Primary real estate market: legislative changes

Civil law
Law Services - Primary real estate market: legislative changes

🇺🇦On October 10, 2022, Law of Ukraine No. 2518-IX “On guaranteeing property rights to real estate objects to be built in the future” entered into force.

The main purpose of this law is to increase the protection of the rights of investors in construction and to provide them with additional powers and guarantees in their relationship with the developer.

What has changed?

The key difference is that from now on funds for construction will be attracted only after special property rights to the object of unfinished construction and future real estate objects in it are registered in the State Register of Real Property Rights.

The law provides for the following innovations:

  • the concept of the future real estate object is introduced;
  • the developer will be able to sell apartments only after receiving all the permit documentation and if all the conditions for completing the object are in place;
  • each future apartment in an apartment building must be registered in the register of property rights of the Ministry of Justice as a separate object of property rights;
  • first sale contracts must establish the developer’s obligation to connect the building to utility networks on a permanent basis before putting the facility into operation;
  • information on the number of sold apartments in the building must be open;
  • the construction customer must determine the so-called “guarantee share” of future real estate objects. Alienation of such guarantee share will be prohibited until the object of unfinished construction is put into operation;
  • all changes to the project documentation will now require agreement with investors if such changes affect the rights of such investors;
  • investors will have the right to terminate the sales contract in cases where the construction customer violates the commissioning period by more than 6 months or makes changes to the project documentation without agreement with the investor;
  • advertising for the purpose of attracting funds from individuals and legal entities for the construction of objects will be allowed only on the condition that the customer of the construction has received all the permits and rights necessary for the start of construction;
  • the customer of the construction must create a site on which he will post detailed information about the construction participants, about the received permit documentation, information about the land plot under development, about the construction object. The site should also include a sample contract with buyers and monthly information on the progress of construction.

In summary, we can say that the law should regulate the construction market and protect the rights of investors from fraud by unscrupulous developers.