On 8 June 2015 the President ofUkraine signed Law of Ukraine No. 417-VIII "On Peculiarities of ExercisingOwnership Rights in Multi-Apartment Building" (the "Law"), whichbecomes effective on 1 July 2015.


The Law is aimed at (i) resolving multi-apartment building (the"Building") management issues in a Building where a co-ownersassociation (the "OSBB") has not been established and (ii) improvingthe legislation on OSBBs. Baker & McKenzie acted as a legal advisor for thedevelopment of the Law.


Forms of Buildingmanagement


The Law provides for the following forms of Building management:

  • by owners themselves;
  • by a manager on the basis of a relevant agreement;
  • by establishing OSBB or an association of OSBBs.


New decision-makingmechanism


The Law establishes a clear procedure for convening, holding and adoptingdecisions by the general meeting of co-owners of the Building, where OSBB hasnot been established.


Currently, the consent of all co-owners of the Building is required to adoptany decisions on management of Building joint property. After the Law becomeseffective, most of the decisions will be adopted by the owners of apartmentsand non-residential premises, the total area of which exceeds 75% of Buildingpremises' area. Resolving some issues, including determination of the managerof the Building, will require the consent of owners of apartments andnon-residential premises, the total area of which exceeds 50% of Buildingpremises' area.


If the number of votes is not sufficient for the adoption of the decision bythe general co-owners meeting, a written questionnaire of owners who failed toparticipate in the meeting may be prepared. The results of such questionnaireare considered in the vote final count.


Thus, the co-owners will be able to make decisions on all major Buildingmanagement issues.


Improvements in OSBBlegislation


The Law also changes the regulation of OSBBs. In particular, the Law improvesthe procedure to hold OSBB constituent and general meeting, specifies theexclusive competence of the general meeting and changes the procedure to adoptand publish decisions thereof.


Expected consequences


The changes introduced by the Law are expected to improve the effectiveness ofBuilding management regardless of having an established OSBB. Improvements tothe decision-making mechanisms will allow the co-owners to make decisions onall Building management issues efficiently.

 

Additional notes

ThisLEGAL ALERT is issued to inform Baker & McKenzie clients and otherinterested parties of legal developments that may affect or otherwise be ofinterest to them. The comments above do not constitute legal or other adviceand should not be regarded as a substitute for specific advice in individualcases.