Small privatization: how to buy a state or municipal property at auction

State and municipal property that its owner no longer needs is sold at electronic privatization auctions. State assets are put up by the State Property Fund of Ukraine and its regional offices, municipal ones by city, settlement and village councils. Bidding takes place on Prozorro.Sale, and any person or company that meets the buyer requirements can buy.

What is sold

• Individual buildings and premises — former offices, shops, canteens, dormitories, bathhouses, garages, premises in residential buildings.
• Unfinished construction — usually the cheapest, but also the riskiest.
• Single property complexes — enterprises together with their assets, staff and liabilities.
• Other individual property — structures, equipment, vehicles.

Almost all of these sales are small privatization. Large enterprises are sold separately (large privatization) — there are only a handful of such lots. All lots are collected in the “Privatization” catalogue; you can filter it by region, price and words in the title.

Pay attention to the land: whether the plot under the building is sold together with it is stated in the announcement. Often it is arranged separately after the purchase.

Sale conditions

A property can be sold without conditions or with conditions. Conditions are the buyer’s obligations after the purchase: for example, keeping the type of business, preserving jobs, paying off the enterprise’s wage arrears or carrying out repairs within a set period. They become part of the contract, and failing to meet them can cost you the contract. So read the conditions before you apply, not after you win.

Why the price may drop

The law provides several sale formats. First comes a regular auction where the price goes up. If it fails, the property is put up at an auction with a reduced starting price, and if there is still no buyer — at an auction with step-by-step price reduction: the price falls step by step until someone accepts it, after which other bidders can still offer more. That is why the same property sometimes appears in the catalogue several times, cheaper each time — the lot page shows this in the “Previous auctions of this asset” block. More in our guide to repeat auctions.

Who cannot buy

The Law of Ukraine “On Privatization of State and Municipal Property” restricts who can buy. In particular, persons connected with the aggressor state, persons under sanctions and companies that do not disclose their ultimate beneficial owner cannot take part. The full list and the documents used to confirm compliance are in the announcement.

How to check a property

• Read the announcement and documents on prozorro.sale: area, technical condition, utilities, encumbrances, sale conditions.
• Use the opportunity to inspect the property — the announcement says when and whom to contact.
• Find out whether the property has a tenant and what will happen to the lease after the sale.
• Compare the price with similar lots in your region — the catalogue can be sorted by price.

How to take part

1. Register on one of the accredited Prozorro.Sale e-marketplaces.
2. Pay the registration fee and the guarantee deposit — the amounts and bank details are in the announcement.
3. Submit an application with documents before the deadline shown on the lot page. Do not leave it to the last day: the payment has to clear in time.
4. Take part in the auction online on the set day; whoever offers the highest price wins.

After you win

The winner signs the auction protocol and then a sale and purchase contract certified by a notary. The property must be paid for within the deadline in the announcement, after which it is handed over under a transfer certificate. If the sale had conditions, their fulfilment is checked afterwards. The winner’s guarantee deposit is usually credited towards the price, and bidders who did not win get it back under the auction rules.

Privatization lots currently accepting applications

Looking for premises in your city or a particular type of property? Save a filter with a region and keywords — the radar will message you in Telegram as soon as such a lot appears, including at a repeat auction with a lower price.

This is an overview for orientation, not legal advice. The binding terms of each auction are in its announcement and documents on prozorro.sale.