculiarity is the utility patent, which offers protection for items such as technical innovations. Unlike a normal patent, however, it is purely a registration right, i.e. the utility patent is entered in the utility patent role after registration (without prior verification by the Patent Office). As a result, utility patents are also granted considerably faster than a normal patent, but offer similar rights. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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Copyright does not require registration. GREECE The Hellenic Industrial Property Organisation is responsible for registration of inventions and industrial designs and models. As regards control and certification of Products with a Designated Origin and Products with a Geographical Indication, this has been assigned to the Organisation for Certification and Inspection of Agricultural Products, which keeps a record of the information and the holder's office, the type and name of the agricultural or alimentary product, the PDO or PGI category, and the relevant dates. Copyright does not require registration. HUNGARY Copyright is due to the author from the moment an individual, original work is created in the field of literature, science or art. The Hungarian Patent Office carries out the procedures for the issue of a patent. The Office will provide information on inventions that have been reported in the Gazette of Patents and Trademarks, and then conduct a novelty study: if the invention meets the study requirements, a temporary patent is issued. IRELAND The Intellectual Property Unit of the Department of Enterprise, Trade and Employment is responsible for intellectual property laws and policies. It also acts as a liaison section between the Department and the Patents Office. The Irish Patents Office implements the system of intellectual property protection. It also provides input in the drafting of certain legislation and in the formulation of policy. Copyright does not require registration. ITALY Copyright in Italy is automatically granted to the author(s) of the work without any formality or fee. Patents and trademarks are issued by the Italian Patent and Trademark Office. Applications may be made through the local Chamber of Commerce or send a registered letter with acknowledgement of receipt to the Italian Patent and Trade mark Office based in Rome. LATVIA Copyright does not require registration. The Ministry of Culture is responsible for copyrights and related rights and their protection is governed by the Copyright Law. The Patent Office (PO) is responsible for implementation of state policy in the field of industrial property rights protection. The Patent Office issues patents, registers trademarks, industrial designs, inventions and topographies of semiconductor products, as well as encourages people to understand why the protection of these rights is necessary in the country. The Appeal Council of the Patent Office deals with disputes linked to the industrial property object registration issues. The courts deal with cases related to protection of patent rights, brands, industrial designs, indications of geographical origin and topographies of semiconductor products. Copyrights and related rights are the responsibility of the Ministry of Culture. The Ministry of Agriculture is responsible for the protection of plant varieties and the geographical indications of foodstuffs and agricultural produce. The Economic Police deal with infringements of intellectual property rights. Cases of unfair competition are reviewed by the Ministry of Economy. The Ministry of Transport is responsible for issues related to domains, servers and downloads. The State Revenue Service takes care of cases of 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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infringement and the seizure of counterfeit goods, as well as handling industrial intelligence. A number of non-governmental organisations are also involved in maintaining and protecting intellectual property rights. Two organisations were set up to coordinate the efforts of public administration bodies: The Intellectual Property Council and the Expert Group. LITHUANIA Registration does not apply to the protection of copyright and related rights; copyright to literary, scientific and artistic works begins upon their creation. Patent applications must be submitted through a patent attorney, registered in the Register of Patent Attorneys of the Republic of Lithuania. The State Patent Bureau publishes the data of the Register in the official bulletin. The Lithuanian Technical Library provides intellectual property services. Databases of Lithuanian patents, European patents valid in Lithuania, and Lithuanian designs and trademarks as well as patent, goods and services classifications are available in Lithuanian. Descriptions of Lithuanian patent applications and patents are available on ESPACE PRECES, which contains information on patent documents from Lithuania as well as from Bulgaria, Czechoslovakia, the Czech Republic, Hungary, Latvia, Romania and Slovakia. LUXEMBOURG All literary, scientific or artistic works (including computer programmes and databases) are automatically protected by copyright provided they are original enough and have a material form (ideas and concepts are excluded). Patent applications are filed with the Intellectual Property Directorate of the Ministry of Economy and External Trade. Trade marks, models and designs are registered at the Benelux Office for Intellectual Property (BOIP). A special procedure known as i-DEPOT allows the registration of innovations at the BOIP before they are created. MALTA Formal protection for Industrial Property in Malta is through registration at the Commerce Division. Copyright works receive statutory protection automatically once they are placed in the public domain. The Commerce Division's Industrial Property Registration (IPR) Directorate is responsible for the registration of Maltese trademarks, designs and patents. It also deals with IP policy by updating and upgrading Maltese IP protection law. The Customs Division's IPR Enforcement Unit specializes in the detection of counterfeit products and the enforcement of IPR laws. Applications for Maltese IP rights can be made through the IPR Directorate as well as via a local IP attorney who is bound by professional secrecy. All applications are filed using the relevant application form, and each application is accompanied by the prescribed filing fee together with the power of attorney documents and priority documents where applicable. The IPR Directorate's forms and fees are available on its website to complete and send back to the IPR Directorate or complete with a Maltabased IP attorney. NETHERLANDS Copyright is not subject to registration. The Netherlands Patent Office registers patents. The Benelux Office for Intellectual Property (BOIP) is the official body for the registration of trademarks, brands, models and designs in the Netherlands, Belgium and Luxembourg. Registration of an idea at an early stage is possible by submitting an iDEPOT registration document to BOIP, proving the paternity of an idea on a given date.

