Metro Park Residential Complex legal review

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Prices as of November 2021 Metro Park Residential Complex

Number of rooms	Area	Price per m2
1-room	28 – 40 m2	29900 – 30400 UAH/m2
2-room	46 – 80 m2	29900 UAH/m2

Residential Complex Characteristics

• Class – comfort
• Buildings – 1
• Floors – 7, 11
• Technology – monolithic-frame
• Heating – individual (in apartment)
• Walls – brick, aerated concrete block
• Insulation – mineral wool
• Ceiling height – 2.75 m (from floor to ceiling)
• Parking – parking lot

I am discussing it for several reasons. First — to familiarize you with what is happening in the real estate sector in the capital and how egregious the violations can be. This information is not meant to cast negativity on any particular complex, but to shed light on how documents are issued and to convey that everyone must check the residential complex they invest in. Second — to explain some of the reasons behind cheap real estate. Third — because in the sales office I was told that they have 8 different residential complexes.

The “METRO PARK” residential complex is located in the Darnytskyi district of the capital. In my opinion, the site chosen for construction is somewhat questionable. Judge for yourself — it is practically on the way out of Kyiv, and it will take a long time to get to Obolon. The nearest neighbor is Boryspil Airport, reachable in 15 minutes. Vyrlytsia metro station is within walking distance (450 m). There is one nuance related to the complex’s location — an unpleasant odor due to the close proximity to the Bortnychi sewage treatment plant and a waste incineration plant.

If you assess the location in terms of social and household infrastructure, it’s not all right. There is a car service near the house; there are no large malls or other major infrastructure objects within walking distance. More or less everything is developed along Kharkiv Highway — the polyclinic, emergency room and maternity hospital are indeed within walking distance. Very close is the huge Park of Partisan Glory, which is really great. A wonderful place for families with children.

In general, this area is not bad, but it will not appeal to everyone. There are districts that elicit more or less neutral opinions, whereas here there are certain peculiarities.

Construction permit and commissioning

The project planned the construction of 11 floors (although there is actually a basement floor and 12 in total). The history of this building begins in distant 1958. It was then that a small house of 104 sq. meters was built on this land.

Then a developer appeared who wanted to carry out a major renovation of this house. He submitted a notice of commencement of construction works for the first three floors (basement, first and second floors). When the works were completed, the developer received a Declaration of commissioning of the building. Although it would probably be incorrect to speak of commissioning the building, because the plan calls for 11 floors, and three floors were put into operation.

But the developer solved this problem very originally. He performed the same procedure 4 times. The developer submitted a notice for major renovations of floors 3, 4 and 5 and again received a Declaration of readiness of the object. And so on up to the 11th floor. You can review the list of declarations for the building. This information is more for lawyers, to make it easier to check this complex and immediately warn their clients.

To make it clearer how original a solution the developer came up with, let’s take a closer look at these permitting documents.

Judging by the declarations, the developer built an 11-storey building in less than two weeks. In all declarations the start and end dates of construction are almost identical and are measured in days. This is record-speed construction and I’m sure no one built anything there in two weeks, nor was this any kind of major renovation.

According to the declaration, the intended purpose is “Капітальний ремонт об’єктів будівництва без зміни зовнішніх геометричних розмірів їхніх фундаментів у плані”. How do you imagine a house from 1958 of 104 sq.m., from which, without changing the foundation, an 11-storey U-shaped building grew?

And if you look at the same declaration one line higher, you can see the answer as to why such a scheme was used. If a capital repair is carried out, there is no need to submit documents for the land. Therefore, nowhere in the permitting documents is the land on which this feat of architectural thought stands mentioned.

And now let’s return to the question — was this really a major renovation? The entry in the register of ownership rights for this building appeared thanks to such a simple certificate from a technical expert. The essence is that the building was built 100 years ago, but it has changed slightly. The area changed and is now almost 7,000 sq. meters. I remind you that earlier the area of the house in which this alleged miracle major renovation was carried out was 104 sq.m. I noted the date of issue of this certificate — it was issued in 2020. And the declaration for the specified building states that construction began in mid-2021. I may be wrong, but the technical expert carried out an inventory of the house even before the start of construction.

And one more reason why it was necessary to split the 11-storey building into 4 pieces and commission it this way. The consequence class of this construction is CC1.

