Lucky Land Residential Complex – legal review

All New Developments

Infrastructure

The Lucky Land Residential Complex is practically a new neighborhood, with a pine forest nearby and the Puscha-Vodytsia recreation area.

Within a 10-minute drive you will have as many as three metro stations – Akademmistechko, Zhytomyrska and Syrets.

Within walking distance there is all necessary infrastructure – Lavina Mall is very close, Epicenter is a 10-minute walk away, Novus and Auchan are also nearby. A school is planned on the complex territory, but if the issue with children is important to you, I recommend finding out in more detail what other schools and kindergartens are nearby and what size the planned school will be. A fitness center with a swimming pool is also planned.

By the way, regarding the developed infrastructure and Lavina Mall nearby. For some this is a plus, but it can also be a problem. You can read complaints on forums that races take place there, constant noise and not very adequate crowds. In general, you need to check the area yourself.

The nearest handover date is Q2 2022. Judging by the website, there are still even one-room apartments for sale, which are bought out first.

The layouts on the site are completely varied – from 28 m studios with standard rectangular layouts and some trapezoidal angled ones, to 4-room apartments of 100 m².

Building permit

There is a building permit; it was issued for 15-storey buildings and allows residential development.

On the complex’s website you can choose apartments up to the 14th floor at most.

But if you browse the site a bit more, you will see information about 16-storey buildings. At the same time I did not see two-level options in the apartment filters. So if you are buying an apartment, check the number of floors in your building.

Construction client and developer

The construction client is the PRIVATE JOINT-STOCK COMPANY “AGROFIRMA” TEPLITSY UKRAINE. It was registered back in 1990, its activity includes organizing construction and the authorized capital is quite substantial – UAH 15 million. That does not guarantee anything for us, but it is obvious the company is not a shell.

I did not find any problems with this company in other open registers. There is no tax debt, no enforcement proceedings where debts are being collected from the company, and it is not listed in the debtor registry.

The developer of the project is listed as DIM Group.

This developer participated in the construction of already completed Kyiv residential complexes Avtograf and A 52.

Currently this developer has projects in progress: New Avtograf, Park Lake City, Metropolis.

Land

The land on which construction is taking place is in communal ownership and belongs to the Kyiv City Council.

It transferred the land to Agrofirm “Teplitsy Ukraine” on lease. There is also a right of sublease on this plot for other users (for example Lavina Mall and Epicenter). The land’s designated use is for residential development.

In principle there seem to be no obvious problems with the land. But if I were buying an apartment here, I would dig a little deeper. I’ll explain why.

In 2006-2007 there was a court case regarding the land. Nothing catastrophic. Teplitsy Ukraine prepared all the documents to obtain the land lease, went through all the necessary procedures, but the Kyiv City Council did not sign the lease agreement. These were quite common situations. Teplitsy Ukraine appealed to the court and the lease agreement was recognized as concluded.

At that time the land was somewhat different. The area was different and the designated purpose was agricultural.

Then in December 2007 the designated purpose was changed to residential and public development. The land was leased to Teplitsy Ukraine for 5 years. My attention was drawn to clauses in that decision that stipulate the developer must transfer part of the apartments in the constructed buildings to the Kyiv administration. Also, it must pay 5% of construction costs to the city budget. There were actually two such decisions, one for one part of the plot and the other for the other part. The decisions are virtually identical, so in the video I show only one. This is all background, an old land lease agreement.

As of now, in the Real Estate Register we see that this land was leased to Teplitsy Ukraine based on a newer agreement from 2009. However, if we look at another document, namely the Urban Planning Conditions and Restrictions, we will see that the right to use the land is confirmed by this fresh 2009 agreement, BUT taking into account that old Kyiv City Council decision which I showed you.

And I would really like to see the current agreement between the Kyiv City Council and Teplitsy Ukraine to understand what the conditions are, whether apartments will be allocated, whether the construction client must transfer or pay something. Because very often this becomes a stumbling block between the lessor (especially since this is the Kyiv City Council) and the lessee (Teplitsy Ukraine). So that it doesn’t turn out later that before commissioning the buildings they start arguing and dividing apartments among themselves.

Legal disputes

When investing in Lucky Land Residential Complex you sign an investment agreement with the Antilia Fund.

And when checking this Fund I encountered a rather unclear situation. My team and I don’t prepare for checking a complex in a single day. So at the beginning of July we checked the judicial register for data on the Antilia Fund. Since investors sign agreements with it, checking this Fund is task number 1.

At that time there were two documents in the judicial register that drew attention:

Case No. 761/21906/20. On the screen you see a quote from the first ruling: “On March 2, 2020, the senior investigator … of the State Fiscal Service in Kyiv … conducted a search in the non-residential premises at ADDRESS_1, during which items, documents, and computer equipment were seized, which at the time of consideration of the complaint were handed over to a specialist to determine the amounts of taxes not accrued and not paid to the state budget of Ukraine for the period 2016-2019 following the inspection of the financial and economic activities of JSC ZNVKIF Antilia.”

