Is cancellation of state registration of rights to a land plot an effective remedy?

As early as 07.11.2018, the Grand Chamber of the Supreme Court issued a ruling in case No. 488/5027/14-ц, which stated that a court decision to reclaim real estate from someone else’s illegal possession is an independent basis for state registration of a plaintiff’s ownership of a property that was previously registered in a defendant’s name. In the Court’s opinion, in order to make such a registration on the basis of a court decision, it is not necessary to separately cancel state registration of ownership in favor of the defendant.

The Court’s position is justified by the fact that a person’s acquisition of ownership of real estate consists in making a record of state registration of ownership. If such a right is registered for another person, then “…the proper way to protect the right is to demand the reclamation of real estate from this person”, since the purpose of such a claim is to ensure that an owner takes possession of a property of which he or she was deprived. Therefore, if ownership of disputed property is registered in the name of a person other than a rightful owner, the court decision on the reclamation of property is itself a sufficient basis for state registration of a plaintiff’s ownership of such property.

At the same time, in practice, the enforcement of such court decisions has always been accompanied by significant difficulties due to the traditional formalistic approach of state registrars. The latter demanded (and continues to do so) a court decision according to which a state registration record is directly canceled. This, in turn, led to administrative disputes with state registrars.

Nevertheless, the Grand Chamber of the Supreme Court consistently adheres to the previous position. Thus, the decision of 09.11.2021 in case No. 466/8649/16-ц contains an unambiguous conclusion that if a plaintiff believes that his right is violated by the fact that a property right is registered for a defendant, the appropriate remedy is a reclamation of property claim, since its satisfaction is the basis for relevant registration in the State Register of Real Property Rights. Moreover, the Court clearly qualified the requirements for cancellation of decisions and records of state registration as not necessary for the effective restoration of a plaintiff’s property rights.

What is noteworthy about the ruling is that, in the Court’s opinion, a claim for reclamation of property will be considered an effective remedy only if there is a valid record of registration of a defendant’s ownership. Otherwise, a vindication claim is not subject to satisfaction. This is fully in line with the principle of registration confirmation of ownership of property, which is adhered to by the Supreme Court.

From the above, the Court draws a key conclusion that “…the claim for cancellation of the state registration of the defendant’s ownership contradicts the claim for reclamation of real estate”. The court points out that satisfaction of the claim for cancellation of the state registration of ownership would contradict paragraph 1 of part one of Article 4 of the Law of Ukraine “On State Registration of Real Property Rights and Encumbrances”, since “…the enforcement of the court decision will lead to a gap in the State Register of Real Property Rights in terms of ownership of the disputed property”. 

Therefore, instead of an erroneous record of state registration, the register should contain a proper record of a plaintiff’s ownership based on a court decision to satisfy a reclamation of property claim.

In its decision dated 10.12.2021 in case No. 924/454/20, the Grand Chamber of the Supreme Court clarified paragraph 9 of part one of Article 27 of the Law of Ukraine “On State Registration of Real Property Rights and Encumbrances” and noted that a court decision to reclaim property is in itself the basis for state registration of ownership of such property: “on the basis of such a court decision, in order to make a record in the State Register of Real Property Rights to Real Estate on the state registration of the plaintiff’s ownership of real estate registered in this register for the defendant, it is not necessary to separately cancel the record on registration of the defendant’s ownership”. The Court also considers the owner’s claim for cancellation of decisions/records on state registration of ownership of this property by an unlawful owner to be an ineffective remedy.

At the same time, in its ruling of 16.04.2024 in case No. 915/200/21, the Supreme Court, pointed out the need to apply the ruling of the Grand Chamber of the Supreme Court of 09.11. 2021 in case No. 466/8649/16-ц, drew attention to the existence of previous conclusions with the opposite approach, which are contained, in particular, in the decisions of the Civil Court of Cassation of the Supreme Court of 24.03.2021 in case No. 672/1790/18 and the decisions of the Commercial Court of Cassation of the Supreme Court of 07.12.2022 in case No. 924/144/20, of 31.01.2023 in case No. 924/504/20.

This demonstrates the dynamism of the case law on the analyzed issue, which is also confirmed by the frequent disregard of the Supreme Court’s conclusions by first instance and appellate courts. Courts of lower instances often satisfy prosecutors’ claims for cancellation of state registration, even if they are filed in the same statement of claim as a reclamation of property claim.

CONCLUSION

It is difficult to disagree with the Supreme Court’s assessment of claims for cancellation of state registration filed simultaneously with reclamation of property. Indeed, the artificial doubling of claims, which may also lead to gaps in the state register, is wrong.

However, as noted above, despite the Supreme Court’s consistent application of the conclusion that claims for cancellation of a state registration record filed simultaneously with a reclamation of property claim are inappropriate, both the Supreme Court and lower courts have taken opposite approaches. This is due to the extremely complicated process of actually enforcing a court decision to reclaim property due to the position of state registrars. Unfortunately, the situation has not been resolved for a long time, which indicates that the problem has not been resolved at the level of the Supreme Court – state registrars are not guided by court practice. 

Criticism of state registrars in formalism is often fair, but criticism alone is not enough. There is a clear need for regulatory changes that would make vindication action a truly effective remedy that does not require excessive creativity.

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