Contract of sale and purchase of property rights

Today in Ukraine one of the most common schemes for investing in real estate is the Agreement of Sale and Purchase of Property Rights. This is explained by the simplicity of this investment procedure and its low cost.

More popular than this form of investment in new buildings is probably only investment scheme through the Construction Financing Fund.

It is necessary to distinguish between the investment scheme under only the Property Rights Purchase and Sale Agreement and the investment scheme through forward contracts involving the stock exchange, where the investor enters into a Derivative Purchase and Sale Agreement and a Property Rights Purchase and Sale Agreement.

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Legislative framework of the Agreement of Sale and Purchase of Property Rights.

Although, the Agreement of Sale and Purchase of Property Rights is not directly provided for by the Law of Ukraine "On Financial and Credit Mechanisms and Property Management in Housing Construction and Real Estate Transactions" (as amended) dated 19.06.2003 No. 978-IV, identifier 978-15, this type of agreement takes place.

In accordance with Article 11 of the Civil Code of Ukraine, the basis of rights and obligations, in particular, are agreements and other transactions.

According to the terms of Part 3 of Article 6 of the Civil Code of Ukraine, the parties are free to enter into agreements, select counterparties and determine the terms of the agreement, taking into account the requirements of the Civil Code of Ukraine, other acts of civil legislation, business customs, requirements of reasonableness and fairness.

According to Article 626 of the Civil Code of Ukraine, an agreement is an agreement between two or more parties aimed at establishing, changing or terminating civil rights and obligations.
That is, both when concluding a Contract for the Sale and Purchase of Property Rights and when resolving a dispute in court, one should be guided by the general provisions of the law on concluding transactions.

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What are property rights?

According to Article 190 of the Civil Code of Ukraine:
Property (as a special object) - a thing, a set of things, property rights and obligations.
Property rights (as an investment subject) - other real rights.
Property right - the right to "expect" the emergence of ownership of a separate individually defined real estate object (apartment, residential or non-residential premises, etc.) with suspensive conditions that are determined by the Agreement of Sale and Purchase of Property Rights concluded between the person (individual or legal entity) who attracted funds from individuals or legal entities for construction and the person (persons) whose funds were attracted for this construction.

The right of ownership arises when all conditions under the Property Rights Sale and Purchase Agreement are observed and fulfilled:
On the part of the person(s) whose funds were involved in this construction - full payment under the agreement. Full payment under the agreement - payment for the design area of ​​the assigned real estate object and adjustment of the square meters of the actual area according to the technical passport of the Bureau of Technical Inventory. Only after payment for the adjustment of square meters does the condition under the agreement arise in full. To confirm that this condition has been met, the person raising funds for construction provides the investor with a certificate of 100% payment.

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On the part of the person(s) who attracted funds from individuals or legal entities for construction - completion of construction, receipt of a technical passport, receipt of a document that, in accordance with the current legislation at the time of completion of construction, will certify the acceptance into operation of the completed construction object, a document certifying the assignment of an address to the real estate object.
According to the law:
In accordance with Article 182 of the Civil Code of Ukraine, the right of ownership is subject to state registration in the State Register of Property Rights. That is, the entry into the electronic register by the registrar (including a state or private notary) of information about the new owner of the real estate.
In legal practice, investors often ask whether there will be any difficulties or obstacles when registering ownership rights if funds are invested in construction through a Property Rights Sale and Purchase Agreement?
The Procedure for State Registration of Property Rights to Real Estate and Their Encumbrances (hereinafter referred to as the Procedure) establishes the procedure for state registration of ownership rights to a real estate object, the construction of which was carried out with the involvement of funds from individuals and legal entities, including under a Property Rights Sale and Purchase Agreement.
According to the above Procedure, a Property Rights Sale and Purchase Agreement is a document that confirms the acquisition of ownership of a construction object assigned to a person.
In accordance with the above, when fulfilling the obligations of the parties under the Property Rights Sale and Purchase Agreement and submitting a full package of documents stipulated by the Procedure, the registrar does not have the right to refuse the investor registration of ownership rights to the real estate object. Therefore, there are no difficulties or obstacles from the law when registering the right of ownership on the basis of the Agreement of Sale and Purchase of Property Rights.

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