Pros and cons of the new law on the purchase and sale of real estate in new buildings

27/ 12/ 2022

Author: Victoria Doskovska, attorney at Dynasty Law & Investment On October 10, 2022, the Law of Ukraine On guaranteeing property rights to real estate objects that will be built in the future entered into force, which is designed to strengthen guarantees for persons who intend to purchase real estate objects in new buildings. This law was needed a long time ago, because the sphere of relations of purchase and sale of real estate in multi-apartment buildings at the stage of their construction was not sufficiently regulated at the legislative level for a long time, which led to abuses by developers and the absence of effective legal mechanisms for the protection of violated rights investors. The immediate advantages of the new law include the legally established obligation of the developer to place on his website links to all permit documents in the Unified State Electronic System in the field of construction; information about all planned real estate objects in the building, including those that have already been sold (because often the developer, in order to sell less popular objects, reported that all the others had already been sold); a draft of the sales contract with the definition of the persons who have the right to sign it on behalf of the developer. In addition, the developer is obliged to publish monthly photos of the construction site, the work schedule and the status of its completion. The developer may be fined for failure to fulfill these obligations. Also, the advantages of the law include the mandatory presence of a guarantee share of real estate in the building, which is registered with the customer for the entire construction period and will constitute a so-called reserve stock to guarantee the completion of the building by other persons in case of bankruptcy of the developer; state registration of the property right to the future real estate object; specific methods of protecting the investors rights in court. The disadvantages of the specified law are, in particular, its overload with a large number of legal terms and formulations that make it difficult to understand without seeking legal help, and the issue of the developers use of investors funds for other purposes remains unsettled. Meanwhile, Dynasty Law & Investment specialists will help you thoroughly understand all the pros and cons of innovations and their implementation.

Author: Victoria Doskovska, attorney at Dynasty Law & Investment

On October 10, 2022, the Law of Ukraine “On guaranteeing property rights to real estate objects that will be built in the future” entered into force, which is designed to strengthen guarantees for persons who intend to purchase real estate objects in new buildings.

This law was needed a long time ago, because the sphere of relations of purchase and sale of real estate in multi-apartment buildings at the stage of their construction was not sufficiently regulated at the legislative level for a long time, which led to abuses by developers and the absence of effective legal mechanisms for the protection of violated rights investors.

The immediate advantages of the new law include the legally established obligation of the developer to place on his website links to all permit documents in the Unified State Electronic System in the field of construction; information about all planned real estate objects in the building, including those that have already been sold (because often the developer, in order to sell less “popular” objects, reported that all the others had already been sold); a draft of the sales contract with the definition of the persons who have the right to sign it on behalf of the developer. In addition, the developer is obliged to publish monthly photos of the construction site, the work schedule and the status of its completion. The developer may be fined for failure to fulfill these obligations.

Also, the advantages of the law include the mandatory presence of a guarantee share of real estate in the building, which is registered with the customer for the entire construction period and will constitute a so-called “reserve stock” to guarantee the completion of the building by other persons in case of bankruptcy of the developer; state registration of the property right to the future real estate object; specific methods of protecting the investor’s rights in court.

The disadvantages of the specified law are, in particular, its overload with a large number of legal terms and formulations that make it difficult to understand without seeking legal help, and the issue of the developer’s use of investors’ funds for other purposes remains unsettled.

Meanwhile, Dynasty Law & Investment specialists will help you thoroughly understand all the pros and cons of innovations and their implementation.