Annotation in contest
New Law “On financial-credit mechanisms and property management while dwelling construction and real estate operations” provides very transparent and practically checked mechanism of dwelling construction, due to which investor’s rights to obtain the dwelling at his expense are more safe.

It has been a year since the Law of Ukraine “On financial-credit mechanisms while dwelling construction and real estate operations” (furthermore the Law) was adopted, but arguing around it is still exists. We also have decided to enter the discussion of the new matters, provided by the Law

Firs of all there is a determination: if you are on the side of more civilized and transparent relations of “investor-constructor”, due to which the guarantees of dwelling receiving by the investor are increasing, and everyone is does his own business - this article if for you. In the other case, there is no need to read it.

For complete and clear understanding of the Law, let’s work out the interpretation of the terms, being used in it.

Measurable unit of the investment object — уset by the Financial Construction Fund’s rules (furthermore - FCF) unit to measure investment object, which is determined in metric units or parts (percents) of the investment object as a whole.

Property Management Agreement— agreement, according to which management adjuster gives the trustee the property in trust ownership with the aim to achieve goals determined by him and sets limit for certain actions of the trustee to manage the property. According to the Law for FCF – this is an agreement of FCF participation, for funds operating with estate (furthermore FOE) – agreement to purchase FOE certificates.

To secure investment object for trustee — setting legal relationships between trustee and proxy on the base of the agreement on FCF participation, due to which there is the right of the proxy to require the investment object in future.

Construction object — the estate, construction of which is organized by the constructor, and the financing is performed by the trustee at the expenses of the received funds to manage.

Investment object— apartment or social premise (built in dwelling house or separately located no residential premises, garage, car-spot and so on) in the construction object, which after the construction is completed, becomes he separate property.

Fund’s rules (FCS, FOE rules) — system of norms, adopted and announced by the fund’s trustee, which all the participants of the finance-credit system of dwelling construction should follow to achieve the goals of property management, determined by the trustee.

Borrower — FCS proxy, who obtained the loan in the bank to participate in FCS.

Current price of the measurable unit of the investment object— set at the moment of payment the price of requirement right of one measurable unit of this investment object.

Manager — financial institution, performing the property management, received as the property in trust on property management agreement. According to the Law FCS management is performed by FCS trustee, FOE management is performed by FOE trustee.

Agreement of the trustee and constructor (furthermore — agreement) — the document that regulates the relations of FCS trustee with constructor as for organization of the construction objects, using funds received by the trustee, and further assignation by the constructor investment objects to management adjuster.

Property management adjuster (furthermore — adjuster) — the person who dares the property to the trustee in trust ownership on the base of the property management agreement. In the Law for FOE – this is proxy when FOE certificates emission - this is FOE certificates owner.


Construction financing— иusing by the trustee the funds received to construct the objects according to the agreement.

Financing Construction Fund— funds, dared to the FCF trustee, which will be used by him in future on the terms Fund’s Rules and FCF Participation Agreements.

FCF type “А” — the fund, in which the current price of measured unit of the construction object, consumer features of the investment objects, comfort and floor ratio are determined by the constructor, besides he accepts the risk in respect of lack of the funds attracted to construct the object.

FCF type “B” — the fund, in which the current price of measured unit of the construction object, consumer features of the investment objects, comfort and floor ratio are determined by the trustee, besides he accepts the risk in respect of lack of the funds attracted to construct the object.

Taking into consideration that the Law is of large volume and is very complicated to be looked through in one publication, we will work out only the first part, which regulates FCF creation and functioning. Funds types “A» organization will be presented with more details, because it is more actual for today, to create it there is no need in license and permissions by specially authorized state executive power authorities

The main document to define interrelations of the parties during the construction of the object at the expense FCF funds is the FCF Rules, worked out and approved by FCF trustee. These Rules determine: FCFs type, procedure of their creation: order of organization and constructor’s, trustee’s and proxy’s interrelations; the order of the property management; conditions, features and limits of the property management; direction and the order of usage of the attracting funds, the order of participation in the fund and refusing from the participation in it; types of the measurable units of the investment objects; order and conditions of the attached investment object to proxy; proxy’s crediting terms and conditions; the amount of trustee’s compensation and other FCF functioning conditions.

FCF rules are pubic attachment to enter the fund for those, who want to be its proxy, in the case of acceptance of the Rules. The fund is considered an existing one after approval FCF Rules by the trustee, to complete an agreement with constructor, finalizing security of obligations of the constructor on the agreement to fulfill, also opening FCF current account in the bank.

For investors FCF Participation Agreement (Property management Agreement) is of great concern. It determines interrelations of the investor and FCF trustee during all the period of their cooperation: from introduction of funds to the accounts, till obtaining by the investor in property the object of investment.

According to the Law, FCF Participation Agreement has to include: subject of agreement; trustee’s title; FCF type; order to dare funds by the proxy to be managed by the FCF trustee; restriction of the certain actions of the trustee to manage property; rights and obligations of the FCF trustee and proxy; information on assigned to proxy investment object’ terms and mechanism of the repayment funds to proxy on his demand; validly term of the agreement; responsibility of the parties for the failure conditions of the agreement; order of information provision to the proxy on fulfillment of the agreement; amount and form of compensation to the FCF trustee.

Besides, on our opinion, into FCF Participation Agreement have to be included:

• the schedule of new funds introductions on the FCF account;
• Conditions of attachments to investor the object of investment;
• Performances are taken by FCF in the case of the failure to follow the schedule of new funds introduction (partial of full non payment of the next payment);
• Determination of the current price of the measured unit of the construction object, floor ratio and comfort;
• The order of detachment of construction object from the investor and repayment the value of the paid part of general floor area of the investment object;
• Obligations of the parties on inter correspondence to inform in the case of legal address changing (mail code), other important requisites, included into the FCF Participation Agreement;
• Order of claims on quality of the building works on the construction object;;
• Obligations of the investor not to perform constructing and\or other works aimed at replanning and so on, until act of acceptance of construction object is sighed;
• Mortgage crediting conditions, if it is provided by FCF bank-trustee;
• Cooperation of the parties to authorize the rights of property on construction object;
• Other important conditions to be provided by the parties.

• Building-assembly works for the whole term from the risks of its damage or destruction in the case of man-caused damage and\or natural disaster – in favor of trustee as a confidential owner;
• Responsibility before third parties in case not qualified fulfillment of the Building-assembly works, from the risks of the construction terms breaking and moral and property damage to third parties in favor of trustees (investors) of the fund.

• Agreement on concession of real estate property rights, with delaying conditions;
• Contract of agency with delaying conditions, on which FCF trustee possesses the right to perform construction, in the case the constructor breaks the terms of agreement, including reassignment of these functions to third parties. At the same time the constructor, for the term of the agreement, has the right to provide irrevocable power of attorney to delegate the right to the third parties the functions of the constructor.