Investor’s guide

REAL PROPERTY LAW

Real Property Law

According to the Kyrgyz Civil Code[1], real property refers to land, minerals, water, forests, perennial plantings, buildings, structures and everything firmly attached to land, i.e. objects that cannot be moved without destroying or altering them. The state registration of rights to immovable property is performed by the State Registration Service under the Government of the Kyrgyz Republic[2].

Real property rights and encumbrances, as well as real property transactions are subject to mandatory state registration. The registration procedure is set forth in the Law “On State Registration of Immovable Property Rights and Transactions” [3].

State registration is mandatory for the following rights:

Right of ownership;
Right of business management;
Right of operational control;
Right of permanent (with no fixed term) use of land;
Rights arising from mortgage, including statutory mortgage or pledge;
Right of temporary use, lease or sublease for the term of 3 years or more;
Easements;
Restrictions of rights to design, construct and use an individual unit of immovable property, except restrictions imposed on immovable property by the laws and other regulatory acts of the Kyrgyz Republic;
Rights arising from court decisions;
Right of use of natural resource listed in Kyrgyz laws;
Rights arising from legalization of property;
Other rights subject to registration at present or in the future under the Civil Code and other normative legal acts of the Kyrgyz Republic.

According to the World Bank’s, ‘Report Doing Business’, 2013, the Kyrgyz Republic ranks 6^th among 189 countries of the world in terms of the steps, time, and cost involved in registering property in the Kyrgyz Republic[4].

The following rights and restrictions are valid regardless of their registration or non-registration:

Right of access to electric power lines, telephone and telegraph lines and poles , pipelines, geodesic points and other rights pertaining to a matter of public concern;
Rights of spouses, children, and other dependents, established by Kyrgyz laws, even if these rights were not registered independently;
Right of temporary use, lease or sublease for the term of less than 3 years;
Right of preferential use of real property by its actual users established by Kyrgyz law;
Rights of tax authorities established by Kyrgyz law;
General restrictions and prohibitions (related to health care, public security and environmental protection) set forth in Kyrgyz law.

Land Relations

The principal regulatory act governing land relations in Kyrgyz Republic is the Land Code of Kyrgyz Republic^[5] according to which, the land fund in Kyrgyz Republic comprises the following:

Agricultural land including farmland and land occupied by on-farm roads, communications, water reservoirs, buildings and structures necessary for farming;
Residential land (in towns, urban villages, and rural settlements);
Industrial, transport, communications, defense and other infrastructure land;
Specially protected areas;
Forest land;
Water-related land;
Reserve land;
State mineral reserve land;

The transformation (conversion) of land from one category into another is set forth in the Land Code of Kyrgyz Republic, the Law “On Conversion (Transformation) of Land Plots”, and the Provisional Regulation on procedure for conversion (transformation) of land plots.[6]

Obtaining the Right to Land

There are two ways to receive the right to land according to the legislation:

Transfer of the right to own or use a private land by an owner or user of this land under a civil transaction;
Transfer of the right to own or use a public or municipal land by a competent authority.

The right to land may be sold at auction, tender or direct sales by the land commission established for this purpose.

The right to land may be sold by direct sales in the following cases:

If there is a private building or facility, including incomplete construction, on the land plot previously provided for fixed-term (temporary) use;

If the land plot was put up for auction twice but was not leased out;

If the land plot adjoins (borders) with part of a private building or facility for the construction of an entrance to, improvement or extension of the said objects, provided that the said land plot cannot be formed as a standalone unit of real property and the transfer of rights over such land plot to third persons may entail violation of rights of owners of these building or facilities;

If the land plot adjoins (borders) with part of a private building or facility or is close to it, and is needed for setting up and maintaining parking lots, when the transfer of rights over such land plot to third persons may entail violation of rights of owners of these buildings or facilities.

Following the auction or direct sales, the parties execute the land purchase and sale agreement or the land lease agreement. The agreement must be registered with the local registration authority and does not require notarization.

The sale of municipal land is effectuated by Bishkek Mayor’s Office through the Land Committee, which determines, within the scope of its authority, the list of land plots offered for sale.

The preliminarily purchase price of the land plot is determined by negotiation between the land committee and the purchaser. Independent appraisers based on the land documentation provided determine the final purchase price.

Residential Property

Citizens and legal entities have the right to own residential property without any limitations [7].

Obtaining the Residential Property Right

The grounds for creation of rights and obligations in respect of the residential property are:

acts of governmental and local authorities;
contracts and other transactions stipulated by law;
judicial acts;
decisions of authorized bodies of legal entities to reorganize the same;
membership in building cooperatives;
other grounds stipulated by law.

The right to residential property arises from the moment of its state registration in the manner provided by law.

Recreational Area

According to the Kyrgyz legislation [8], recreation assets (i.e. assets used in recreation, health improvement, and tourism) may be owned by governmental and local authorities or by individuals and legal entities.

Restrictions on Foreign Ownership of Immovable Property

There are no restrictions in Kyrgyz legislation on the right of foreign persons to acquire buildings and structures as long as they refer to non-residential assets.

