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Ukrainians are not allowed to sell housing obtained through compensation for three years. Lawyers believe it's illegal

Ukrainians who suffered losses over the war, together with the right to get housing instead of the destroyed one, will sign an obligation not to alienate it within three years.

Such an innovation is proposed in bill No. 7198 "On state registration of damage caused as a result of the armed aggression of the Russian Federation against Ukraine" that was voted for in the first reading on April 1.

As the head of the Servant of the People party Olena Shuliak said during an online discussion of the bill attended by mayors of cities and the Confederation of Builders of Ukraine, housing obtained as a result of state compensations cannot be sold for three years.

Quote"We don’t want people to get an apartment, then sell their housing and leave the country with this money. We would like every Ukrainian to stay in our country," the MP explained.

However, lawyers consider the ban on alienation unconstitutional.

10 features of compensation for lost housing

  1. All citizens of Ukraine whose housing was destroyed and damaged are entitled to obtain compensation. Investors who have not obtained title to property but have documents on making payments for housing will also be eligible for a refund.
  2. Housing that cannot be restored will be compensated not with funds, but solely with square meters. The recipient will be able to choose a housing option in any locality of the country. Calculating the cost of 1 sq. m of the property area is carried out according to the methods determined by the Cabinet of Ministers.
  3. Property obtained as a result of state compensations cannot be sold for three years.
  4. Military personnel and their families, families with many children, persons with disabilities will have a priority right to compensation for housing as a result of the Russian Federation military aggression.
  5. With regard to properties to be remediated, the state offers compensation for repairs. In the bill, the amount of funds for repairs is limited — it cannot exceed the cost of construction and installation work when constructing new housing.
  6. Methods and assessment of the housing cost, procedures, and establishing commissions will be determined by the government by separate decrees.
  7. The ceiling for compensation in the form of a property cannot exceed the cost of 150 sq. m for property. According to the law authors, more than 85% of potential recipients are included in this figure.
  8. The compensation recipient is entitled to obtain a property, the value of which exceeds the compensation ceiling, by paying on their own the difference between the value of the property and the amount of compensation at market value.
  9. One can apply for compensation through the application Diia, Administrative Service Centres, or a notary. There is also a mechanism for applying through social security centers that can accept applications in the field.
  10. The compensation procedure involves four stages: establishing a commission to consider the issues of compensation for damaged and destroyed real estate in each community affected by the war; determination by the commission of the recipient’s right to compensation; conducting an examination on the possibility of restoring housing and assessing damage; transferring the commission’s conclusion indicating the compensation amount and the concluding an agreement.

Ban on sale and project’s other disadvantages

As Hanna Novak, an analyst at the Institute of Legislative Ideas, noted in a commentary to The Page, in addition to the positive aspects of regulating housing compensation mechanisms, the bill has a number of shortcomings that will need to be taken into account when finalizing it for the second reading.

Firstly, the right to further alienate a property after its restoration/construction is limited for three years, and this restricts the rights of citizens.

Quote"Before the war had started, the housing owner could freely dispose of it. In addition, this restriction is contrary to the norms of the Constitution — Parts 1 and 2 of Art. 64 and Art. 41. In particular, Art. 41 says that everyone has the right to own, use and dispose of their property.

Secondly, the document is too large in volume and also provides for the drafting and approving at the sub-legislative level of procedural and critical issues related to determining the amount of compensation.

Quote"This will not help to eliminate possible abuses with the payment of compensations both on the part of Ukrainian citizens and officials who are part of the commission for considering compensation issues. For example, it is proposed to submit such documents for approval by the Cabinet of Ministers as: "Methods for assessing the cost of restoring damaged properties" (Part 4, Art. 5); "Methods for cost accounting of 1 sq. m of the properties area" (Part 3, Art. 6) and others," Hanna Novak noted.

Thirdly, only citizens of Ukraine who own destroyed real estate have the right to obtain compensation. However, such a right is not granted to legal entities, foreigners, or stateless persons legally staying in Ukraine. Although they have the same rights and freedoms, they have the same obligations as the citizens of Ukraine.

Fourthly, the compensation procedure has its drawbacks:

  • unclear and non-transparent mechanism for electing/appointing commission members;
  • there are no requirements for commission members (at least minimal);
  • the grounds for refusal to provide compensation are not defined, although the bill provides for the possibility of such a refusal;
  • the introduction of a compensation ceiling that creates a legal limitation of the Russian Federation liability;
  • the opportunity to apply for compensation during martial law and after the expiration of martial law within 90 days. This period may turn out to be too short: some of the territories are mined, and in order to get into the house/apartment and find out their condition, one will have to wait at least for mine clearance, and this time may exceed the deadlines specified in the project;
  • regarding the issue of assessing destroyed, damaged property (deadlines, who will conduct such an assessment);
  • the mechanism for building up a fund for restoring property and the destroyed infrastructure of Ukraine, its management, control over the activities of this fund (requires the introduction of a separate bill). In addition, capitalizing the fund should be made primarily at the expense of funds collected from the aggressor country and sanctioned persons.
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