property right on the apartment. The customer paid the cost of construction and the
developer should arrange the issue of ownership act for the apartment. The act of
acceptance - transfer of apartments between the parties was signed, but contrary to the
taken obligations, the developer did not register ownership of the apartment after the
customer, instead - gave property rights on the object of unfinished construction into
the mortgage.[17] The problem in the case was how to remove that apartment from the
register of mortgages and withdraw from the mortgage.
In our view, the apartment owner in that case should refer to the Part 5 of the
Article 16 of the Law of Ukraine “On Mortgage” [18]. In case of unfinished object
under construction, the mortgage does not apply to the part which is allocated in nature
and has been acquired by any person (buyer) under a civil contract by full payment of
its value before the decision of foreclosure. After the foreclosure of penalty, the rights
and duties of the developer to third parties should pass to the new owner of unfinished
construction (building) or the object of unfinished construction. Thus, the full payment
under the contract will be the ground for removal of the object from the mortgage.
Inconsistencies and problems in this area arises because both the developer and
customer have property rights on the object of construction, however, they vary
depending on the reason they occur.
According to the valid legislation of Ukraine the private funds financing
construction should be performed through the FCF or FREO to ensure and protect the
rights of investors. Therefore, it is necessary to analyze the peculiarities of contractual
and property rights circulation in this sphere.
a.
Stage of contract conclusion on the FCF participation and transmission of
funds to FCF
At the stage of the contract conclusion on FCF participation and transmission of
funds to FCF, the installer of management transfers property into the trust. As noted
by R. Maidanyk, trustee is the only owner of the trust property, there are no other
owners. The installer and beneficiary of trust property have only contractual rights, that
is why they are not the owner of this property.[19] Thus, by making an investment, the
investor got contractual rights to acquire property and the manager - the right on the
trust property.
It is important to note that the investor doesn’t get contractual rights to acquire
property at the moment of FCF contract conclusion but at the time of funds
transmission to the FCF.
At the same time the investor acquires the status of principal. Under the Part 2 of
the Article 15 of the Law of Ukraine “On Financial and Credit Mechanisms and
Management of Housing Construction and Real Estate” the manager should assign the
client the appropriate amount of measurable units of the investment after the first
payment under the FCF agreement [20]. Principal gets rights for the appropriate
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