Preliminary agreement in Ukraine

Preliminary agreement in Ukraine

The Civil Code of Ukraine effective as of 1, January 2004 settles the right to conclude the preliminary agreement, under which the parties undertake to conclude a principal agreement in a specified term under conditions stipulated in a preliminary agreement.

The Commercial Code of Ukraine states that a principal agreement may be concluded in a specified term but not later then one year from the moment of conclusion of a preliminary agreement.

The law does not stipulate any limitations on the scope of the preliminary agreement, which means it can be concluded on a wide range of real estate issues.

To purchase the real property the first step is to sign the preliminary agreement, which is subsequently followed by the final deed of sale certified by a notary. In this case the preliminary agreement is a proof of intention to buy property.

Preliminary agreement should contain subject matter and all other essential conditions of the future principal agreement. It is advisable to have the contents of the preliminary agreement correspond to the final deed of sale as closely as possible.

The preliminary agreement is to be executed in writing. Under the law it is not a subject to the obligatory state registration.

Once the parties have signed the preliminary agreement, they are both committed to the transfer of the property. If the party fails to conclude the principal agreement, it has to reimburse the damages due to delay. At the same time the other party has the right to claim to execution of the principal agreement through court. In particular the party may only claim to fulfilment of the obligations stipulated in the preliminary agreement.

Under these terms a preliminary agreement is very rarely broken and inevitably leads to the signing of the final agreement.