Developer Legal Due Diligence

Developer Legal Due Diligence: Comprehensive Review Before Investing

Developer legal due diligence is a professional legal review of the company’s legal standing, permitting documentation, rights to the land plot, and the construction project’s compliance with applicable Ukrainian law. This review is critically important for both private investors and businesses planning to purchase real estate or invest funds in a construction project.

Given the strengthened regulatory oversight in the urban development sector and ongoing legislative changes (in particular, under the Law of Ukraine “On Regulation of Urban Development Activities”), a legal due diligence review of the developer helps minimize financial risks and avoid potential loss of investment.

What Is Developer Legal Due Diligence?

Developer legal due diligence is a comprehensive legal assessment of:

• the company’s legal status;

• the authority of the governing bodies;

• rights to the land plot;

• urban planning conditions and restrictions;

• permits and approvals required to perform construction works;

• the compliance of design documentation with DBN (Ukrainian Building Codes);

• litigation, disputes, and encumbrances;

• the financial and investment model used to attract funds.

The purpose of the due diligence review is to confirm the legality of the construction project’s implementation and to assess the investor’s risk exposure.

When Is a Developer Review Necessary?

Legal due diligence is advisable in the following cases:

1. Investing in primary (new-build) real estate.

2. Purchasing an apartment in a new development.

3. Entering into a participation agreement in a Construction Financing Fund (CFF / FFB).

4. Purchasing commercial real estate at the construction stage.

5. Joining a joint development project.

6. Acquiring a land plot with an unfinished construction project.

A due diligence review is especially important for large residential complexes, mixed-use properties, or projects with complex financing structures.

What Is Reviewed During Developer Legal Due Diligence?

1. Company legal status

• Registration documents.

• Types of business activities (KVED codes).

• Director’s authority.

• Existence of bankruptcy proceedings.

• Tax risks.

2. Rights to the land plot

• Title documents (ownership, lease, superficies).

• Designated purpose (zoning/land-use designation) of the land plot.

• Consistency with the Master Plan and the Detailed Territory Plan.

• Existing restrictions and easements.

An error in the land plot’s designated purpose is one of the most common grounds for recognizing construction as unauthorized.

3. Construction permitting documentation

• Urban planning conditions and restrictions.

• Design documentation.

• Project expertise review (if required).

• Construction permit or notification of commencement of works.

• Technical supervision and author’s supervision.

Missing permits or improperly executed permitting documents may result in suspension of construction or annulment of the project.

4. Litigation and encumbrances

Lawyers analyze:

• court decisions involving the developer;

• disputes relating to the land plot;

• criminal proceedings;

• enforcement proceedings;

• asset seizures/attachments.

Active disputes significantly increase investment risk.

5. Investment funding model

Ukrainian law provides several mechanisms for construction financing, including:

• Construction Financing Funds (CFF / FFB);

• Real Estate Transaction Funds;

• Collective investment institutions;

• sale and purchase agreements for property rights.

An incorrectly selected model or non-compliance with legal requirements creates risks of double sales or loss of ownership rights.

Common Investor Mistakes

1. Relying only on advertising and the developer’s website.

2. Ignoring the analysis of land rights.

3. Signing an agreement without legal review.

4. Underestimating litigation risks.

5. Failing to verify urban planning documentation.

Such mistakes may lead to lengthy court proceedings or financial loss.

Developer Due Diligence Checklist

Before investing, make sure that:

• the land plot has the appropriate designated purpose;

• urban planning conditions and restrictions are in place;

• a permit to perform construction works has been obtained;

• the project has passed an expertise review (if required);

• there are no asset seizures or court disputes;

• the agreement complies with applicable law.

For a comprehensive review, we recommend using the legal support for construction projects service on gbu.kyiv.ua.

Case Example

An investor approached GlobalBud Ukraine planning to purchase commercial premises in a new residential complex. During the legal due diligence review, it was established that the land plot had a different designated purpose, and the construction permit was being challenged in court.

Thanks to the timely review, the client withdrew from the transaction and avoided financial losses.

Why Order Developer Legal Due Diligence from GlobalBud Ukraine?

GlobalBud Ukraine provides comprehensive engineering and legal services in construction and real estate, including:

• in-depth analysis of permitting documentation;

• verification of compliance with DBN (Ukrainian Building Codes);

• due diligence of rights to land plots;

• analysis of litigation risks;

• support of investment agreements;

• services for individuals and legal entities, including international companies.

We provide end-to-end support — from the initial review to the execution of a safe and legally sound transaction.

Conclusions

Developer legal due diligence is not a mere formality; it is a practical tool for protecting your investment. In the context of the active development of Ukraine’s primary real estate market, a comprehensive legal review helps minimize risks, avoid litigation, and ensure the lawful implementation of construction.

If you are planning to invest in a new development or purchase a property at the construction stage, contact GlobalBud Ukraine. Our experienced lawyers and engineers will provide a professional review of the developer and deliver expert support at every stage of the project.