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“Purchase of housing, which is in process of construction. Investment in real estate.”

As for 2017, there is significant increase of sales on market of new buildings, and therefore the issue of understanding the legal regulation of such arrangement became actual.

Are you buying? Or playing lottery?
In practice, developers use the least risky systems for themselves for real estate “sales” in new buildings. In this way they are insuring themselves in case circumstances hang over “their”, but in fact your money.

Typical “shadow” schemes:
1. Preliminary agreement.
2. Sale through housing construction cooperatives.
3. Sale of property rights.
4. Forward contract (Derivative).
5. The booking agreement.

It must be understood that in accordance with the legal aspect of such way of the real estate “acquiring”, you only have a phantom right for apartment, but you do not acquire ownership, and your costs are not connected to the construction object. It means, in such cases all you have is only the decency of the developer. In addition, most of such contracts do not even provide the transfer of property rights for the real estate, and you should think about it.
In decree on the case No. 6-168цс12 dated January 30, 2013, the Supreme Court of Ukraine noted that property law, which can be defined as “The Right of Waiting”, is an integral part of property as an object of civil rights.
In accordance with the Law of Ukraine “On Investment Activity”, investing and financing construction of housing objects using non-state funds raised from individuals and legal entities, including those in management, may be carried out exclusively through:
1. Construction financing funds;
2. Real estate operations funds
3. Joint Investment Institutions
4. Also by issuing targeted bonds of enterprises, due to which the fulfillment of obligations is performed by transferring the object (part of the object) of housing construction.

That is to say that the investing in real estate is regulated at the legislative level, but not all developers are governed by such legislation. Why? About this and more we will tell you in next articles.

Considering the relevance of this issue, the “Hordiy Consulting” team will prepare a group of articles and talk about all the risks and benefits of such schemes.
Vasyl Hordiy
January 25, 2018