In simple terms, the consequence class is needed to determine how many people would be affected if the building becomes uninhabitable or collapses. Buildings up to 4 floors fall under class CC1. And their construction is subject to a much simpler procedure and fewer documents. In reality, this 11-storey building belongs not to CC1 but to CC3, i.e. the maximum consequence class. But if you slice this tall cake into pieces of 3 floors each, you can pretend it’s CC1. You don’t have to be a lawyer to understand that the building should have been constructed according to documents and technology as an 11-storey building, not as four pieces of 3-storey buildings.

Land

The land is not indicated in the permitting documents, but through research and a meticulous look at the map you can easily find this plot. The designated purpose assumes individual, cottage construction, not high-rise development.

Developer and criminal case

The client of the construction is the housing construction cooperative “Wood Park” (JBC “Wood Park”), created in 2019 and engaged in comprehensive maintenance of facilities. This type of activity, organization of construction, is not needed by the client; he didn’t build anything, he just carried out renovations.

The construction client is involved in a criminal case about tax evasion. Information about criminal cases is closed, so I cannot say whether it is current. But the last document on this case was in February 2021: “According to materials from the State Fiscal Service, a group of persons operates in the territory of Kyiv who in the period 2018-2019 implemented an unlawful scheme aimed at deliberately evading taxes on income received from the construction and sale of apartments in the residential complexes Metro Park, Wood Park, Loft Park, which are being built and sold by a number of housing cooperatives that are non-profit organizations, although they spend the received money not for its intended purpose and thus withdraw their profits.”

It is difficult to predict how this case will end for the housing cooperative.

Investment scheme

Investment in Metro Park takes place through joining a cooperative. The contract structure and the wording in it look rather atypical. If you read the contract literally, its subject is not my joining the cooperative, nor my acquisition of ownership of an apartment, but my payment for a share. From a legal point of view, the share constitutes an apartment, but I would insist that the contract be written more clearly — the procedure for my joining the cooperative, the procedure for transferring the apartment to me (and not just securing an ephemeral share for me).

One more point: the contract provides the possibility to terminate it, but the procedure for refunding the money is vaguely defined. There is a risk that if I want to terminate the contract, the money will be returned to me over 90 days from the moment another investor buys that apartment. These clauses in the contract need work, and you should insist that it is clearly stated that the money will be returned to me within a specified period from the moment of contract termination, regardless of whether a new buyer for the apartment appears or not. Since sales managers say that’s how it will be, I recommend potential investors ensure that this is clearly stated in the contract.

The sales office informed me that if I insist, they can immediately conclude a purchase agreement for an already finished apartment with me and register the ownership in my name without any share agreements.

Conclusions

All these strange schemes with a major renovation of an antiquated building, which has effectively turned into a 12-storey building, definitely create certain risks. First, I cannot be sure that authorities will not take up this building and its commissioning in the near future. Maybe no one will, and maybe they will. Second, it is necessary to check the decision on assigning a postal address. The sales office told me that the address has not changed. The address remained the same as that of the old 1958 house and there is no need to assign a new one. But I am not interested in the house number; I am interested in the address including the apartment number.

Let’s model two situations.

Situation 1. There is an individual intact house without apartments, address Kamenska, 127.

Situation 2. There is a multi-apartment building, address Kamenska, 127. It hypothetically contains 100 apartments and 100 people live there. In this case the address includes not only the house number but also the apartment number. The assignment of numbers follows a certain procedure described by the Cabinet of Ministers in its resolution. For registration of ownership rights for these apartments, the registrar must have data on the assignment of these addresses.

I approached a notary who is not associated with the “METRO PARK” complex and asked whether he would register ownership of an apartment in this building for me. The notary, having checked the information, said that he would not register my ownership until there are proper documents on the assignment of the postal address. Therefore, take into account that most likely not every notary will register your rights to the apartment. Whether it will be possible to register apartments with the notary the developer uses to do this to date is unpredictable.

From a practical point of view, how can the absence of a proper address affect things?

1. Which of these 100 people living in this apartment building should a letter sent to this common address be delivered to.
2. With which of these 100 people to conclude a contract for utilities, for example, if a direct contract with a specific apartment is required,
3. Communications are only being laid; whether there will be problems with them is unknown.

And finally — I would insist on amendments to the contract.

Remember, checking a residential complex is a very complex task. I definitely do not recommend trusting the words of the sales department; carefully verify every document or piece of information given to you. Even better, entrust this to people who understand it. The Nakaz team accompanies real estate transactions, we will check the developer on all key parameters and will be with you during the transaction. This can really protect you from losing funds when investing in construction.