Notarised contract of sale of real estate, which was not signed by a party to the contract (contains signature of an unauthorised person), is not concluded - SC GC

In the event that a notarised real estate sale and purchase agreement is signed by an unauthorised person on behalf of the seller and notarised using stolen documents, and the seller's identity is established on the basis of a forged document, the agreement should be qualified as not concluded if the owner has not established the fact of abuse of his rights.

An owner whose property has left his legal possession on the basis of an unconcluded agreement may file a claim for recovery of the property from the unlawful possession of another person or from a bona fide purchaser (Articles 387, 388 of the Civil Code of Ukraine), without contesting the transaction(s) concerning the disputed property and without cancelling the decision(s) on the state registration of the ownership of the property in favour of another person or persons.

This legal conclusion was made by the Grand Chamber of the Supreme Court.

In the circumstances of the case, in December 2017, the owner of an apartment in which she did not live learned that unknown persons had moved in without her knowledge.

At her request, law enforcement agencies found that in September 2017, the apartment was sold to an unknown person using a passport forged in her name, who then alienated it. She did not personally sign or enter into any contracts for the sale of the disputed apartment.

The plaintiff filed a lawsuit seeking to invalidate the sale and purchase agreement for the disputed apartment from the moment of its execution, to cancel the state registration decisions, to reclaim the property from someone else's illegal possession and to evict them.

The courts of the previous instances partially satisfied the claim, refusing to invalidate the apartment sale and purchase agreement. The courts were guided by the fact that the initial apartment sale and purchase agreement concluded on behalf of the plaintiff with an individual was void due to the circumstances of the plaintiff's failure to sign it.

The Grand Chamber of the Supreme Court amended the reasoning parts of the decisions of the courts of previous instances, stating that the main criterion for distinguishing between concluded and unconcluded sales transactions is the fact that the parties to the transaction expressed their will - an external objective form of expressing a person's will, which is manifested in the performance of purposeful actions to change the civil legal relations that existed at the time of the transaction.

If the process of forming the will was influenced (pressured) by external circumstances or factors that deform it, as provided for in part 1 of Article 215 of the Civil Code of Ukraine, this is a ground for declaring the transaction invalid.

The absence (forgery) of a signature of a party to a transaction requiring a written form does not generally indicate the invalidity of such transaction, but rather indicates a defect in its form and, in the absence of confirmation of the party's will to enter into it, indicates that such a transaction has not been concluded. In other words, it is not a defect in the will of the party, but its complete absence.

An unconcluded transaction cannot be declared invalid or considered null and void (void by virtue of the law), since the invalidity of a transaction as a private law category is intended to prevent or stop violations of civil rights and interests in respect of which the will of the parties to the transaction was expressed, or to restore them.

The fact of notarisation of an agreement that does not contain a party's signature (or contains a forged signature) does not affect the validity (conclusion) of such an agreement.

An owner whose property has left his/her legal possession under an unconcluded agreement may protect his/her property right by filing a vindication claim pursuant to Articles 387 and 388 of the Civil Code of Ukraine without challenging the transaction(s) in respect of the disputed property and cancelling the decision(s) on state registration of ownership of the property belonging to him/her by another person(s).

Taking into account the circumstances established in the case, namely the alienation of the disputed property without the will of the owner on the basis of stolen and forged documents, the reclamation of such property in favour of the rightful owner from the last purchaser is a proportionate interference with the latter's property right, which is based on law, pursues a legitimate goal and is necessary in a democratic society.

Resolution of the Grand Chamber of the Supreme Court of 27 November 2024 in case No. 204/8017/17 (proceedings No. 14-29цс23) - https://reyestr.court.gov.ua/Review/123780071.

This and other legal positions of the Supreme Court can be found in the Database of Legal Positions of the Supreme Court - https://lpd.court.gov.ua.