Foreign persons may not own recreation, infrastructure or tourism assets, but they may use such assets for a maximum of 49 years subject to permission of the Kyrgyz Government and consent of Kyrgyz Parliament.

In addition, there are a number of legal restrictions on the right of foreign persons to own land in Kyrgyz Republic. A foreign person is a person who must meet one of the following:

be a foreign national or stateless person;
be a foreign legal entity, i.e. a legal entity which must meet one of the following:
be established and registered under the laws of a foreign state;
be fully owned by one or more foreign individuals or legal entities;
be controlled or managed by one or more foreign individuals or legal entities under a written contract, the right to sell a majority of the voting shares, the right to appoint a majority of members of its executive or supervisory body;
be registered within Kyrgyz Republic and have at least 20% of its charter capital owned by foreign nationals, stateless persons, or legal entities mentioned in this paragraph;
be established by an international agreement or treaty.

The land rights of foreign persons are limited to the following:

Foreign persons may not own or use agricultural land[9];

Foreigners or foreign legal entities may receive residential land plots for fixed term (temporary) use or into ownership as a result of enforcement of mortgage with subsequent disposal of land plot within two years from the moment of acquiring the ownership right in the manner provided by the pledge law of Kyrgyz Republic;

Foreigners may receive non-residential land plots (except land plots provided for agricultural or mining purposes) for fixed term (temporary) use by the Government of Kyrgyz Republic. In all other cases, non-residential land plots may be provided, transferred or transmitted to foreign persons through universal succession for fixed-term (temporary) use;

Foreigners may receive land plots intended for mining purposes for temporary use in the same manner as local mining right holders;

Foreign nationals and foreign legal entities except repatriates may not receive land plots located within the frontier area for fixed-term (temporary) use;

Foreign banks and specialized financial institutions which received agricultural land plots into ownership as a result of enforcement of mortgage must dispose of these land plots within two years from the moment of acquiring ownership right in the manner provided in the pledge law.

Foreigners who have acquired ownership of land by way of universal succession (inheritance, reorganization) must alienate such land to a Kyrgyz national or legal entity within one year from the date of acquiring such ownership.

In general, according to the Kyrgyz legislation, a person must alienate any immovable property, which has been lawfully acquired, but may not belong to them by law, within one year from the date of acquiring, unless law provides other period.

Kyrgyz legislation does not clearly regulate the procedure for waiver of immovable property rights with simultaneous determination of an owner. The ownership right is terminated upon alienation by the owner of their property to other persons, or waiver of the ownership right by the owner, or perish or destruction of the property or loss of the ownership right to the property, or in other cases provided by law. An individual or legal entity can waive the ownership right to their property having declared this waiver or having performed other actions expressly evidencing that they were deprived of possession, use or disposal of the property without an intention to preserve any rights to this property. However, waiver of the ownership right does not entail termination of the owner’s rights and obligations with respect to the relevant property until the other person acquires the ownership right to this property.[10]

The owner voluntarily waiving their ownership right or other rights to the immovable property can apply to the authority for registration of immovable property rights in person with a written request stating their waiver of the ownership right and other rights to the immovable property. In this case, the owner’s waiver of the ownership right or other rights must be recorded in the respective files.[11]

[text is provided by Kalikova & Associates]

[1] Article 24 of the Civil Code of Kyrgyz Republic (with the latest amendments as August 3, 2013

[2] Regulation on State Registration Service under the Government of Kyrgyz Republic (with the latest amendments as of December 14, 2015) approved by the Resolution of the Government of Kyrgyz Republic dated February 20, 2012 No. 128.

[3] The Law of Kyrgyz Republic “On State Registration of Immovable Property Rights and Transactions” dated December 22, 1998 (with the latest amendments as of July 9, 2013).

[4]http://www.doingbusiness.org/data/exploreeconomies/kyrgyz-republic/.

[5] The Land Code of Kyrgyz Republic of June 2, 1999 (with the latest amendments as of June 14, 2016).

[6] The Law of Kyrgyz Republic “On conversion (transformation) of land plots” dated July 15, 2013 (with the latest amendments dated March 19, 2016) and the Regulation on procedure of conversion (transformation) of land plots dated March 19, 2014 No. 169.

[7] The Housing Code of Kyrgyz Republic dated as of 9^th July 2013

[8] The Law of Kyrgyz Republic “On Sustainable Development of Issyk-Kul Ecological and Economic System” dated 13^th August,2004 (with the latest amendments as of 19^th October 2013)

[9] Article 7 of the Law of Kyrgyz Republic “On Management of Agricultural Land” dated January 11, 2001 (with the latest amendments as of July 22, 2011).

[10] The Civil Code of Kyrgyz Republic: Part I.

[11] The Rules of state registration of immovable property rights and encumbrances (restrictions) thereon and related transaction, approved by Resolution of the Government of Kyrgyz Republic dated February 15, 2011 No. 49 (with the latest amendments as of January 9, 2014 No. 5 ).