Is It Realistic For Investors In Ukraine to Protect Themselves From Construction Scams?

by Roman Cheplyk
Wednesday, December 1, 2021
Is It Realistic For Investors In Ukraine to Protect Themselves From Construction Scams?

Investing in real estate is one of the most common types of placement of accumulated capital in Ukraine, which has its advantages, disadvantages, and at the same time – the risks of its loss

Let's try to understand how to save the investment and whether there are enough ways to protect the rights of the investor.

Do not trust and check!

Investors are more likely to buy apartments during construction, as this saves 30-40%. In addition, during the construction process, the value of the acquired property can increase several times, which makes such investments very attractive. But remember that the lower the quality of the item, the lower the risk of incomplete.

The main risk for the investor may be to stop the construction of real estate or, even worse, to complete it altogether. This can happen even if the developer is honest and wants to fulfill all obligations, as certain force majeure circumstances may not allow him to carry out his intentions. For example, a change of political force in power in Ukraine. Moreover, it should be remembered that even the presence of the entire list of permits from the developer does not guarantee timely and complete construction. In addition to these political force majeure circumstances, construction may be stopped for other, purely economic or legal reasons, such as lack of money from the investor to continue financing the work, detection of violations in the project documentation or construction process, revocation of permits and more.

Several measures can protect a prospective investor from acquiring a troubled asset. First, before investing, you should conduct a comprehensive check of the reputation of the developer, to find out the number of homes built by him, how many years he has been working in the market. It is also worth paying attention to the construction dynamics on the site, which should be at least 2-3 floors per month.

The next stage is to check the documentation for the land plot. To minimize the risks, it is necessary to ask the developer for documents confirming his right to the site where the construction takes place. Apart from the records provided by the developer, the information in the State Register of Real Rights to Immovable Property should also be checked for the land plot and the relevant record of the right to it for the developer.

The last stage before investing is checking the permit documentation, in particular obtaining from the developer confirmation of the registered right to build, notification of the start of construction works or permission to perform them.

However, it will be challenging for the average citizen-investor to analyze all documents for compliance with current legislation and information in the relevant registers, correctly assessing the risks of investing in a particular object.


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