Without permits, even a new building with the best contracts and offers for the buyer can not be completed. Improper permits or their complete absence is a direct way to stop construction work.
What are the main problems of buyers?
– Stop of construction works.
– Inability to put the house into operation.
– Not connecting communications.
– Poor construction quality.
But these are only global problems that are the result of unfair behavior of the developer, and arise when all permissions are not received. Let’s look at each of them in more detail.
1) stopping construction work.
This problem is closely related to the inability to put the house into operation.
Suspension of construction work may occur on the basis of the instructions of the State architectural and construction Inspectorate of Ukraine, the presence of court cases or criminal proceedings in the developer. In all cases, this does not happen just like that, but has priority reasons.
– the developer’s lack of land rights.
Sometimes the company that sells You an apartment and the one that owns or uses the land plot are two different companies and they do not always have a corresponding agreement. As a General rule, all property rights to the new building, and therefore to Your apartment, belong to the person who owns the land plot.
It may also be that the developer has ended the lease agreement for the land plot and it is not renewed for a new term at the initial stage of construction, which means that such construction is illegal.
– the inability to use the land plot for the construction of a specific new building.
This is probably the most common problem of new buildings related to land. Each land plot in Ukraine belongs to a certain category of land (land for transport, residential and public buildings, agricultural purposes, etc.) and has a corresponding purpose (for the construction and maintenance of an apartment building, for the construction and maintenance of other public buildings, for the construction and maintenance of a residential building, etc.).
First, to the construction of new buildings on lands of residential and public buildings. Some developers are starting construction on land for transport, energy, and so on. This is a clear sign that construction will be stopped sooner or later.
Secondly, the specific purpose of the land plot is also important, as well as the purpose for which the land plot was transferred to the developer for use.
For example, the land plot is in communal ownership, the developer has a signed lease agreement, but such land was transferred to use for the construction of a Parking lot, and not for the construction of an apartment building. Accordingly, the developer violates the terms of the lease agreement and this will lead to the suspension of construction work in the future.
Here you need to understand that properly designed land is the first Foundation, without this, no other permits can be in order, because obtaining the same permit for construction work is directly related to a properly designed land plot.
– violation of the permitted number of storeys by the developer.
One of the documents that the developer receives when designing a house is urban planning conditions and restrictions. Urban planning conditions determine the main characteristics of the future new building: the distance to neighboring houses, requirements for landscaping, the number of apartments, and so on. But the main thing: this is the allowed number of floors.
If the developer was granted the right to design a building within 10 floors, and the developer offers apartments on the 15th floor, this is a risk. This will result in the fact that either the house will have ten floors and your apartment will not be in the house, or the developer will build 15 floors, but it will be impossible to put such an object into operation, and therefore formalize ownership.
At the same time, this risk is not only for those who buy on any floors. There is a well-known case when a developer, in accordance with the content of urban planning conditions and restrictions, could only build a new building on three floors, although all eight floors were sold. In the end, construction was banned, and neither buyers who purchased housing on the second floor, nor those on the eighth floor, were able to get apartments, court cases continue to return the invested funds.
2) The inability to put the house into operation.
After completion of construction, the developer must receive a certificate of commissioning. If the developer had problems with permits, this is not always possible.
What can prevent the house from being put into operation?
– false information in the permitting documents.
The main problem is fake data in the Declaration of the beginning of construction work. Until June 2017, most developers declared their homes as the third category of complexity of the object (the highest were the fourth and fifth categories), which allowed registering a Declaration for the beginning of construction work, which gave the right to build. When registering the Declaration, the other documents of the developer were not checked, and if it was filled out correctly, such a Declaration was registered. Often there was a situation when developers deliberately underestimated the complexity of the construction object, entered false data. Now this problem continues to exist, because many existing new buildings are built on the basis of old permits.
– loss of land rights.
For example, the lease term of a land plot should cover the construction period of a house.
– violation of permits by the developer during construction.
The problems mentioned above, which may delay construction work stoppages, may also lead to the inability to put the house into operation, depending on the stage at which the relevant problems were identified.
3) Not connecting communications.
When a house is put into operation, it has not yet been properly connected to water, gas, and electricity. This is due to the fact that at the construction stage, the developer must receive technical conditions for their connection, but the working project for such connection is performed only after the house is delivered.
When a situation may arise that you will be left without communications:
– if the developer did not receive the appropriate technical conditions for connecting communications during construction.
– if the developer did not comply with the tasks defined in the technical conditions. For example, the technical conditions provided for the obligation to install a transformer substation, but the developer did not do this.
– if the house was not put into operation.
4) low-quality construction.
It would seem that this is completely unrelated to the licensing documentation and depends on the integrity of the developer, the price per square meter, and so on.
In fact, it’s all connected. If the developer has not received all the permits that will definitely be needed for the construction of the house, then why should we hope that they will fulfill all their obligations regarding the characteristics of the new building? In addition, problems with permits that lead to the suspension of construction work may result in a large number of court cases and criminal proceedings. Court fees, legal aid costs, reimbursement of funds to buyers, changes in project documentation – all this entails costs, and accordingly, buyers ‘ funds will not be used directly for the construction of the house, which can lead to savings on important materials, attracting an unverified contractor, and so on.
Working for many years in the market of new buildings, we have seen various problems with permits. For example, several times we were assured that the developer has all the necessary permits, and land registration is not a priority issue. Subsequently, as predicted, construction work stopped, and instead of the desired housing, investors received court cases.
To minimize the occurrence of these problems, you need to conduct a detailed check and take into account all the risks and benefits.
How can this be achieved?
1) to provide for the suspension of construction work, you need to check the information about the land plot. To do this, the information of the public cadastral map of Ukraine, the State register of real property rights to real estate, and the resolution of the Lviv city Council are checked to identify the “history” of the land plot. In addition, an important source of information is the land lease agreement. We also search for existing court decisions at the address of construction.
It is necessary to analyze information on urban planning conditions and restrictions of land development. This document can be obtained from the developer, checked on the website of the relevant authorized body, or in response to a lawyer’s or information request sent, if the urban development conditions and restrictions were received before August 2016 and they are not freely available.
Contracts concluded between companies involved in construction (between the owner of the land plot and the developer, etc.) are subject to study.
2) Understanding that the developer will not be able to put the house into operation, will give a detailed analysis of permits and information from the developer. In particular, you need to check whether you have a permit to perform construction work, namely construction, and not to carry out preparatory work. It is worth analyzing the expert report of the project documentation: from this document, it will become clear in detail about the construction queues, floors, and characteristics that are planned in the project documentation.
3) to reduce the risk of not connecting communications in Your home, you need to require the developer to provide technical conditions for connecting communications for review.
In certain cases, other documents are also necessary, namely, if Your house is higher than 10 floors, the developer promises gas supply on all floors, special approval from the Ministry of regional development, construction and housing and communal services of Ukraine is required.
4) high-quality or low-quality construction will be difficult to predict in the future, but there are a number of factors that need to be checked and which may indicate this. For example, the history and reviews of previous properties of the developer, the ratio of the price of an apartment with market prices, and so on.
In addition to analyzing all these documents, we emphasize that in order to avoid risks, you need to comprehensively study and verify information about the developer and the contract that is offered for signing. Only a comprehensive audit will reveal all the risks.
Also, the presence of the developer of commissioned objects does not always indicate that he has all the documents for the new building you have chosen. Even in the same new building, different apartments can be sold under different schemes.
For advice, please contact our lawyers by phone: +38-068-911-06-40