The Legislative Chamber of Uzbekistan's Oliy Majlis reviewed a draft law concerning the construction of apartment buildings and other real estate objects based on shared capital participation during its first reading. This document establishes new rules for attracting funds from citizens and introduces mechanisms to protect shareholders' investments.
Challenges in the Housing Construction Sector
During the session, it was noted that the volume of housing construction in the country has significantly increased in recent years. Nevertheless, some projects are not completed within the established deadlines, and relationships in shared capital construction were not regulated by a separate legislative act, which created difficulties for homebuyers.
Provisions of the New Draft Law
The draft law defines the rights and obligations of participants in shared capital construction, the powers of state bodies, and the procedures for interaction between them. Specific provisions regulate the collection of funds from individuals and legal entities for the construction of residential buildings and other real estate objects.
Mechanisms for Protecting Citizens' Funds
One of the key provisions is the introduction of an escrow account mechanism. Citizens' funds will not be directly at the developer's disposal but will be held in a special bank account. The transfer of these funds to the developer is possible only after the completion of construction in accordance with established requirements and the commissioning of the object.
A developer can attract funds from the public only by complying with all legislative requirements, registering in the Unified Information System, concluding a general agreement with an authorized bank, and publishing a project declaration.
Requirements for Contracts and Liability
The bill proposes making notarization and state registration of shared capital participation agreements mandatory. Authors argue that this will help prevent the resale of the same property, the conclusion of illegal contracts, and other violations.
If a developer attracts citizens' funds in violation of established norms, the shareholder has the right to demand the return of funds with accrued interest for their use. If this demand is not met within the specified period, the citizen can file a lawsuit.
Guarantees of Timeliness and Transparency
The draft also provides for ways to ensure the timely completion of construction projects. Specifically, the possibility of replacing the authorized bank or the developer may be provided for if necessary, as well as the application of financial instruments to maintain continuous project financing.
Information about shared capital construction will be published in the Unified Information System, allowing citizens to obtain information about the developer, the building under construction, and the progress of the project. Furthermore, the bill proposes introducing liability for violating legislation regulating the construction of residential buildings and real estate objects using shared capital.
During the discussion, deputies asked questions regarding specific provisions of the draft and proposed options for its further improvement. After the debates, the document was adopted in the first reading.