What forms of investment attraction do developers use today?
The scheme of selling an apartment to the first investor depends on the form of contract that the investor concluded with the Developer.Today the most common forms of attracting investments in housing construction are the Purchase and Sale Agreement of property rights to an apartment and the Agreement on associate membership in a housing cooperative with a share contribution equal to the future apartment's cost.
By the way, about the process of purchasing through a cooperative you can read in our article Cooperative as a scheme for buying an apartment in a new building.
In both of these cases, your purchase of an apartment from the first investor occurs under the Agreement of Assignment of Claim (Cession).Assignment of claim - what is it?
The assignment of claim is defined in Article 512 of the Civil Code of Ukraine as the transfer by the creditor of their rights to another party under a deal.
In the situation of apartment investment, the creditor is the first investor who has paid fully or partially for the future apartment, and the debtor is the construction company which undertakes to build the house and transfer the apartment specified in the contract by the acceptance-transfer act.That is, the investor has the right to claim this apartment. It is exactly this right of claim that the first investor assigns to the new investor.
In which cases is assignment of claim possible, and in which cases is it not?
Article 516 of the Civil Code states that for assignment of claim, the debtor's consent (in our case, the construction company) is not required, unless the opposite is stipulated in the contract or by law.
There is a common practice where, in the investment contract, the construction company includes a clause requiring obtaining their consent for the assignment.
How much does the assignment cost?
Additionally, the contract usually determines a fee for the service of reissuing the contract to a new investor. The cost of such service often amounts to 5% of the contract price. Some construction companies, for example Kadorr, do not charge a fee for the apartment assignment service while the house is under construction. Many construction companies do not charge for such service if the apartment rights are transferred to relatives. Usually a list of such kinship relations is defined, often including spouses, children, parents, brothers and sisters, grandchildren, grandparents.
Again, we repeat, this is regulated by the contract that was concluded between the construction company and the first investor.
These same norms will apply to the new investor after the assignment, provided the contract is not amended. If you intend after purchase to transfer the rights to a relative who is not listed in the first contract, we recommend agreeing to amend the provisions of the original contractthat
