On Ensuring Financing under an Agreement for the Organization and Provision of Construction

Abstract

The article is dedicated to the examination of issues related to financing, ensuring financing, and investing in construction as a subject of contractual obligation involving customer and real estate developer. The definition of «construction financing» is provided as a set (system) of actions involving the transfer and receipt of monetary funds in compensation for the value of property benefits created and/or transferred for the construction project. The «ensuring of construction financing» is characterized as legal actions leading to the release and allocation of financial resources for construction from the customer’s and/or real estate developer’s own/borrowed capital within the limits and manner prescribed by law. Attention is devoted to investing in construction as the investment of property (financial resources, property rights in particular) and intellectual values of the investor into objects of their own economic activity or the recipient’s economic activity for the creation and/or transfer of property to the investor (objects of investment activity), the expected value or future pecuniary benefit of which (at the time of investment) is assessed by the investor as higher than the value of the investment made, and/or for achieving social, environmental effects. The expediency of classifying the issues of ensuring construction financing within the competence of the customer and the real estate developer is substantiated. It is proposed to apply an expense-oriented approach in defining the category «construction financing» (exclusively for specific production costs) in relation to the funds of individuals attracted by the real estate developer/customer of construction for the further acquisition by such persons of ownership of the relevant real estate objects. Based on the results of the analysis, amendments to the Law of Ukraine «On guaranteeing real rights to real estate objects that will be built in the future» have been prepared, designed to improve the protection of investment interests of individuals and legal entities, to provide certainty in the use of attracted financial resources and investments in legal relations involving customer and real estate developer.