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NORWAY The rules for protection of patents, design and trademarks are managed by the Norwegian Industrial Property Office, which also processes applications. The Nordic Patent Institute is a cooperative body comprising the patent authorities in Denmark, Norway and Iceland. NPI's main task is to supply various types of service in the field of patents to other patent authorities and private individuals. Nordisk Patentinstitutt has the status of PCT authority, i.e. an international authority for checking news and preparing assessment of patentability. Kopinors main activity is to enter into and maintain agreements on behalf of its member organisations with all types of undertakings in Norway about copying copyrighted material. Copyright is not subject to registration. POLAND The Patent Office provides registration rights for geographical and origin indications (excluding the protection of origin indications for agricultural and consumable products, which belongs to the competency of the Ministry of Agriculture). For plant varieties, exclusive rights to a variety can be obtained by submitting an appropriate application to the Research Centre for Cultivar Testing. Copyright is not subject to registration. The regulation of copyright and related rights is among the competencies of the Minister of Culture and National Heritage. PORTUGAL Applications for industrial property registration is submitted to the National Institute for Industrial Property (INPI) and can also be submitted in the “one-stop shops” of the Lojas da Empresa (Business Gateways), in some of the Commercial Registry offices and the National Register of Legal Persons (RNPC). Once submitted, the request is formally examined and published online in the Bulletin of Industrial Property. Following this a period of time is available in which those who oppose the possible concession can register their complaint, after which the process is examined in detail by the INPI (except in cases where there is no need for this examination) and is then granted concession (partial or complete) or refusal. A Portuguese peculiarity is the “Trademark on the Spot” service, which offers to possibility of the immediate assignment of registered trademarks. This system allows the immediate adoption of trademarks and the corresponding company name, or solely the trademark, and can be requested online or at a dedicated one-stop-shop, and with full legal certainty. This can be done at the same time as creating a company via the 'on the spot' service, in the counters of the company itself or online at Business Gateway site. Alternatively, a trademark can be obtained separately at the 'on the spot' firm counters or online at Business Gateway. In order to achieve this objective, the National Institute of Industrial Property and the Office of Registration and Notary made efforts to provide a joint database of firms and trademarks which have been previously approved, available on the “Firm On The Spot” website. Copyright is not subject to registration. ROMANIA In Romania, intellectual property rights are protected mainly by two specialist institutions: the Oficiul de Stat pentru Invenții și Marci, OSIM (State Office for Inventions and Trademarks) and the Oficiul Român pentru Drepturile de Autor, ORDA (Romanian Copyright Office). OSIM protects intellectual property rights in the area of industrial property, in accordance with national legislation and national treaties and conventions. ORDA protects intellectual property rights in the area of copyrights and related rights. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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Commercial disputes relating to intellectual property can be resolved amiably at the Centrul de Mediere a Diferendelor Comerciale (Centre for Mediation of Commercial Disputes) within the Camera de Comerc di Industrie a României (Chamber of Commerce and Industry of Romania). Copyright is not subject to registration. SLOVAKIA The central government body for the field of intellectual property is the Industrial Property Office of the Slovak Republic. It keeps the central repository of patent and trademark documentation, which it makes available to the public, acting as a specialized centre for patent information in the Slovak Republic. National patent applications and utility models applications can also be filed electronically. This is the result of cooperation between the Industrial Property Office and the European Patent Office, of which the Slovak Republic is a member. Copyright is not subject to registration. SLOVENIA The copyright enters in force automatically just after publication. Registration is not compulsory for works which will be protected by copyright ; a holder of rights may store a source version or sample of work in the Register of protected copyright works. The Copyright Agency of Slovenia (AAS) acts as a legal representative of authors and holders of copyright. Its mission is to administer authors' contracts, offer protection of material and moral rights and conduct legal proceedings. It provides consultancy in the area of copyright, 'related rights' and the registration of copyright works. The Slovenian Intellectual Property Office undertakes tasks in the area of intellectual property, including the areas of copyright and industrial property. The informiran.si website enables the electronic registration of intellectual property through standard forms. SPAIN The agency with the authority to grant patents and trade marks is the Spanish Patent and Trade Mark Office (Oficina Española de Patentes y Marcas – OEPM), which comes under the control of the Ministry of Industry, Tourism and Trade. Through its Sub-Directorate General for Intellectual Property, the Ministry of Culture is the body in charge of proposing the necessary measures for adequately protecting intellectual property in Spain. Almost all applications to register trade marks and patents can be made online, through the OEPM's virtual office. Because copyright is protected automatically in Spain, authors do not have to register their work in order to be able to assert their rights. However, there is an Intellectual Property Register in Spain, which is used on an entirely voluntary basis. SWEDEN Copyright exists automatically when the work satisfies the relevant requirements ('verkshöjd' in Swedish). 'Verkshöjd' is a measure of the originality, individuality and independence of a work. Copyright does not need to be asserted by way of registration or similar procedures. The Swedish Patent and Registration Office (PRV) grants protection for and the sole rights to technical ideas, trademarks and designs. A Swedish patent application can be submitted to the PRV. The PRV trademark register contains details of who owns a given trademark in Sweden and how extensive the registration protection is. UNITED KINGDOM UK copyright law provides automatic protection of original works. Industrial property rights are registered with the United Kingdom Intellectual Property Office (UKIPO) through a locally registered IP attorney or online. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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B.3 INTELLECTUAL PROPERTY RIGHTS REGISTRATION IN UKRAINE There is a widespread opinion about imperfection of the Ukrainian legislation in the field of intellectual property rights protection. However, it should be noted, that specific drawbacks of the provisions of the Ukrainian law are not the main the reason of why the protection of intellectual property rights is in such a bad state. For example, the primary Law of Ukraine “On copyright and related rights” (2001) has been many times thoroughly analyzed by experts for compliance to the European and international norms. This law is indeed grounded on internationals norms on the use of copyrighted works, comprises contemporary trends of legal regulation of traditional as well as new objects of copyrighted property (e.g., computer programs). Cases of unauthorised use (with no corresponding agreements) of copyrighted materials are brought down to minimum. For the first time protection of related rights is accounted for. There are provisions for protection of rights of those, who takes the written by authors to the public: artists, manufacturers of phonograms and video materials, broadcasting companies. Also the following Laws are in force: –

