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Messenger What about the land, who is the developer, what court disputes exist and what risks do they pose, what are the construction documents like and what investment scheme is being offered — I will be glad if when considering investing in a residential complex you ask exactly these questions. My small mission is to help you make the right choice and, through my legal audits, to demonstrate various residential complexes from a lawyer’s point of view.
In the Kyiv-Sviatoshynskyi district there are two very similar residential complexes. They have one developer – the company “White Chocolate”. The first complex is being built in Belogorodka and is called White Chocolate Center, and the second residential complex is being built in the village of Shevchenkove and is called City Lake. It is this complex that we will analyze today.
The complex is fairly large and divided into phases, each with different construction conditions. This legal audit is about phase 4 of City Lake, since construction is at an early stage and apartments are currently being actively sold there.
- Document review
- Analysis of the investment scheme
- Process analysis
- Transaction support
Location
- Belogorodka, Yubileiny Lane, 4, Kyiv-Sviatoshynskyi
- Zhytomyrska – 15 min.
- Akademgorodok – 15 min.
- Sviatoshyn – 15 min.
Transport connections
- Stoyanka village – 26 min.
- Horenychi village – 38 min.
- Zapadny residential area – 44 min.
Shopping centers, markets, stores
- Garden center Green Village – 28 min.
- Imperator Vkusa – 32 min.
Hospitals
- Clinic “International Medical Center” – 46 min.
- Polyclinic – 28 min.
| Number of rooms | Area | Price per m2 |
| 1-room | 26 – 67 m2 | 17500 – 25500 UAH/m2 |
| 2-room | 43 – 110 m2 | 17500 – 24500 UAH/m2 |
| 3-room | 77 – 148 m2 | 17500 – 23500 UAH/m2 |
| 4-room | 79 – 143 m2 | 17500 – 23000 UAH/m2 |
Installment plan for 1 year and 6 months – initial payment from 30%
Residential Complex Characteristics
- Class – Comfort
- 40 buildings
- Floors: 4-5, 8
- Technology – brick
- Heating – autonomous (in-building)
- Walls – brick
- Insulation – polystyrene foam
- Ceiling height – 2.7 m (from floor to ceiling)
- Parking – parking lot
Developer company White Chocolate
On the complex website and in all advertising materials you may come across information about the project’s developer – the company “White Chocolate”. The company does indeed exist and is registered, but from a legal point of view it does not matter much for you. It is much more important to check the Builder, because it is with the Builder that you will sign the contract.
The Builder is the company “Riverbank”. It is registered in Kyiv and its authorized capital is 1 million UAH. Of course, if we consider the scenario that some building will not be completed (even just one of the six planned in this phase), that money would not be enough to settle with investors. BUT imagine how much capital a company would need to cover possible investor claims even for a single building… That is unrealistic. For comparison, the developer company “White Chocolate” has an authorized capital of one thousand hryvnias, so the Builder’s one million capital sounds much more impressive.
The company “Riverbank” was registered in October 2018. At the moment the Builder has no open enforcement proceedings (these mean that someone is trying to forcibly collect debts from the company).
Land in Belogorodka
Phase 4 should consist of 6 buildings that will be located on a plot of 1.9 ha.
The land is in order: the designated use corresponds to the requirements — “for the construction and maintenance of a multi-apartment residential building”, it belongs to the Belogorodka village council, i.e. it is municipally owned, BUT the village council transferred this land to an individual under a long-term lease. This individual, in turn, subleased the land to the developer. The sales department provides the sublease agreement without problems.
This agreement is valid until 02.03.2023, and the stated commissioning date of the latest building in phase 4 is Q2 2022. The contract also states that the Builder takes the land for the construction of a multi-apartment residential building, so this point is also in order.
Legal disputes
In 2019 a criminal case was opened. The investigator assumes that a certain individual, by systematically selling real estate in 2016, evaded paying taxes. Of course, it is not possible to comment on this criminal case in detail, because the information is confidential and I only voice what is publicly available in official registers. Based on the information in the GASK registry, a natural person was the customer of the first construction phases of the complex. According to information from the court decisions registry, the land on which the first phases were built also belonged to an individual, and the built apartments (or some of them) were sold on behalf of that individual. The investigator assumes that this individual evaded paying taxes when selling those apartments. To obtain information about the movement of funds, in February 2020 the investigator applied to the court and requested access to documents allegedly held by the companies “Riverbank” and “White Chocolate”, but the court did not see sufficient grounds and denied the petition.
Of course, this investigation somewhat spoils the overall impression of the complex and it is advisable to monitor it, but:
- the investigation concerns actions of an individual, not the companies we are interested in;
- it concerns tax evasion, not construction problems;
- the land and apartments mentioned in the court registry were in the first phases of the complex, while the fourth phase that we are considering is being built on a completely different plot of land and by a different developer.
Construction documents for City Lake Residential Complex
The Builder has a construction permit (No. ІУ 113201201526, dated 29.04.2020) and it is also shown in the GASK registry. The general contractor is the construction company “Altana” and I did not identify any significant problems with this company.
Investment scheme
Investment is carried out by concluding two contracts:
- derivative sale agreement;
- sale agreement of property rights.
This scheme is quite standard and is used very often. Under the derivative agreement you usually pay about 50-70% of the total cost of the apartment. If the building is not completed – you will file a lawsuit to get your money back, but you can only claim the amount that was paid under the sale agreement of property rights. That is, the amount you paid under the derivative agreement will most likely not be recoverable in court.
Natalya ChatskisI always recommend providing the contract itself to a lawyer, or carefully studying it yourself.
Senior lawyer of the litigation department
The templates that the sales department provided me were quite standard and it is important that you know the terms. Pay attention to penalty sanctions that are applied if you fail to make installment payments on time (if you have an installment plan) and to the fact that you have the option to terminate the contract, but the money will be returned to you within 90 days from the moment the apartment is sold to another investor. Therefore, if you decide to withdraw from this investment, you will actually need to find a new investor yourself (that is usually how it happens in practice).
White Chocolate Residential Complex — problems you can avoid.
- Unfinished construction. There are 70 unfinished constructions in Kyiv alone. 18 thousand apartments for which keys will never be received.
- Long-term construction. In Kyiv there are 8 well-known long-term construction projects that have been under construction for more than 12 years.
- Mismatch between the finished project and what was advertised. This is when the developer promised one thing, but another happened. You expected to see a luxurious playground, but in fact there are three swings. Visualizations showed a green yard with mature trees and bushes, but in reality it’s all asphalt, with patches of dug-up earth around the perimeter and some sprouts instead of lush crowns. They promised a courtyard without cars, but ended up with parking near the entrance. Pictures showed a beautiful lobby and corridors with finishing, while in reality there are plain Soviet-style entrances. There are many examples.
“Remember! Neither the realtor, nor the bank, nor especially the sales department will fully investigate all the problems with the White Chocolate Residential Complex, because they have one goal — to close the deal and get their profit. Checking the new development and the investment is your personal responsibility. Study all documents, check all aspects yourself. If you want to reduce risks to zero, order a full check and we will do everything for you.”