Protection of the Rights of a Bona Fide Purchaser: Changes in the Legislation

On March 12, 2025, the Verkhovna Rada of Ukraine adopted Law No. 4292-IX “On Amendments to the Civil Code of Ukraine on Strengthening of the Protection of the Rights of a Bona Fide Purchaser”.

This measure has become an important step towards harmonizing Ukrainian legislation with European standards and ensuring the right of citizens to peaceful possession of property.

The main changes introduced by the Law are:

1. Establishing a clear statute of limitations for claiming property from a bona fide purchaser

According to the new version of Article 391 of the Civil Code of Ukraine, if a state authority or a local government body, without authority, has taken actions aimed at alienating property (transferring it into ownership), as a result of which a private person became the purchaser of such property, the state or territorial community represented by authorized bodies has the right to reclaim property from someone else’s illegal possession, i.e., to apply to court with a vindication claim.

In this case, the state or territorial community loses the right to reclaim real estate if more than 10 years have passed since the state registration of the ownership right of the first purchaser.

The procedure for calculating and running the specified period shall not be interrupted by a change in the first and subsequent purchasers.

For instance, if in 2010 a local council transferred land into ownership without proper authority, after more than 10 years the state may no longer reclaim it, even if the transfer was illegal.

2. Compensation for the value of the claimed property

In the event of satisfaction of the claim of the competent authority or prosecutor to reclaim real estate from the buyer, the court simultaneously decides on the issue of compensation for the value of such property.

The amount of compensation shall be determined on the basis of an expert monetary assessment conducted by a certified valuation entity as of the date of filing the claim.

A court decision to reclaim property shall be made subject to prior deposit of the value of the property by a state authority, local government body, or prosecutor into the court’s deposit account.

The state or territorial community that compensated a bona fide purchaser for the value of the property based on a court decision has the right to demand the recovery of the paid funds from the person through whose fault the property was illegally withdrawn from the owner’s possession.

3. Cases when the statute of limitations does not apply

It is important to remember that the 10-year period does not apply to cases of free receipt of property (in particular, when it is donated). In such a case, the owner of the property has the right to claim it from the bona fide purchaser in all cases.

Additionally, the 10-year limit shall not apply if the property at the time of such disposal belonged to:

• critical infrastructure facilities or state-owned facilities that are of strategic importance to the economy and security of the state;

• defense facilities and lands;

• territories and facilities of the nature reserve fund and hydraulic structures;

• cultural heritage monuments that were not subject to privatization.

4. Retroactive effect of the Law in time

Please note that the provisions of Law No. 4292-IX have retroactive effect in time:

• if the court of first instance is considering a case based on a claim by a competent authority to recover real estate from a bona fide purchaser, within the framework of which the conditions and procedure for compensating the purchaser for the value of such property are determined;

• regarding the procedure for calculating and running the time limit for claiming or recognizing a right to real estate, the ownership of which was registered before the date of entry into force of the Law.

It should be noted that the court applies the statute of limitations only upon a request from a party to the dispute made before the decision in the case is adopted. The court shall not have the right to apply the statute of limitations on its own initiative. The expiration of the statute of limitations, the application of which is claimed by a party to the dispute, shall be the grounds for dismissal of the claim.

Law No. 4292-IX entered into force on April 9, 2025 and is intended to ensure the inviolability of private property rights and help maintain a balance between private and public interests.

K.A.C. Group lawyers and advisors will be happy to advise on issues related to changes in legislation, as well as provide comprehensive legal support.

Law No. 4292-IX