Significance of the State Registration for the Acquisition of the Real Estate Title

Abstract

The Ukrainian legislation on state registration of property rights and their encumbrances is based on the principle of entry, i.e. introduces a negative title system. State registration is essential for the acquisition of the real estate title and its protection, as it is the final legal fact with which the law links the acquisition of ownership. This is preceded by the conclusion of an agreement, which is the basis for the acquisition of ownership, and therefore the basis for making an entry in the state register of real rights to immovable property and their encumbrances. Since an agreement for the alienation of real estate is subject to notarisation, a notary performs both a notarial act to certify the agreement and a registration act to enter the relevant information into the register. If the agreement on the basis of which the entry was made in the register is challenged, the question arises as to what legal consequences will occur and whether this will affect the ownership of the person in whose name it is registered. This is all the more important if the property has already been alienated by a party to a transaction that has been declared invalid and acquired by a third party who relied on the correctness of the entry in the register. Ukrainian court practice holds that vindication by a person who disputes the real estate alienation agreement and is considered to be the owner of his property is permissible against an acquirer who is unlawfully listed in the register as the owner. The legal regulation of real estate acquisition in Germany is different from that in Ukraine, and therefore the legal consequences of challenging the title to property are different. Under German law, two fundamental principles must be observed when acquiring real estate property: The separation and abstraction principle as well as the public faith of the land register and the protection of bona fide acquisition. According to the principle of separation and abstraction, the sale and purchase agreement (under the law of obligations) and the legal transaction (in rem) for the transfer of ownership are strictly separated from each other. They are also not dependent on each other in terms of their existence. The entry in the land register is only one part of the legal transaction in rem for the transfer of ownership. The public faith of the land register means that the bona fide purchaser of a right entered in the land register may rely on this entry - even if it is not correct under substantive law. Consequently, a person who proved the invalidity of a sale and purchase agreement is not entitled to vindication but to condictio, as the transfer of ownership is valid. In case of resale of the real estate to a bona fide third party, the original seller is only entitled to a compensation in money: The entry in the land register is of paramount importance to all those who relied in good faith on its correctness, believing that they were entering into an agreement with a person who has the right to alienate the property as its owner.