The second document in the judicial register, Case No. 761/34936/20, also concerned a search and seizure of property.

I suppose, just hypothesize, these are my guesses, that in 2020 an investigator of the fiscal service, within a criminal proceeding, tried to find out how correctly the Antilia Fund paid taxes for 2016-2019. And in the process a search and seizure of some items was conducted. Then, as it seems to me, the investigator’s actions were appealed, possibly in order to have these items returned.

But when I started final preparations for the review, I discovered that links to these court rulings stopped working.

And all I could now find online about this case was an indication that the document is temporarily unavailable.

But on the Verkhovna Rada Anti-Corruption Committee website there is a rather detailed article about developer DIM Group, about the Antilia Fund and the tax situation. I’ll leave the link below. Accordingly, I don’t know what happened with that criminal case, whether it is current — I don’t know, I’m only sharing publicly available screenshots from the web.

I checked separately in the register of enforcement proceedings for the Antilia Fund — currently there are no open proceedings to collect debts.

I checked on the tax authority’s website, also no current debts.

But I would keep an eye on this situation. Because it seems it was fairly large-scale.

Investment scheme

At the moment an investment agreement is used in Lucky Land Residential Complex.

I had a draft of such an agreement for analysis, which I received from the sales department.

My comments on the agreement:

1. The construction client, as I said earlier, is Agrofirm Teplitsy Ukraine. I sign the agreement with the Antilia Fund. That’s normal. But there is also an agreement between the client and the Fund. You should request it from the sales department and read it carefully.
2. The agreement provides that the investor can ask the Fund to terminate the agreement. The Fund will consider this issue within 30 days and IF the Fund agrees, the agreement will be terminated. I would recommend either clearly specifying the cases when the Fund may NOT agree, or clearly stipulating that the agreement WILL be terminated, not leaving it to the Fund’s discretion.
3. In case of termination of the agreement (because you wanted to or because you violated payment terms under an installment agreement and the Fund terminated the agreement with you), your money will be returned less 5% (this is basically a fairly standard condition), and they will be returned only after someone else buys that same apartment (such conditions are not uncommon, but you must understand that this practically nullifies your ability to terminate the agreement if something goes wrong with the complex, because finding a new buyer will be difficult).
4. There’s a clause that you cannot change the external facade of the building. Even the slightest change is considered a violation (in the contract it is written exactly “the smallest change in the external appearance of the Building”). This is a standard condition in new developments. But the fine for such actions in Lucky Land Residential Complex is UAH 100,000 for each violation. Installed an outdoor AC unit in an unauthorized place – 100,000. Repainted the window frame black because you have a loft-style apartment – 100,000. Changed the window configuration – 100,000. In general, either be aware and don’t forget, or demand to reduce the amount of the potential fine.
5. One of the most high-profile topics in real estate recently is the bill regarding changes to VAT rules (among other things). If you don’t know what it’s about, watch our video; I’ll leave the link below. Briefly here — the agreement explicitly states that if VAT rules change, the Fund will revise the apartment price under the agreement. That means you will most likely face an additional payment of 20%.
6. The agreement specifies a planned date for commissioning. If you watch my videos, you know I nitpick this phrase. It seems insufficiently precise. It’s better when a final deadline is specified by which commissioning must occur. But in this agreement there is an even more important inaccuracy. The Fund first registers ownership in its name and then concludes a new agreement with you and transfers ownership to you. So the agreement does not state when the Fund must do this, meaning it could do it even 100 years later. You must absolutely specify a clear period from the moment the building is commissioned during which the Fund must sign the main agreement with you and transfer ownership of the apartment to you.

Conclusions

I don’t actually see any clear current problems with Lucky Land Residential Complex today. But there is a situation with the courts that MAY not be resolved and which makes me think that problems may arise in the future. The situation with the land and the Kyiv City Council is also potentially an issue.

But I’m talking about risks here, so I’m assuming what might be. And construction is, by definition, about the future.

A separate conclusion about the agreement. I would not sign it in its current form. I have only highlighted a few clauses of the agreement that need attention. But the contract needs to be read through further.

Questions for the sales department

1. What will be in the complex, tell me the plans. Handover dates. Guide me on prices.
2. Taxes and additional costs when the building is handed over and when registering ownership.
3. Lavina Mall. They say races are held there and it’s very noisy at night.
4. Show the current land lease agreement with the Kyiv City Council.
5. In 2020 there were court rulings on criminal investigations. The Antilia Fund was involved. Can they comment?
6. Can they make amendments to the agreement. For example, upon termination of the agreement will my money be returned only if someone else buys the apartment. Or specify the period when the main agreement will be concluded with me.
7. Show the agreement between the client and the Fund.
8. In the urban planning conditions and restrictions there is no maximum height limit. Do you have a Detailed Plan of the Territory (DPT)?