In September 2022, the President signed a new Law on Guaranteeing Rights to Real Estate Objects that will be built in the future. For simplicity, we will refer to it as the Law on Guaranteeing Rights to New Buildings. This is truly a revolutionary law that will fundamentally affect the primary real estate market.
What will change?
Registration of rights to new buildings in the state registry
The term "future real estate object" is introduced – this is a part of a divisible object of unfinished construction (multi-apartment building), which after being put into operation becomes a separate real estate object (apartment, apartment-type apartments, non-residential premises, storage rooms, parking spaces...). For simplicity, we will call them apartments in new buildings.
Purchase and sale transactions for premises in new buildings are possible only after registration of rights to such objects in the state registry.
And registration of rights to apartments in new buildings will be possible only after obtaining a construction permit. This is undoubtedly a correct norm that will eliminate the practice of sales before obtaining a permit.
Initially, rights to all premises and apartments in new buildings will be registered in the name of the developer and the construction client.
There may be a situation where the construction client and the developer are the same company, or they may be two different organizations. For example, the construction client owns the land plot, while the developer develops the project and manages it. In such a case, the construction client and the developer, according to the agreement, distribute the future premises and register rights to them in the state registry.
What does this give? This mechanism eliminates the possibility of double sales.
Guarantee Share
The guarantee share will include a portion of the premises in a multi-apartment building that cannot be sold or pledged as collateral throughout the construction period. The size of this share will be determined by the Cabinet of Ministers.
This guarantee share will become available for sale after the completed building is put into operation.
And if the object becomes an unfinished building, for example due to the developer's bankruptcy, apartments from the guarantee share will be sold to complete the object.
Until the new law takes effect, the problem of unfinished buildings remains relevant; see
how not to "fall into" a long-term construction project in the article "The State Finally Took Up Long-Term Construction".
Disclosure of information about the object, sold apartments, and remaining unsold apartments
The law obliges the construction client and the developer to regularly publish on their website the following information:
- technical characteristics of the residential complex under construction
- construction schedule and degree of its completion
- monthly photo report
- list of premises that have been sold
- list of apartments available for purchase
- price and conditions of apartment purchase
Thanks to this transparency, it will be possible to assess how in demand a particular object is on the market, what the sales dynamics are, what the volume of unsold apartments is, and whether there are sufficient resources for successful completion of construction.
It will also be possible to assess risks to avoid falling into an unfinished building.
Notarization of purchase agreements for apartments in new buildings
When purchasing an apartment in a new building, notarization of such an agreement will become mandatory.
In the state registry, the买
