Section d Listening

16 Property-law presentation

Task 1 You are going to hear an excerpt from Mykhailo's seminar presentation. Under what circumstances are foreigners permitted to buy real property in your jurisdiction?

Tapescript – T.4

Task 2 Listen to the excerpt. How does the law in Ukraine compare to the law in your jurisdiction?

Task 3 Listen again and decide whether these sentences are true (T) or false (F).

1. Foreigners are not permitted to buy agricultural land in Ukraine under any circumstances.

2. If a foreigner inherits farmland, he/she is allowed to retain it for the purpose of conducting business there.

3. Foreign business entities may not acquire buildings or structures on non-agricultural land.

4. Foreigners can acquire land in Ukraine by founding a company.

Task 4 Prepare a short presentation about the real property law in a jurisdiction you are interested in.

Task 5 Discuss the circumstances under which foreigners can buy and lease real property.

Section E

Skimming and scanning reading

Skimming reading

17. The text given below deals with “Security used in real property financings”. Skim the text and make the logical plan of the text.

Before skimming the text see the notes, given below the text.

Time limit – 15 minutes

Be sure to know that the term “skimming “is “looking for a gist”.

SECURITY USED IN REAL PROPERTY FINANCINGS

A mortgage, a pledge over other assets, suretyship, parent guarantees and guarantees of Ukrainian banks are all common forms of security used in Ukrainian real property financings.

Mortgage. Under Ukrainian law various types of immovable property may be subject to mortgage. The mortgage is a specific type of pledge that may be created, inter alia, over land or buildings. A mortgage may be imposed on the basis of agreement, court decision or law. The mortgaged building shall remain in the use and possession of the mortgagor. Unfinished buildings may also be mortgaged. The mortgage of a building or construction must include the mortgage of underlying land plot, otherwise it shall be deemed invalid.

A mortgage may be established in a separate mortgage agreement, or be included in the agreement establishing a principal obligation (i.e. a loan agreement). The mortgage agreement must be executed in writing and is subject to notarisation. It must also include the essential mandatory terms required by the law. The parties may include the price of the mortgaged property in the mortgage agreement, although it is not mandatory. The mortgage is subject to registration in the State Register of Mortgages. Failure to register does not invalidate the agreement. The mortgaged property is subject to sale at a public auction, once the execution procedure has been carried out. A mortgage may be enforced under the agreement, notary superscription or judicial decision.

Pledges. In the event a debtor (pledgor) does not fulfil the obligation secured by the pledge, a creditor (pledgee) shall have the right to satisfaction at the expense of the pledged property prior to other creditors of this debtor, unless otherwise specified by the law.

Ukrainian law considers mortgage and pawn as specific types of pledge. Mortgage shall be pledge of the real property that remains in possession of a pledgor or a third person. While, pawn (in Ukrainian “zaklad”) shall be pledge of movable property being transferred into possession of a pledgee or by his order – into possession of a third person. Under Ukrainian law pledges can be created under agreement, law or court decision. Except for some restrictions, any property (objects, securities, property rights), which can be freely alienated by the pledgor, may be seized.

A pledge agreement must be concluded in writing. Notarisation is required for mortgages of immovable property. The parties may also agree to notarise other pledge agreements. Upon the parties’ decision, a pledge over movable property may be registered in the State Registry of Movable Property Charges. The registration of the pledge in relevant Register provides the pledgor with the priority right to enforce the pledge over other later secured creditors.

Ukrainian law recognises the following types of pledges:

• pledge of goods in circulation;

• pledge of rights;

• pledge of shares;

• pledge of bank accounts, etc.

Suretyship. Under a surety agreement, a surety assumes liability before a creditor of another person (the primary debtor) for the performance by the primary debtor’s obligation towards the creditor in full or in part.

A surety may be provided by one person or several persons. In the event that the primary debtor fails to perform or improperly performs the obligation secured by a surety agreement, the surety provider and the primary debtor shall be jointly and severally liable towards the creditor, unless the agreement provides for the secondary liability of the surety. Upon default, the creditor may require the discharge of the obligation directly from the surety rather than first applying for the discharge by the primary debtor. The surety may invoke the same objections as available to the debtor against the creditor. The surety is liable to the creditor to the same extent as the primary debtor, including payment of the principal debt as well as interests, penalties and losses.

Once the surety has performed the obligation to the creditor the surety provider is entitled to recover his debt from the primary debtor. The surety provider is also entitled to receive remuneration for the provision of surety. The parties are advised to include an agreement pertaining to the price of the suretyship since the legislation contains no such a provision.

A surety agreement must be executed in writing. Generally, a surety agreement defines the scope of liability of the surety provider. In the absence of such provision, the surety provider will be liable to a creditor to the same extent as the primary debtor, including payment of interest, reimbursement of court expenses for recovery of the debt and other losses of the creditor caused by improper performance or non-performance of the primary debtor’s obligation.

Guarantee. By virtue of the guarantee, a bank, another financial institution, or an insurance company (a guarantor) gives a written commitment to pay a cash amount to the creditor in accordance with the conditions of the guarantee given by the guarantor upon the creditor’s presentation of a written demand that such amount be paid. The guarantee is similar in some respects to a suretyship. The difference is that the guarantee can be issued only by a bank, financial institution or insurance company. Similar to the suretyship the guarantor is liable to the creditor when the debtor fails to perform his obligation. A guarantee shall be in force only for the period for which it was issued. A guarantor cannot withdraw the guarantee unless otherwise is stipulated in the agreement.

A guarantee does not depend on the secured (primary) obligation of the debtor. Therefore, the guarantor may not refuse payment under the guarantee based on any issues arising from the relations between the creditor and the debtor or based on the invalidity of the primary obligation secured by the bank guarantee. The guarantor is obligated to pay to the creditor upon submission by the creditor of a written demand and the documents required under the bank guarantee.

The guarantor is entitled to recover the amount of the guarantee paid to the creditor from the primary debtor, unless otherwise agreed by the parties.