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Uzbekistan’s Legislative Chamber passed a sweeping law on shared-equity residential construction at its third reading on 10 November, sending the bill to the Senate for final approval. The legislation, formally titled the Law on the Construction of Multi-Apartment Buildings and Other Real Estate on the Basis of Shared Participation, sets out the rights, obligations and powers of all parties involved in off-plan property sales — buyers, developers and state bodies — and establishes a framework designed to prevent the abuses that have left tens of thousands of Uzbek homebuyers exposed to fraud and stalled projects.
The centrepiece of the bill is a mandatory escrow mechanism. Buyers’ funds will be held in an escrow account at an authorised bank rather than transferred directly to the developer. The money will only be released to the developer once construction has been completed in accordance with statutory requirements and the building has been formally commissioned. Developers will be permitted to raise funds from the public only if they meet legally defined eligibility criteria, are registered in a unified information system, have signed a framework agreement with an authorised bank, and have published a project declaration.
Notarisation and a Public Registry
Every shared-participation contract — and any subsequent amendment to it — must be notarised and registered with the state. The requirement is intended to close a well-documented loophole through which developers have altered contract terms by persuading buyers to sign informal supplementary agreements outside the official record. Notarisation will also prevent the same apartment from being sold to multiple buyers, a practice that has generated numerous disputes in recent years.
All information about shared-construction projects will be published in the unified information system, giving prospective and existing buyers open access to details about the developer, the building and the progress of construction. Deputies noted that the system is designed to be transparent and accessible in format, not merely technically available.
Protections Against Delays and Problem Projects
The revised bill removes a provision that previously required buyers to wait an additional six months after a delivery deadline had been missed before a project could be classified as problematic. Under the new text, a breach of the handover deadline is sufficient on its own. Separately, a developer will no longer be able to remove a project from the problem-property register simply by paying compensation; the underlying defects must first be remedied.
If a developer raises funds in violation of the law’s requirements, buyers will have the right to demand repayment together with interest for the period during which their money was held. The bill also provides mechanisms for replacing the authorised bank or the developer itself in cases where continuity of financing is at risk, ensuring that construction can proceed even if one party defaults.
The bill applies prospectively: its provisions will cover projects for which construction permits are issued after the law enters into force, a transitional arrangement intended to avoid disrupting buildings already under way.
The Committee on Entrepreneurship, Competition and Industry, which led preparation of the bill for its second reading, conducted site visits to apartment buildings under construction, heard directly from buyers and developers, and reviewed international practice before finalising the text. Deputies said the resulting legislation would provide legal and financial protection for citizens’ savings invested in housing construction and would prevent the unlawful solicitation of funds that has characterised parts of the sector.