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Support of real estate transactions: legal due diligence of apartments in new buildings

To secure purchase of apartment in a new building, it is recommended to learn in details all necessary documents. In addition, to prevent from possible financial expenses, you should to involve qualified specialists, for example: such as real estate lawyer of our Law Office in Kyiv.

The lawyer, who carries out registration of real estate sale and purchase transactions, will carefully analyze documents of the developer’s company, general contractor, and other enterprises which involved in construction. In addition, there are analyzed documents for land where construction works are carried out, a set of permits, information received from special registration and judicial registers.

Further, if there are no any remarks to construction documents, we provide legal support of real estate transaction in Kyiv city and Kyiv region.

Legal due diligence of apartments in new buildings consists of the following stages:

Due diligence of participants of the construction in the Register of legal entities

There is used a special service of the Ministry of Justice of Ukraine, that is the Unified Register of legal entities and individual entrepreneurs.

In the stated above state register, there is verified information regarding all participants of the construction:

  • developer’s company;
  • firm of a general contractor;
  • financial company which accepts money from buyers / investors.

Pay attention to the date of company establishment, amount of its authorized capital, founding members.

It is recommended to carefully review documents of developers who registered in the state register recently and which have minimal authorized capital.

It’s important to remember!

The amount of minimum authorized capital for limited liability companies is not fixed.

Due diligence of all participants of construction in court registers

Attention should be paid not only to decisions of courts of first instance, but to all cases in courts of appeal or courts of cessation.

At legal audit, it is necessary to work with registers of civil cases (which are hearing by general jurisdiction courts) and commercial cases (which are hearing by economic courts). So, actions against developers may be applied both on the side of individual investors in civil proceedings, and on the side of legal entities contractors in economic proceedings.

If there is found a large amount of information, the real estate lawyer of our Legal Firm in Kyiv will be able to systematize all court decisions.

Due diligence of all participants of construction in mass media

In this case, there is analyzed information on reputation of developer, general contractor, financial companies which receive money from buyers. In addition, as to apartment building (proximity to kindergartens, schools, hospitals, and availability of convenient traffic interchange and so on).

It is necessary to note, that the legal firm providing support of the real estate transaction, may apply official requests to the specified mass media.

Due diligence of permits for construction

In accordance with the current legislation of Ukraine, construction of housing buildings is carried out as following:

  • drafting of necessary documents by a developer:
    • urban conditions;
    • proper technical specifications (it’s a complex of terms and requirements to engineering support for construction object regarding water, heat, electricity, and gas supply);
    • project;
  • beginning of construction is possible only after registration of declaration on beginning of construction works;
  • then there are carried out construction works and putting the built property into operation (with further registration of proper declaration on authorities of state architect and construction inspectorate);
  • registration of ownership to apartments in a new building.

At due diligence of construction documents, you should pay attention to the specified documents.

It’s important to remember!

In case of unauthorized construction, the supervisory authorities are entitled to apply petitions on demolition of such building to courts.

Involved real estate lawyer detects such risks timely and recommends how to avoid the stated situations.

Due diligence of land documents

Land, where a housing building is built, is verified in the State Register of proprietary rights on real estate, in State Public Cadastre Map of Ukraine and in the Register of the State registration, cadastre and cartography service of Ukraine.

We recommend you to pay attention to the following:

  • address, area, purpose of land should coincide with information specified in permits for construction;
  • purpose of land should provide possibility of construction just an apartment buildings;
  • if there are no arrests, encumbrances on land in court, criminal proceedings;
  • owner / leaser of land should be the same in all registers.

Due diligence of construction object

Construction object is verified in a register of rights to real estate, urban cadastre of Kyiv city (which includes information about all unauthorized buildings on the territory of city), court registers (by request of building address or name of a proper housing complex) and in mass media.

Due diligence of sale/purchase scheme and payment of cost for apartment

For present, there are some of the most extended schemes to purchase apartments in new buildings.

Conclusion of preliminary agreements

A developer concludes an apartment sale and purchase preliminary agreement with the buyer of the apartment. Under which it is obliged to sell real estate after completion of building construction and taking a building into operation.

Signing this agreement, a buyer makes an advance payment as a part of the apartment cost. After completion of construction, there is paid remain amount of cost. Some developers require 100% payment at signing an apartment sale and purchase preliminary agreement.

Use of construction financing funds

In this case, there is determined the following procedure of receiving money from individuals to housing building construction:

  • a developer involves a commercial company with license for financial services to cooperation;
  • the specified facility creates a Construction financing fund;
  • then investors, who wish to purchase apartments, conclude agreement with commercial company and transfer money for construction to the stated company and no to customer;
  • then commercial company transfers money to construction customer and controls the proper use of funds;
  • herewith at construction a customer /developer gives in mortgage to commercial facility his proprietary rights on construction object.

The necessity to involve CCF is provided by the Law of Ukraine “On finance and credit methods and management of property at apartment construction and real estate transactions”.

At the stated procedure, which is very difficult to understand, only a real estate lawyer may determine a safety of transaction for a buyer.

Entering to housing cooperative members.

A developer forms cooperation before staring the construction.

Then the stated HC executes permits on its name and acts as a customer of construction works. And sale of apartments is carried out through acceptance of buyers/investors to cooperative members.

At completion of construction, a cooperative sells apartments to investors based on proper civil legal transactions.

Please note, that the stated above actions (legal due diligence of real estate) are obligatory for any investor, regardless of cost of housing building as to which money is deposited.

Support of real estate transactions in Kyiv

Real estate lawyer of the Law Office of Andriy Lotysh may provide a high-quality legal support of your case.

We check various new buildings in Kyiv city and Kyiv region, both as with available safety legal documents and with hidden defects and high risks for investors.

To book legal support of real estate transactions, please call to our company.

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