“On protection of rights on industrial samples” (1993);

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“On protection of rights on inventions and useful specimens” (1993);

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corresponding provisions are also contained in the Book Four (Chapters 35 to 46) of the Civil Code of Ukraine “Rights on intellectual property”.

The results of analysis confirm, that the Ukrainian legislation on protection of intellectual property rights contains certain differences from international laws, has certain terminological and procedural drawbacks. The Ukrainian parliament has ratified a number of international legal instruments, especially the Bern convention and the agreement of WIPO (World Intellectual Property Organisation). And by that, it should have been effectively used to protect the rights of Ukrainian as well as international authors. International right protection organizations primarily criticise not the legislation itself, but the lack of its proper implementation and application. Ukraine has created a state Department on intellectual property as a governmental body (www.sdip.gov.ua) that inspects observance of the law in the field. But the things in the protection of intellectual property stay bad as they have been for years. The vital issue is the absence of institutions that would be assigned to protect intellectual property rights and be engaged in resolution of disputes in this field. State bodies indeed systematically ignore the legislation in this area. Counterfeit and pirated production is distributed in a nearly open manner throughout Ukraine with the law enforcement agencies covering this illegal business in quite many cases. It is understood, that this situation doesn’t pass unnoticed by international organizations. International Intellectual Property Alliance (IIPA) in the 2010 Special 301 Report on Copyright Enforcement and Protection, recommended that Ukraine be retained on the Watch List in 2010, and that such a listing be coupled with a U.S. Government out-of-cycle review (OCR) for six months to assess the progress of whether the Government of Ukraine has accomplished urgent measures, such as: – Enact Copyright and Criminal Code Amendments. IIPA believes that it would fix existing shortcomings and make it possible to effectively prosecute corporate end-user piracy (use of unlicensed software in a business environment) and to stop the distribution of pirated works over the Internet; – Implement Government Software Legalization. The Government of Ukraine should take real steps to implement the resolution of the Cabinet of Ministers regarding legalisation of software in state executive bodies; – Increase Dedicated Enforcement Personnel. IIPA recommends, that, “considering the alarmingly high piracy rates in Ukraine, the current number of 130 officers serving in the IPR units of the 102-104, Antonovycha Street 03150, Kyiv, Ukraine

