Law of Ukraine “On Ensuring Proprietary Rights to Real Estate Objects to be Constructed in the Future” No. 2518-IX (“Law”) entered into force on 10 October.
This Law aims to protect the rights of those investing in construction and eliminate some legislative gaps in this area.
To achieve this goal, the Law:
- introduced a new party responsible for the organisation and financing of construction – the developer
- provided for a future real estate object (“FREO”) as a new object of civil circulation, which a construction initiator or a developer (“Constructor”) may sell after registering a special proprietary right before the start of construction
- granted the owners of special proprietary rights to the FREOs the right to demand in court the recognition of the ownership right to the object in respect of which the special proprietary right arose
- established a fine for the Constructors that fail to comply with requirements on public disclosure of information about future residential construction
- established FREO sale and purchase agreements, agreements for participation in a CFF, issuing of target corporate bonds and REOF certificates as the only options to invest in construction
- restricted partial disposal of FREOs by the Constructors before the objects are commissioned
The Law prevents the double resale of objects but needs further development in part of introducing effective tools to protect investors’ rights from unfair Constructors.
We will be happy to help you assess the Law’s impact on your future projects.