The “right without guarantees” is a current status of property rights of citizens who have invested in own housing. The recent situation with the raiders’ attempt to occupy an apartment building at the 58a Bohdana Khmelnytskoho St. in Kyiv is a good example. They used a classic scheme, when a real estate developer is declared a bankrupt and several owners appear in court.
The Construction Sector Head of the Better Regulation Delivery Office Olena Shulyak believes that a lack of effective tools to protect ownership rights to real estate becomes a snow avalanche that involves more and more injured persons on a daily basis. The state, which is not an effective regulator, plays a key role in this scheme, since the fund of construction financing it established to raise funds doesn’t protect investors from multiple sales, bankruptcies and delayed construction.
“Currently, investors have only a financial intermediary represented by the fund of construction financing under the law, but in case of problems, it won’t help to resolve them or return the invested money. The fund receives the money and a contractor company carries out the construction, but only the investor deals with risks,” Olena Shulyak said.
The BRDO Office experts developed a mechanism that will protect Ukrainian citizens from such situations and provide the investors not only with the right to purchase ownership titles, but also with real ownership rights for real estate. We are talking about the draft law of Ukraine on registration of property rights to facilities to be built in the future.
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 in three steps:
I step – construction project owners register the property right to every facility (apartment) to be built in the future if they have all the necessary permits making it impossible to carry out illegal construction projects;
II step – the property right is being reregistered in the name of an investor after purchasing 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 automatically when the construction is finished and the facility is put into service.
This initiative is being currently approved by the Ministry of Justice. We hope that it will be presented to the Government for consideration and submitted to the Parliament in the coming days.