On 10 October 2022, Law of Ukraine No. 2518-IX "On guaranteeing property rights to real estate to be constructed in the future" ("Law") came into effect.
Originating from draft bill No. 5091, which had been under discussion since February 2021, and finally made into law by Parliament on 15 August 2022, this Law aims to offer more protection to those who invest in future real estate.
Highlights
The Law intends to secure the rights of investors in real estate (particularly residential real estate) on the primary market by introducing different measures described in more detail below.
A major change is that from now on, funds may be raised for real estate construction only if a special property right to the property under construction, as well as to the future real estate objects therein, is registered in the State Property Rights Register.
Detailed overview
The Law envisages, among other things, the following novelties:
- The concept of a future real estate object - a future real estate object is defined as a part of property under construction, which after the commissioning will become a separate real property item (apartments, other residential or non-residential premises, parking lots, etc.).
- From now on, the sale of future real estate objects to investors will be possible only after the developer obtains all the necessary construction permits and ensures the state registration of a special property right to all future real estate objects in a property under construction.
- Developers must reserve the so-called "guaranteed share" of future real estate objects. Alienation of such guaranteed share will not be possible until a property is commissioned. The minimum amount of guaranteed shares is to be determined by the Cabinet of Ministers of Ukraine.
- The Law obliges developers to disclose and publish information about the construction project, including the anticipated year of commissioning, information about construction documents, information about construction progress with photos, information about future real estate objects and the terms of their purchase, etc. Failure to comply with such disclosure obligations entails administrative liability (in a form of penalty).
- Any changes to the project documentation will now be subject to the consent of the investors if such changes affect those investors.
- Sale and purchase termination rights are granted to the investors if the developer delays the commissioning for more than six months or amends the project documentation without the investors' consent.
- Advertising with the aim of raising funds from individuals and private legal entities for the construction is allowed only if the developer has obtained all permits and rights necessary to commence the construction.
The Law will apply only to those properties under construction, construction permit to which was obtained after the Law became effective.
