Ukraine adopts law regulating compensation for real estate damaged by the war


On 23 February 2023, the Ukrainian parliament passed the real-estate compensation legislation, Law of Ukraine No. 7198 “On Compensation for Damaging and Destroying Certain Categories of Real Estate as a Result of Combat Actions, Terroristic Acts, Diversions Caused by war aggression of Russian Federation against Ukraine, and State Register of Property Damaged and Destroyed as a Result of Combat Actions, Terroristic Acts, Diversions Caused by war aggression of Russian Federation against Ukraine”.

The Law establishes the general legal framework for claiming and receiving compensation for real estate that has been damaged or destroyed as a result of the Russian invasion of Ukraine. Within two months of the law's enactment, the Ukrainian government will determine the detailed procedure for granting compensation for damaged or destroyed real estate.

The Law stipulates that the objects falling under its regulations include apartments, houses, unfinished construction (including multiapartment houses) and common property of multi-apartment houses that were damaged or destroyed as a result of Russian aggression. 

The persons entitled to compensation will be natural persons owning property or heirs (if the owners are dead) and balance holders of the common property mentioned above. According to the Law, the Cabinet of Ministers may define additional categories of subjects while persons under sanctions or persons guilty of committing crimes against Ukraine are not eligible for compensation.

An application for compensation may be submitted during martial law (currently effective until 20 May 2023) and one year after its termination regarding each separate real estate object. Claims may be submitted either in paper form or electronically and must be supported by the documents confirming the title and photos of the object prior to damage and after (if available).
Once submitted, the applications will be considered by special commissions, which under the Law will be established by local authorities. The term for consideration of an application will be 30 calendar days and may be prolonged for another 30 calendar days. Local authorities will approve the decision of the commission on compensation within five calendar days.
The Law stipulates that compensation for the destroyed real estate may be granted in two forms: first, payment of money on the special account of the applicant or, second, the financing of the purchase of new real estate with the issuing of a residence certificate. The owners of destroyed houses may choose both options while the owners of flats may receive compensation under the second option only. The compensation for a damaged object can be granted in the form of construction work and/or providing materials for such work.

The value of the destroyed property will be calculated on the basis of its total area multiplied at the value of one square metre while the latter will be defined by an order from the Cabinet of Ministers, which has yet to be developed. After receiving compensation, the owner of a property will sign an agreement regarding claims for damages in favour of state or local authorities.

According to the Law, compensation will be performed in the amounts prescribed by the budget, which implies that amendments to the budget will follow and that the number of satisfied applications may be limited by available funds.
Separately, the Law establishes that a register of damaged and destroyed property will be introduced to gather the information regarding the people who incurred damages, the property that was damaged and the compensations paid.

The Law is currently pending the signature of the President and will come into force in two months after its signing and publication. During this period, the Cabinet of Ministers and respective ministries will develop rules and regulations to facilitate the Law. 

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