A progressive land reform was implemented in Azerbaijan in the 1990s. The country was one of the first among the former USSR republics to introduce the private ownership of land, as well as free trade and transfer of title to land, and it distributed a large portion of land to its population. A large amount of formerly state-owned real estate was also either sold or distributed to the public and to businesses.
Azerbaijani law provides for the following basic rights in land: (I) ownership; (II) lease; and (III) use. In Azerbaijani legislation real estate is generally referred to by the term "immovable property". Pursuant to the Law on the State Register of Immovable Property (the “State Registration Law”), the creation of rights to property (ownership and other rights), transfers and the termination of rights are subject to state registration with the register of immovable property.
The State Registration Law recognizes the registration of rights to immovable property carried out by various state authorities prior to the date of the law, and provides for the transfer of data to the register from the various state authorities that previously registered rights to immovable property. Under the State Registration Law the register will be available to a limited range of persons entitled to receive information on the data kept in the Register. As a general rule, the registration of property rights to immovable property takes not more than 20 days. The State Registration Law contains special provisions in respect of registration of certain rights in immovable property:
* Ownership and other property rights regarding unfinished construction of immovable property may be registered in advance.
* Property rights regarding individual apartments in unfinished buildings or non-residential properties and mortgages thereon may also be registered in advance.
* In the event that immovable property is leased or given for use for a period exceeding 11 months, such right must be registered by either party to the lease or use agreement.
The concept of ownership in Azerbaijan includes the right to exercise possession, the right to use/benefit and the right to dispose of the land (transfer ownership or other rights in land to third parties). It should be noted that the right to own land is a privilege of (I) the Republic of Azerbaijan, (II) municipalities, and (III) Azerbaijani individuals and legal entities. Foreigners (individuals and legal entities) and stateless individuals may not own land in Azerbaijan and may not be granted a purchase option on a lease. However, international organizations, foreign legal entities and foreign citizens and states may lease land in Azerbaijan. Foreigners who have acquired ownership rights in land through general legal procedures, such as the enforcement of a security interest, a grant or a succession must dispose of their ownership (e.g. through a sale) within one year; otherwise, ownership of the land reverts to the state or the relevant municipality. There is no legal limitation on the ownership of buildings, constructions etc. by foreign individuals and legal entities.
Certain categories of land plots are under the exclusive ownership of the state or municipalities, and may only be leased by or granted for the use of private persons.
In addition to ownership, the Land Code recognizes perpetual and temporary land use rights, lease rights and easements. A temporary land use right is granted for up to 99 years and may be extended by the parties. A perpetual land use right is granted for an indefinite period. The holder of such rights is liable only for the land tax for land use. Perpetual and temporary land use rights are granted by the state and municipalities only in exceptional circumstances to a limited number of persons listed in the Land Code. Landowners may grant perpetual or temporary land use rights under an agreement with the land user. Land use terms are defined by an agreement between the landowner and the land user. The lease of land is the use of land for a specific period for a charge. Leases are concluded for a period agreed by the parties. Rent payments for the lease of privately held land parcels are freely negotiable. Rent payments for state or municipally owned land parcels are determined according to market conditions, but may not be less than specified statutory rents. With regard to agricultural land, discounts from statutory rents are available depending on market conditions in the agricultural sector.