Write for force majeure. Can developers stop construction due to war?

Those who invest in a new residential building before the war begins face at best a significant delay in commissioning and at worst a loss of investment. After all, even in Kiev, where the ZSU was driven away by enemy forces at the end of March, as written, about a third of the residential complexes under construction have remained frozen since the end of February. Focus “Money now, an apartment – later. Can home buyers return money for long-term construction?”

Attorney Maxim Koldoba, partner of the law firm ASA GROUP, in the current situation, many developers in the Letter of the Ukrainian Chamber of Commerce and Industry dated February 28, 2022 No.

However, the addressee Focus draws the attention of investors to the following fact: The existence of force majeure is exempt from liability for delay in fulfilling obligations in the form of fines and penalties for the duration of such conditions.. However, no force majeure on which developers can speculate can relieve them of the obligation to build a property, put it into operation and transfer the purchased flats to investors.

UCC “De jure” senior lawyer Ivan Topor explains that it is not enough for a developer to simply refer to the Russian invasion as a force majeure – you need to get a corresponding result from the Chamber of Commerce and Industry. On the other hand, the war factor in Ukraine is not in itself a force majeure. To verify this, the developer’s specific project is based on the fact that force majeure conditions – military operations, etc. – must have a direct effect.

The next important point is the duration of the force majeure. For example, as Ivan Topor has clarified, at the end of February, roads in some areas may be closed and only military or humanitarian vehicles can pass through, impeding work on a construction site, for example. In this case, confirmation of force majeure can only be obtained during the duration of such prohibitions. In addition, the location of the construction site in the occupied territory, according to the interlocutor Focusacts as force majeure only for the period of occupation until the recovery and restoration of transport links.

So, if we summarize what was said in the review FocusWe can draw the following conclusions about the legitimacy of justifying Ukrainian developers with force majeure factors:

• In order to confirm the force majeure, the opinion of the Chamber of Commerce and Industry is required for each particular case;
• force majeure occupation, being at the epicenter of hostilities, restrictions and prohibitions that hinder business, etc. can be accepted as;
• the war factor itself and even the increase in the price of construction materials and the decrease in the demand for real estate do not constitute force majeure;
• an approved force majeure allows the developer to delay the fulfillment of its obligations to investors only for the period during which the force majeure occurred;
• Confirmed force majeure does not relieve the developer of the obligation to complete the construction, commissioning and transfer the ownership of the acquired real estate to the investors.

“A bullet hitting a construction site is a loss to the contractor who has to rebuild the destroyed parts of the house. After all, his client is responsible for the site if he buys apartments and non-residential buildings until the building is operational and transferred to condominium or a manager’s control, and the buyers do not” continues to be and all losses belong to him alone.” according to the interlocutor Focusin this case, the construction period can only be extended by the time required to restore the object after demolition.

In simple terms, Kyiv developers who do not continue to work on construction sites after February 24, 2022 have no reason to justify themselves in force majeure and must fulfill their obligations to investors.

Previously Focus He wrote about the timing and reasons for delays in commissioning housing in Ukraine.

Moreover Focus reported that the cost of housing in new buildings in Lvov during the war was almost equal to the level of Kyiv.