The recently adopted Law of Ukraine No. 4292-IX of March 12, 2025, which amends the Civil Code and other laws to strengthen the protection of the rights of a bona fide purchaser, marks a significant turning point in the regulation of property relations. Published on April 8, 2025, this law is intended to strengthen legal certainty for real estate owners—particularly those whose properties were formerly state- or municipally-owned—and to protect the interests of individuals who purchased property on the market without knowing about potential defects in its prior transfer history.

A key provision of the law is a significant restriction on the right of the state and local communities to reclaim real estate from bona fide purchasers (those who acquired the property for a fee without knowing, and without having the means to know, that the seller lacked the right to transfer the property). The new version of Article 388 of the Civil Code establishes a general 10-year statute of limitations, after which such reclamation becomes impossible. This period begins to run from the date of registration of ownership by the first private purchaser or from the date of the actual transfer of the property, if registration was not required at that time, and is not interrupted in the event of subsequent changes in ownership. At the same time, the law provides for important exceptions: the 10-year limitation does not apply to critical infrastructure facilities, strategic state-owned facilities, defense lands, nature reserve areas, hydraulic structures (provided there are supporting documents confirming their status at the time of disposal), or cultural heritage sites that were not subject to privatization.

Furthermore, property generally cannot be reclaimed from a bona fide purchaser if it was sold in accordance with court orders or at an electronic auction during privatization.

Another revolutionary provision is the introduction of a mandatory compensation mechanism for a bona fide purchaser in the event that real estate is reclaimed from them in favor of the state or a community (new paragraph 5 of Article 390 of the Civil Code). From now on, a court may issue a decision to reclaim property only if the plaintiff (a government agency or a prosecutor) has first deposited funds into the court’s escrow account equal to the appraised value of the property as of the date the claim was filed. These funds are then automatically transferred to the bona fide purchaser as compensation, without the need to file a separate claim.

The state, having compensated for the value, acquires a right of recourse against the person through whose fault the property was unlawfully removed from its possession. This mechanism, supported by amendments to the procedural codes, radically changes the approach to resolving such disputes. Importantly, key provisions of the law—particularly those regarding compensation and the calculation of the 10-year statute of limitations—have retroactive effect under certain conditions.

Undoubtedly, these changes lead to a number of positive outcomes. First and foremost, they significantly enhance legal certainty and stability in civil transactions. Property owners, especially those who purchased property on the secondary market, receive significantly stronger guarantees to protect their rights against claims by the state related to past violations during privatization. Bona fide purchasers are now protected not only from the mere possibility of having their property reclaimed after 10 years, but also financially—through a compensation mechanism. This enhances the fairness of the regulatory framework, as the risk is shifted from an innocent party to the state, which, in turn, has the tools to recover damages from the actual perpetrators. Such guarantees are expected to stimulate the real estate market and boost the country’s investment appeal.

At the same time, the implementation of Law No. 4292-IX is also associated with certain risks and challenges. There are concerns that the 10-year period could lead to the de facto legalization of assets illegally acquired in the past, unless they fall under clearly defined exceptions, which could potentially harm state and municipal interests. Mandatory compensation places a significant financial burden on budgets at all levels, requiring the allocation of funds and an effective mechanism for their administration. The practical application of exceptions to the 10-year rule may also prove challenging and give rise to new legal disputes regarding the classification of assets. One should also not overlook potential disputes regarding the valuation of property for compensation purposes. Furthermore, the reduction in the time limits for challenging the actions of state registrars will require citizens and businesses to act more promptly in defending their rights.

Thus, Law No. 4292-IX is an important step toward strengthening the institution of private property and protecting bona fide market participants. However, its success and actual impact—whether positive or negative — will largely depend on the quality of subordinate legislation, the effectiveness of government agencies in budgeting for compensation and enforcing recourse claims, as well as consistent judicial practice that ensures a fair balance between private and public interests.