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Fines for violations in construction industry became more modern and not so expensive in Ukraine

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Since January 19, 2012 liability for violations in the field of urban planning will become not only more modern but also less expensive. From now on the amount of fines will depend not on the cost of construction but on particular type of violation. Such innovations derives from the Law “On amendments to some regulations of Ukraine related to increase of liability and improvement of state regulation in the field of urban planning” (hereinafter – the law) which entered into force on the mentioned date.

Penalties for new violations are maximally specified: penalties for legal entities and sole traders are measured in minimum wages without maximal and minimal limits and penalties of individuals have minimal deviations. Such approach contradicts the principle of individual liability for a particular violation which requires taking into account both aggravating and mitigating factors of a violation.

Previously liability of legal entities and sole traders for a number of violations in the field of urban planning depended on the cost of completed works and therefore had quite individual amount. As of now – persons who have completed construction of an object with violations and who have just started such construction and is caught will bear equal liability.

Such approach can be best exemplified by houses and constructions that were being built without authorization by legal entities during 1992 – 2009. Those who tried to legalize such constructions had to pay 50% of construction works cost. Now this procedure requires payment of fine in the amount of 10 minimal wages (almost 1 500 USD). Thus, both a small cottage and luxurious mansions of 1st and 2nd categories will require paying of the same fine.

However this is probably the only innovation of the Law which can be complained about. And even if so these complaints will be balanced mostly by the fact that liability for non-registered declarations (if permit was not obtained) of onset of construction and operations with objects which hasn’t been commissioned will depend on complexity category of the object. Thus the maximal amount of fine for construction works or illegal operations with objects that belong to 5th category of complexity is 900 minimum wages (121 000 USD) for legal entities and up to 1 700 USD for individuals. The same actions with object of 3rd category of complexity will be penalized in lesser amount: 90 minimum wages (12 000 USD) for legal entities and 1 000 – 1 200 for individuals.

However liability for such violations will be equally assumed by customer and contractor and therefore the amount of fines should be multiplied by 2.

Positive innovations of the document include provision of liability for public officials for breach of declarations registration term or terms of permits provision as well as for demanding documents which are not required by the legislation. Also it stipulates liability of enterprises that provide technical specifications. Of course the mentioned liability can hardly scare public officials and monopolists but the very fact of its provision is very pleasing for contractors.

The most important thing is that the Law defines absolutely new violations in the field of urban planning which are based on provisions of the Law “On regulation of urban planning” and not on legislation that previously existed in the field. For example liability is provided for preparatory and/or construction works without registration of declaration of onset of construction, absence of technical and/or author’s supervision, absence of notification about change of contractor, etc. At the same time the liability for such violations as non-conformity with local and regional standards of construction activities, approval of urban planning documentation with violations is revoked.

Such “modernization” generally should support free-willed compliance with the provisions of the law “On regulation of urban planning” on the side of conscientious contractors and will force those who try to neglect its regulations.

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