On February 29, the Better Regulation Delivery Office (BRDO) presented a draft law providing a clear mechanism to protect the rights of owners of property to be built in the future from a double resale and illegal change of other technical specifications.

“There is no mechanism that could protect investors at present. That is why we believe that the adoption of a draft law, which would control the possibility to register ownership rights to properties that will be built in the future, is very important,” the BRDO Construction Sector Head Olena Shuliak said.

According to the Kyiv Dentons Office lawyer Angelica Livitska, every fifth buying transaction for properties to be built carries a risk.

That is why, the Draft Law “On Amendments to Certain Legislative Acts of Ukraine regarding protection of ownership rights to properties to be built in the future” provides for registering property rights to facilities that will be built. This registration will have 3 steps:

I step – a construction project owner registers the property right to every facility (apartment) to be built in the future;

II step – the property right is being reregistered in the name of an investor after acquiring the facility;

III step – the “ownership right to immovable property to be built in the future” title changes into the “ownership right to immovable property” title when the construction is finished and the facility is put into service.

It is also proposed to legislate the investor’s obligation to create a website devoted to the construction object. There must be a public information about object’s characteristics, approved project documentation for construction, construction progress, investors’ forum, etc. The website address should be present in advertising of residential real estate for sale.

Also the draft law proposes to reduce the state fee for notarial certification of real estate developers’ alienation contracts for newly built immovable property. For today, the amount of this fee is 1% of the contract. It is proposed to reduce it to 170 UAH.

The BRDO expert Maria Hrabovska noted that the conception of proposed changes must provide maximum efficiency of all available construction investment vehicles and eliminate unnecessary restrictions.

“Our idea is that the business has the right to choose financial mechanisms of construction investments independently.  For this, we propose to include corresponding amendments to the legislation and abolish the part 3 of Article 4 of the Law of Ukraine “On Investment Activity” that restricts the ways of investment. But state registration of property rights should be carried out independently from the selected construction investment mechanism,” Maria Hrabovska said.

The representatives of the Department of Civil and Financial legislation and Land Relations legislation of the Ministry of Justice of Ukraine, the Confederation of Builders of Ukraine, the Construction Chamber of Ukraine, the Ukrainian Building Community, Ukrainian leading law firms and business representatives in the field of real property commercialization participated in the roundtable.

During the roundtable, the experts discussed terms, which should be used in the Law (property rights or right of ownership).  As well as the postal address registration. Among others, it was proposed to identify objects that are being built by not the address, but the numbers in the cadastre. Examination of taxation issues and the process of the technical implementation of rights registration requires the further attention.

The BRDO called all the industry experts to provide their suggestions for draft law improving. All suggestions and comments sent to the Better Regulation Delivery Office (BRDO) will be took into account while creating the most effective mechanism of state registration of ownership rights to such properties.