Legal review of Residential Complex Urlovsky 1 by Kyivgorstroy

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Client and Developer

The developer is the company “Kyivgorstroy”. I will not dwell on this, but I remind you that this company took on finishing some UkrBud projects and the burden on it is now very large.

The declared completion date of Residential Complex Urlovsky 1 is the end of 2021 and there are serious doubts that they will manage to deliver the buildings on time. On the forum investors are already betting on 2022 and even 2023.

The customer is the company “KRUAZET“. It was created in 2014, and its charter capital is 100,000 UAH. I did not find any court disputes related to construction or the company’s financial stability.

Land

Residential Complex Urlovsky 1 is being built on two land plots that are in municipal ownership and belong to the Kyiv City Council, and the land’s designated use allows for the construction of residential buildings.

This land was leased to the developer in 2017 for 25 years. But in the city council decision on the lease there is a phrase that the developer must comply with the conditions specified in a letter from the Department of Urban Planning and Architecture. I did not find this letter in the public domain. Very often court disputes arise precisely because of the land: wrong designation, improper procedure for transferring the land, etc. Therefore, before investing it is important to ask the sales department to show this letter and check whether there are requirements that are not being fulfilled and whether the city council would have grounds to take the land back.

Another point about the land: there is a protective zone of an energy system object, and a power transmission line runs nearby. First, this is not very good for health. Second, it is a frequent cause of court disputes and criminal cases.

If you believe the master plan for this area, a power transmission line with a voltage of 35 kilovolts runs here. The protective zone on each side from such a line should be 15 meters.

I assume that this requirement has been met! But if the environmental safety of living near a power line is important to you, you can separately inquire whether this statutory 15-meter zone is sufficient to exclude negative health effects.

Building permit

I found 2 building permits for this complex – 1 and 2. The complex is being built on two land plots and a separate building permit was issued for each of them. Both permits are valid and were issued for the construction of 26-story buildings.

Investment scheme

A preliminary agreement is used in Urlovsky 1. Such an agreement is considered not very reliable, but popular.

With whom will you sign the contract?

The customer of the construction is the company “KRUAZET”, which, apparently, concluded several contracts and the rights to the apartments are distributed among several companies. I assume that the main portion of the apartments was allocated to KGS and if you choose an apartment on their website, the preliminary agreement will be concluded with KGS.

But there are also apartments allocated to other companies. Therefore, when you buy an apartment, pay attention to whom exactly you are signing the preliminary agreement with and ask to see the agreement between that company and the customer of construction. Also ask to show where it is stated that this company is authorized to sell this particular apartment to you.

I studied the draft preliminary purchase agreement for an apartment in Residential Complex Urlovsky 1 and am ready to share 3 brief comments on the contract:

1. In my opinion, the completion date of the building is not specified at all. According to the preliminary agreement, the main contract will be concluded with you within 6 months from the moment the postal address is obtained. When the postal address will be obtained is unknown. Such wording in the contract does not at all allow you to determine when you have the right to expect your apartment and when one can start talking about a delay in construction.
2. Assignment (transfer of rights) is provided, but only if you have fully paid the cost of the apartment. And in the case of assignment you lose 5% (but this is common practice).
3. There is a possibility to withdraw from the contract, terminate it and take back the invested money, but you will lose 5%. I recommend specifying this procedure more clearly in the contract so that it doesn’t turn out that you have to wait forever for KGS to approve such termination.

I did not find any obvious problems with Residential Complex Urlovsky 1. There is a permit, the land has the proper designated use, and no lawsuits are visible. But I would check KGS’s lawsuits in more detail — it is a huge corporation and it is obvious that there are lawsuits. I reviewed about 25 court cases involving KGS and did not find anything related to Residential Complex Urlovsky 1.

I would recommend reading the agreement between the customer and KGS or the company with which you will sign the contract (if it is not KGS).

And also to adjust the draft preliminary agreement to add a bit more specificity in your favor.

And most importantly, if you plan to buy an apartment here, read the forums, observe the construction progress yourself, and determine whether you will be able to wait if the building is not completed by the end of this year. Because forums clearly indicate that construction is proceeding slowly.