How to choose a plot of land for development and invest funds safely?

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Property check
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Land audit
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In recent years, substantial progress in land reform and urban development has been witnessed in Ukraine. This period marked significant changes in the legislation, aiming to overcome the complexities, fragmentation, and conflicts within the existing land law framework.

One of the primary objectives of these changes is to simplify the procedures for executing construction projects and to resolve conflicts in land relationship regulation and urban planning.

These legislative amendments are also geared towards attracting foreign companies to partake in Ukraine’s rebuilding, facilitating the establishment of production facilities and other developments. This is becoming feasible due to the reformation and organization of land relationships, which is expected to attract investments and foster urban development through the formation of united territorial communities.

However, there remain issues that require attention and resolution. Often, buyers purchasing land plots focus solely on the plot's designated purpose, overlooking local urban planning documentation. This oversight can lead to misguided decisions, as a plot's designated purpose can only be altered within the confines of the urban planning documentation.

Our lawyers will share insights on selecting a land plot for construction, verifying it, and safely investing your resources.

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What Documents Should Be Reviewed Before Building on a Land Plot?

Factors influencing the choice of a plot for construction include:

  • Ownership documents issued in previous years carry a risk. Rights might not have been registered, posing a risk of encountering counterfeit documents. During audits, we meticulously analyze the legislation governing the provision of ownership rights and the documentation process for the specific period in question.
  • Discrepancies in data sets, such as differences between the land cadastre information and the information in title-establishing documents concerning area, location, configuration, and overlaps. It is crucial to analyze this as buyers need to be fully aware of their purchase, including the exact location of the plot and potential conflicts with neighbors.
  • Designated purpose of the plot: It’s essential to thoroughly examine the intended purpose of a land plot before purchase to ensure it aligns with your needs and future plans. Ignoring this can result in adverse outcomes like limitations on land use, conflicts with local authorities, and other legal issues. Therefore, we explore the feasibility of changing the plot’s designated purpose when necessary.
  • Changes in the plot’s configuration, division, or unification might indicate a deliberate alteration of the cadastral number and intentional concealment of the plot.

This information pertains to auditing the documents and history of a land plot. How does this work in practice?

A client came to our firm seeking to conduct an audit on a land plot they planned to acquire for future development.

At first glance, the situation seemed fairly standard: the land's designated purpose was in line with the client's intentions. However, during the audit, we discovered an absence of local-level urban planning documentation.

The law mandates that the general plan of a settlement remains valid indefinitely until a new plan is adopted. Yet, in this case, the local self-government body hadn't received, nor did it manage, the general plan of the settlement since its incorporation into a United Territorial Community (UTC).

This scenario presented a complex dilemma for the client: how to proceed with their construction project, given the lack of urban planning documentation could significantly delay its execution.

After assessing the audit's findings, the client opted to consider an alternative land plot for potential purchase and project realization.

This case underscores the importance of conducting a thorough audit before acquiring a land plot. An audit aids in evaluating not just the legal feasibility of a project but also its technical and economic practicality.

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What Should Be Verified Before Purchasing a Land Plot for Construction?

Beyond reviewing the land plot's documents, other crucial information can impact an investor's decision-making process.

  • Legal Disputes: The existence of ongoing and unresolved legal cases related to the land plot. Legal disputes can influence the rights of ownership and usage of the land, making it essential to review the history of court rulings and the status of current legal proceedings.
  • Rights to Alienation: It's vital to check whether the person or entity selling the land legally has the right to do so.
  • Urban Planning Documentation and Restrictions: The presence and adequacy of urban planning documents can significantly affect the ability to carry out specific construction projects on the site.

These factors are critical in safeguarding the legal and financial security of your project. A comprehensive legal audit is advisable before purchasing a land plot to prevent unforeseen complications in the future.

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How Does the Detailed Verification of a Land Plot for Construction Work?

First and foremost, we conduct an in-depth analysis of the title documents for the plot, the land cadastre information, and any registered rights. We also review the local-level urban planning documentation to ensure alignment with the plot's designated purpose, functional zoning, and the building and structure classification. The functional designation of the area is determined according to urban planning documents, such as:

  • The zoning plan;
  • The detailed territorial plan;
  • The general plan of the settlement, applicable when a zoning plan or detailed territorial plan for land plots within the settlement has not been approved.

An integral aspect of any construction project is ensuring connection to engineering networks (water, electricity, gas supply, sewage, etc.). Technical conditions are determined to specify the technical characteristics, connection points, timelines, and terms of supply.

During the audit, it's critical to consider this factor, as providing utility connections is a complex and costly procedure that can significantly influence the project's overall cost.

We advise our client to:

  • Perform due diligence on the land plot, assessing its legal clarity through an analysis of documents, encumbrances, and legal cases;
  • Examine local urban planning documents that might affect the intentions and feasibility of the construction project;
  • Verify access to utilities. Though technically oriented, this aspect significantly impacts the project's viability and cost.

Of course, our team is equipped to assist in conducting all necessary checks. Our services include:

  • Auditing the land plot for technical and legal parameters and restrictions;
  • Gathering documents, submitting inquiries, and obtaining information from urban planning documentation;
  • Analyzing urban planning documents to ensure they align with the construction intentions;
  • Accessing and reviewing information from the State Register of Rights and the State Land Cadastre;
  • Involving necessary technical experts in the audit;
  • Developing a comprehensive project implementation roadmap, covering both legal and technical aspects.

The cost of checking the land plot can be found here.

The cost of legal support services for construction can be found here.

Publication date: 02/11/2023

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