Reclamation of property from an unfair purchaser: The Supreme Court clarified the nuances of the prosecutor’s claim

Depositing the value of the real property into the court’s escrow account is a mandatory prerequisite for granting a claim to recover property from a bona fide purchaser.

When reclaiming property from a bad-faith purchaser, the provisions of Part 5 of Article 390 of the Civil Code of Ukraine do not apply. The issue of the purchaser’s good faith is resolved by the court after examining the evidence at the stage of rendering a judicial decision, rather than upon accepting the claim for consideration.

These conclusions were reached by the Supreme Court, composed of a panel of judges of the First Judicial Chamber of the Civil Court of Cassation: Resolution of the Civil Court of Cassation of the Supreme Court dated January 14, 2026, in Case No. 354/160/25 (Proceedings No. 61-12856св25) 

In the case under review, the prosecutor, acting in the interests of the state, filed a lawsuit with the court seeking to reclaim into state ownership a land plot located within a populated area from unlawful possession by a third party, justifying his claims by the bad faith of the acquirers of the disputed land plot, in particular the defendant (the last acquirer) in the case.

Leaving the prosecutor’s claim unconsidered on the grounds of failure to comply with the requirements of the court’s ruling to remedy deficiencies—namely, the prosecutor’s failure to provide an expert monetary valuation of the land plot and to deposit funds equal to the value of the disputed land plot into the court’s escrow account— the court of first instance, with which the appellate court concurred, reasoned that Article 390 of the Civil Code of Ukraine (as amended by Law of Ukraine No. 4292-IX of March 12, 2025, “On Amendments to the Civil Code of Ukraine Regarding the Strengthening of Protection of the Rights of a Good-Faith Acquirer”) establishes the obligation of the local government body or the prosecutor to deposit the value of the real estate into the court’s escrow account, which is a prerequisite for the further consideration of the case to ensure compliance with and enforcement of legal requirements at the time of the decision in the case, regardless of the outcome of the proceedings.

According to the findings of the lower courts, the defendant is considered a bona fide purchaser of the disputed land plot until proven otherwise; consequently, the requirements of the aforementioned Law No. 4292-IX apply to the disputed legal relationship.

In overturning the court decisions challenged by the plaintiff and remanding the case for a new trial to the court of first instance, the Civil Chamber of the Supreme Court noted that the provisions of Part 5 of Article 390 of the Civil Code of Ukraine apply to cases where a claim is filed to reclaim property from a bona fide purchaser. However, in the case of filing and adjudication by the court of a claim for the recovery of property from a bad-faith acquirer, the aforementioned provision does not apply.

The Civil Chamber of the Supreme Court noted that the issue of whether the acquirer acted in good faith or bad faith can be resolved by the court only after examining the evidence at the stage of rendering a judicial decision.

If the purchaser is found to be acting in bad faith, the court grants the claim pursuant to Article 387 of the Civil Code of Ukraine without applying the provisions of Part 5 of Article 390 of the Civil Code of Ukraine, which establishes the procedure for compensating the value of the property to a purchaser acting in good faith. Conversely, if the plaintiff fails to prove the purchaser’s bad faith and it is established that the purchaser acted in good faith, the court shall deny the claim, in particular pursuant to Part 5 of Article 390 of the Civil Code of Ukraine, unless the plaintiff has previously deposited the value of the property into the court’s escrow account.

The Civil Chamber of the Supreme Court drew the courts’ attention to the fact that, pursuant to paragraph 2 of Section II of Law No. 4292-IX, the provisions of this Law have retroactive effect, particularly regarding the conditions and procedure for the plaintiff to compensate a bona fide purchaser for the value of real property, the valuation of which was carried out in accordance with the procedure established by law in effect as of the date of filing the complaint, in cases where the court of first instance had not issued a decision to reclaim the property from the bona fide purchaser as of the date this Law entered into force.

At the same time, the prosecutor in this case filed a claim to reclaim a land plot from a bad-faith acquirer, and therefore the provisions of Part 5 of Article 390 of the Civil Code of Ukraine, Part 4 of Article 177, and Paragraph 3 of Part 2 of Article 185 of the Code of Civil Procedure of Ukraine do not apply in this case when deciding whether to accept the claim for consideration.