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Economic Police Departments that is simply not sufficient for conducting effective and systematic actions to deter piracy, should be doubled to 260 officers, and these officers should be provided with effective training. The same — about the inadequacy of current number of 19 state IP inspectors in the State Department of Intellectual Property (SDIP) empowered to combat illegal trade of pirated products throughout the 25 regions of Ukraine. IIPA recommends to increase the number to at least 25, so that each region has at least one dedicated inspector; – Increase Enforcement Actions. IIPA believes that law enforcement agencies should significantly increase the number of enforcement actions against all types of copyright theft in order to serve as an effective deterrent. Moreover, the main focus of law enforcement fighting IP crimes should be immediately shifted from targeting small companies and private individuals selling pirated discs, to addressing Internet piracy and corporate end-user piracy on larger scale; – Criminally Prosecute Rogue Collecting Societies and Website Operators. IIPA insists that enforcement officials in Ukraine should: (a) criminally prosecute the principals of the well-known rogue collecting societies that claim to offer “licenses” that they do not have the authority to grant; and (b) immediately takedown illegal websites that rely, in bad faith, on these false licenses, and prosecute the owners of such sites. Regarding the illegal websites, the owners of the numerous pay-per-download and BitTorrent sites should be criminally prosecuted, and so on. The specified measures sound good, but the less real they are in getting them to work, which is what has been proven by years without success. In this manner even having a strong desire to find and prosecute a disturber, personnel of law enforcement agencies, judges and inquirers do not and cannot know the vast number of special conditions, that the property owners want to be maintained in the process of the use of their materials. Nor do or can they know any other specifics of application of norms of protection of intellectual property. That’s why what really matters, is how the expert examination is run during the investigation proceedings and in the court. In Ukraine there are problems similar to the ones in any other area: problems with a quality, independent and timely examination of intellectual property objects due to a lack of competent experts and corruption. Usually neither law enforcement agencies nor judges in Ukraine want to find and have desire to prosecute infringers of intellectual property, since both categories of legal guards belong to the same mentality and bear the same way of thinking. Many observers note, that Ukrainians en masse do not perceive intellectual property as property, and as a result they don’t find a disregard of intellectual rights to be a theft. This is not surprising as for a country that has the level of formalization of immovable property being close to 10%, with the welfare level not allowing them to buy licensed discs, computer programs or legally printed books. That is why the quite few cases of prosecution of infringers of intellectual property rights were either ordered by business competitors or a desire of Ukrainian officials to demonstrate to the international community how Ukraine fights pirates. It must be noted, that with the adjudication system being in fact unable to resolve disputes in the field of intellectual property, involvement of arbitration tribunals and international commercial arbitrage is increasing. The level of protection of a specific sort of property cannot be substantially higher than the overall level of protection of property rights itself. The level of effectiveness and non-corruption of law enforcement agencies and judges in regard to the rights of intellectual property always correlate with the similar levels in other categories of rights. So while the overall situation with property rights and other possession rights doesn’t totally change, the regime of soft legal restriction is still in force in contrast to the supremacy of the law with everyone being equal in a court, as well thanks to the introduction of IPRS, the situation with the property rights is at no event will change. 102-104, Antonovycha Street 03150, Kyiv, Ukraine

Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19 E-mail: office@ueplac.kiev.ua http://www.ueplac.kiev.ua