Risks of investing in the construction in progress would try to make limited by the law

Who we are > News > Risks of investing in the construction in progress would try to make limited by the law

Risks of investing in the construction in progress would try to make limited by the law

At the conclusion of contracts, which provide financing for the construction of real estate objects, the majority of investors have limited information on the construction project. Among other things - the presence of the customer's building rights for the execution of works, project documentation, the actual state of the facility and the like.

Existing risks of investing in construction in progress was offered to reduce by the authors of the draft Law № 5091 from 02.17.2021 "On Guaranteeing Rights to Real Estate Objects to be Built in the Future".

It is noted that the customer of the construction today can mislead potential investors about information that is important to them. Due to the lack of information, the investor cannot qualitatively and fully assess the existing risks, including in the absence of a real opportunity to control the activities of the construction customer:

- changes in the technical characteristics of the object without the consent of the investor;

- double resale of the object by unscrupulous construction customers;

- challenging the ownership of the future immovable property acquired, in particular, by means of a financing method not provided for in part three of Article 4 of the Law of Ukraine "On Investment Activity".

Therefore, among other things, the project proposes to establish:

- conditions under which objects of unfinished construction, future real estate objects can be objects of civil rights;

- basic requirements for the disclosure by the construction customer (construction developer, manager of the construction financing fund) information about the construction in progress (apartment building);

- mechanism of state registration of ownership of such objects;

- a guaranteed share of the construction of a real estate object - a set of future real estate objects in one divisible object of construction in progress (in each stage of construction / each start-up complex), property rights to which are encumbered in order to ensure the completion of the corresponding object of construction in progress in the event of financial insolvency of the construction customer / developer construction;

- a list of persons who have the right of first alienation, transfer into trust as a way to ensure the fulfillment of obligations of the object of construction in progress and the future real estate object and the moment from which such a right arises;

- specifics of transactions with construction in progress, future real estate, including the conclusion, execution and termination of sales and purchase agreements;

- features of the mortgage, as well as certification by notaries of transactions on such objects;

- peculiarities of foreclosure within the framework of enforcement proceedings.

Thus, the legislators expect to establish mechanisms for a transparent and safer attraction of funds from individuals and legal entities in the construction.

Contact us