Property Law in Kazakhstan
Property Law in Kazakhstan is primarily governed by the Civil Code of Kazakhstan, which outlines the legal framework for ownership, property rights, and transactions. Kazakhstan's legal system is influenced by civil law traditions, and property law operates under a combination of statutory law and regulations set forth by the government. The property laws in Kazakhstan cover a wide range of issues including ownership, inheritance, land use, and property transactions, while also providing rules for the protection of property rights.
Key Features of Property Law in Kazakhstan:
1. Legal Framework
a. Civil Code
- The Civil Code of Kazakhstan (adopted in 1994, with amendments) is the primary legal source for property rights and transactions in the country. It governs all aspects of civil law, including the ownership of property, contractual agreements, torts, and inheritance.
b. Land Code
- The Land Code of Kazakhstan (adopted in 2003) regulates the use, ownership, and transfer of land. It also provides for land tenure rights and the process for land privatization.
c. Other Relevant Laws
- The Law on State Registration of Rights to Real Estate (2003) provides the legal foundation for the registration of property rights, ensuring that ownership and transactions are properly recorded.
- The Real Estate Law and Construction Law regulate the building and development of real estate in Kazakhstan.
2. Types of Property Ownership
a. Private Ownership
Private ownership of property is permitted under Kazakhstan’s legal system. Individuals, legal entities, and foreign investors can own both movable and immovable property, including land, buildings, and structures.
Private ownership is generally protected, and owners have the right to use, sell, lease, or transfer their property unless restrictions apply due to zoning or land use laws.
b. State Ownership
- The government retains ownership of certain types of land and property, especially agricultural land and land used for public purposes. However, privatization of state-owned land and property has occurred over the years.
c. Land Ownership
Land ownership in Kazakhstan is generally allowed for individuals and legal entities, but foreigners face specific restrictions regarding land ownership, particularly agricultural land.
- Foreigners can lease land in Kazakhstan but are generally prohibited from owning agricultural land. However, they may own land in urban areas or for specific commercial purposes under certain conditions.
- Citizens of Kazakhstan and Kazakh companies have broader rights to own land.
d. Joint Ownership
- Property in Kazakhstan can be owned jointly by multiple individuals or entities. This includes joint tenancy (where each co-owner has equal rights to the whole property) and tenancy in common (where co-owners own specific shares of the property).
3. Land Registration System
Kazakhstan operates a land registration system, administered by the Republican State Enterprise "Government for Citizens", which is responsible for the state registration of real estate rights and transactions.
The State Register of Rights to Real Estate records all ownership, use, and transfer rights to property. Registration is mandatory for the legal transfer of property ownership and for protecting the rights of property holders.
The registration process includes verifying the ownership and issuing a certificate confirming the rights of the owner.
4. Property Transactions
a. Sale and Transfer of Property
The sale and transfer of property must be carried out according to the formal procedures laid out in the Civil Code. Both immovable property (real estate) and movable property can be transferred, but real estate requires mandatory registration with the state registry.
A sale agreement must be executed in writing, and payment of taxes is required for the transaction. The buyer also needs to confirm the property’s legal status, including checking whether there are any encumbrances, liens, or mortgages.
b. Stamp Duty and Taxes
Stamp duty is applied to property transactions. The rate of stamp duty varies depending on the value of the property and whether the property is sold in urban or rural areas.
In addition to stamp duty, property tax is imposed annually on property owners. Property tax rates depend on the type, size, and value of the property.
Value Added Tax (VAT) may also apply to the sale of newly built properties.
c. Due Diligence
Before purchasing property, it is crucial for buyers to conduct due diligence. This process includes checking the property’s legal status, confirming that there are no existing encumbrances (e.g., mortgages or liens), and ensuring the seller has the right to sell the property.
The notary (if involved) and real estate agent will often assist in ensuring the legality of the transaction.
5. Mortgages and Secured Lending
a. Mortgages
Mortgages are commonly used to finance property purchases in Kazakhstan. A mortgage is a form of secured loan, where the lender holds the property as collateral until the borrower repays the loan.
Mortgages must be registered with the State Register of Rights to Real Estate. If the borrower defaults on repayment, the lender can initiate foreclosure proceedings to recover the loan amount.
b. Foreclosure
- In case of default on a mortgage, the lender has the right to initiate foreclosure proceedings in the court. The property can be sold to repay the outstanding debt, and the court process ensures that the borrower’s rights are respected during this process.
c. Bank Financing
- Kazakhstan has a growing mortgage market, and local banks offer financing options for both residential and commercial properties. Foreigners may have access to financing under certain conditions, but local residents typically receive more favorable terms.
6. Leases and Tenancies
a. Residential Leases
Residential leases in Kazakhstan are regulated by the Civil Code and must be executed with a formal lease agreement specifying the duration, rent, and responsibilities of both the landlord and tenant.
The lease agreement must be registered if the property is rented for a long-term period, such as for more than 1 year. Security deposits and terms for rent increases are often included in the lease contract.
b. Commercial Leases
Commercial leases follow similar principles to residential leases but are generally more flexible and negotiable. Commercial leases are typically longer-term agreements and often involve complex terms related to property usage, maintenance, and rent adjustments.
Landlords and tenants are free to negotiate the terms of the lease, including who is responsible for paying for utilities, maintenance, and repairs.
7. Inheritance and Succession
a. Inheritance Laws
Inheritance law in Kazakhstan is governed by the Civil Code, and it is generally based on principles of forced heirship. The property of the deceased is distributed among the heirs according to legal rules or the will of the deceased.
In the case of intestate succession (without a will), the spouse, children, and parents are typically the first to inherit. If there are no direct heirs, the estate can be passed on to extended family members.
Testamentary wills are recognized, and individuals can designate their heirs and specify how property will be distributed.
b. Inheritance Tax
- Kazakhstan does not impose an inheritance tax on property or assets inherited by direct descendants (e.g., children, spouses). However, there are administrative fees and potential costs associated with registering the transfer of property.
8. Expropriation and Public Use
The government of Kazakhstan has the right to expropriate land and property for public purposes under the Law on Expropriation. This may include infrastructure projects, urban development, or national security concerns.
Compensation is provided to the affected property owners, and the government must ensure fair market value for the expropriated property.
9. Dispute Resolution
Property disputes in Kazakhstan are generally resolved through the court system, and the Civil Court has jurisdiction over real estate disputes. The Arbitration Court may also be used in commercial property disputes.
Property-related disputes can involve issues such as ownership, leases, inheritance, and land use. Mediation may be used as an alternative to litigation, particularly in commercial property conflicts.
10. Foreign Ownership
Foreign ownership of land in Kazakhstan is restricted. Foreigners may not own agricultural land in Kazakhstan. However, they may lease it for a limited period (up to 25 years) under certain conditions. Foreigners can own urban land and residential properties.
The Foreign Investment Law provides incentives for foreign investors to own certain types of property for commercial purposes. However, the total land area owned by foreigners is also regulated.
Key Takeaways:
- Kazakhstan's property law is based on the Civil Code, Land Code, and other laws, regulating ownership, transactions, land use, and inheritance.
- Private ownership is allowed, but foreigners face specific restrictions, particularly on agricultural land.
- Land registration is mandatory for property ownership and transactions, ensuring legal clarity.
- Property transactions are subject to stamp duties and taxes, and due diligence is essential before buying property.
- Mortgages are common, and foreclosure procedures are regulated by law.
- Inheritance follows the Civil Code, with forced heirship rules, and there is no inheritance tax.
- The government has the right to expropriate land for public use, offering compensation to property owners.
RELATED Blog
0 comments