By Armen Melkumyan
On 12th September 2023, the National Assembly of Armenia adopted significant amendments to the Civil Code. These changes came into effect on 15th October 2023. The revisions introduce key regulations for developers and constructors, impacting the use of funds from special accounts. Here’s a breakdown of the essential changes:
New Regulations Starting 1st July 2024
From 1st July 2024, developers can use up to 70% of the funds from special accounts before the buyer registers ownership of a newly constructed apartment. This rule applies regardless of the construction stage. Additionally, the pledge rights over the paid amounts by owners can be released up to 70% of the amounts held in the developer’s special accounts.
Changes Effective from 1st January 2025
Starting 1st January 2025, the regulation tightens further. Developers will only be able to use up to 50% of the funds from special accounts. They can utilise 50% of the funds, but not exceeding 95%, proportional to the building’s completion degree. The pledge rights over the paid amounts by owners can be released up to 50%, and not more than 95%, of the amounts in the developer’s special accounts.
Conditions for Using Remaining Funds
Developers can access the remaining 5% of the funds in the special accounts within one year after the buyer’s ownership registration. This is contingent on the absence of defects during building operation or the elimination of identified defects by the developer.
Summary
The recent amendments to the Civil Code of the Republic of Armenia introduce stricter regulations on the use of funds from special accounts by developers. Effective from 1st July 2024, developers can use up to 70% of these funds, decreasing to 50% from 1st January 2025, with conditions on fund utilisation linked to the building’s completion degree. These changes aim to enhance financial management and accountability in the real estate sector.
How 360 Business Law Can Assist
Adapting to these new regulations can be challenging, but 360 Business Law is here to help. Our team of experienced legal professionals can provide comprehensive guidance to ensure compliance with the latest amendments. We offer:
- Expert Legal Advice: Detailed insights into the new regulations and how they affect your business operations.
- Compliance Support: Assistance with implementing necessary changes to meet the new legal requirements.
- Contract Review: Thorough review and drafting of contracts to align with the updated Civil Code provisions.
- Dispute Resolution: Effective resolution of any disputes arising from the new regulations.
Trust 360 Business Law to help you address the complexities of the new amendments to the Civil Code, ensuring your business remains compliant and successful. Contact us today for tailored legal support and expert advice