Buying an Apartment in a New Building in Kyiv as a Foreigner: How to Protect Your Money?
In October 2020 we were contacted again by a Client with a request for a real estate inspection. This is not a rare request, because the intention to purchase real estate in another country always raises many questions:
What actions need to be taken in order to purchase real estate as a foreigner in Ukraine?
What documents do you need to purchase real estate in Ukraine?
How to bring money into Ukraine to pay for real estate? Can I pay in cash?
And most importantly: How to make sure that the purchase of real estate will be safe? Without living in the country, without keeping abreast of real estate events, it is difficult to know which of the real estate developers to trust, and who can suspend the construction.
For the Client’s peace of mind and security our lawyers offer a service, which is often called “Due Diligence” - it includes the inspection of real estate, in which the investor plans to invest money, and involves a check of financial, tax, legal and other aspects of the investment object. These very services we provide to our Client.
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What does a lawyer check during the inspection of an apartment in a new building before purchase?
First of all, we checked which companies were involved in the construction of the new building, in particular: the general contractor, the real developer, the client and the designer. We made sure that there were no encumbrances on the land of the new building location and checked the construction permits.
During the analysis it was revealed that after the construction of the residential complex an inspector of the State Architecture and Construction Inspectorate issued a ruling on violation of town-planning legislation provisions since the parking lot had been built with noise insulation disorders and unacceptable neighborhood with public catering facilities.
In addition, the inspector gave a formal notice of violating the city’s master plan. Based on the results of the inspection, an administrative fine was imposed on the contractor, but the court sided with the developer and overturned the fine and the order to stop the construction work. It is worth noting that for the capital’s general contractors, one court case is a pretty good indicator.
We also checked the documents certifying the seller’s title to the apartment and the preliminary purchase and sale agreement.
We drew the Client’s attention to certain clauses concerning the distribution of tax payments between the buyer and the seller. Thus, the agreement imposed additional expenses on the buyer totaling 7.5% of the apartment value, not including the 1% pension fee and the official fee for the title registration, which significantly affected the final amount to be paid by our Client for the apartment. Our lawyers negotiated with the seller to reduce the tax burden on our Client as a buyer.
The agreement also specified the property in the apartment that would be transferred to the ownership along with the apartment, but there was no clearly defined list and condition of the property. We recommended making an additional act of acceptance as the furniture adds to the value of the apartment and such action could decrease the total price of the apartment or get a compensation for the part of the money, taking into consideration the condition of the furniture.
Based on the results of the inspection, it was decided to proceed to the purchase of the apartment. Our experience shows that it is comfortable to conduct such agreements in the specialized negotiation rooms of banks – this allows us to conduct all necessary non-cash transactions conveniently and quickly.
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Legal support of the real estate purchase transaction in Kyiv
In the process of the sale and purchase transaction, the task of our lawyer was to legally support and accompany our Client, namely:
Checking the final version of the purchase and sale agreement before signing it;
Analyzing the realtor services agreement;
Checking the completeness of the necessary package of documents, such as a certificate of registered tenants, an expert evaluation of the apartment, as well as the correctness of the documents execution and their contents.
For example, the condition of the realtor services agreement, to which our lawyer drew attention, was that if the Client failed to pay the realtor’s services on the same day, the next day he would be charged a penalty. In addition, for the transaction a notary needs a certificate of absence of debts for housing and communal services at the address of the apartment, which, by the way, is a certain marker of fair practice of the seller.
According to the established rules of financial monitoring, the notary conducts primary financial monitoring, namely: performs identification of the Client and specifies the origin of funds to be paid; in our case - for the purchase of real estate.
The notary takes into account the country of origin, social status, business activity, financial situation and reputation of the purchaser and based on that can classify the Client as a high-risk person. In our case, the Client did not belong to such a category and did not fall under the detailed test, but it’s worth taking these features into account and preparing in advance all the documents that may be of interest to the notary.
It is important to say that if you are married at the time of real estate purchase, you must get a notarial consent of your wife, because if the transaction is carried out without such consent, even after several years, the court may terminate the agreement at the initiative of the other spouse or even the seller. The same requirements apply to the seller of the property, if he/she is married.
In practice, we have encountered situations when notaries try to cover all bases and offer to notarize the consent for couples who have not formalized their relationship, which in most cases is unnecessary.
The agreement stipulated that the transaction shall be conducted by a specific notary, which allowed us to check his activities in advance.
The mentioned person is mentioned in the criminal case, although not as a suspect or a party to the criminal proceedings, but as the notary who certified the forged documents. Of course, he may not have known that they were fake, but before such transactions one should consider the reputation of the chosen notary and make sure that he will act as an independent party. For our Client’s safety, we have agreed on our trusted partner notary for the transaction.
We have already written about how to prepare a foreigner for a visit to a notary in more detail here.
Both at the stage of preparing to buy real estate and at the conclusion of the transaction a lawyer will be an indispensable assistant and will protect you from mistakes, which could lead to loss of time and money. To see a full list of our services and prices please click here.
Would you like to buy an apartment or other real estate in Kyiv? Don’t hesitate to contact us! We will be pleased to examine your investment and support your purchase and sale transaction.
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