Case of deceived investors: 1000 people may lose 300 billion soums and be left without apartments
24.07.2023What Uzbek and international experts have been warning about for a long time has happened: “deceived investors” have appeared in Uzbekistan. Everything was leading up to this: local administrations allocated huge plots of land for construction to unknown small firms with small authorized funds, often created several months before the relevant decision of the khokim to allocate the plot was issued. No due diligence checks were ever conducted. At the same time, no legislation in Uzbekistan regulates the relationship between the developer and its clients on shared participation in the construction of apartment buildings.
Below is a synthetic material compiled from Uzbek press and social media reports describing one of the first mass cases of such a “scam”
Photo : makarenko_channel / Telegram
Residents of Tashkent appealed to the President with a complaint against Aziya Invest Favorit, which is building 8 houses on Izzat street in Yashnabad district of Tashkent,. To obtain loans from banks, the company pledged the owners’ apartments as collateral, and then the banks seized the housing because of non-payment of the loan. The damage to more than 1,000 tenants may exceed 300 billion soums.
The developer has been building eight multi-storey residential buildings in the Izzat complex since 2019-2020, some of them fully commissioned, others only under construction.
The Tashkent City Department of the Cadastre Agency stated that Aziya Invest Favorit was allocated 5.2 hectares of land with the right of permanent use for the construction of 8 multi-storey houses by the decision of former Tashkent Khokim Jahongir Artykhodzhaev.
To date, cadastral documents for 5 out of 8 houses have been formed on the 0.9155 hectare land plot. These houses have been assigned numbers 58/3, 58/4, 58/5, 58/6, 58/7 and have passed state registration, the report says.
Three more houses under construction – 58/1, 58/2 and 58/8 – have not yet received cadastral documents.
According to one of the residents, in two years the company has built only the first floor of the building, although the sale of apartments is underway.
He reported that on August 2, 2021, he paid 100% of the amount of the apartment in the 7th building at 58 Izzat Street, which is still under construction, but later it became known that the developer a year ago, without notifying the owner of the apartment, executed the above-mentioned cadastre in the name of the company’s employee. The dwelling was pledged as collateral to obtain a loan from Ipoteka Bank.
According to him, similar cases occurred in other houses. As a result, the developer cannot repay the resulting debt, due to which banks come to the apartments of the shareholders or residents who live in houses without cadastre and ask them to leave the apartment.
Another resident in an interview with Kun.uz said that he signed a contract to buy an apartment on February 21, 2022 and paid 273.8 million soums. “Over a year and a half of various promises, the delivery of the apartment was delayed. During this period, not a stick has been used to build the house I paid for,” he said.
Photo: gazeta.uz
Residents are concerned that the case may be forgotten after the elections, and also worry about inflation in refunds, as they bought apartments for 3.5-4 million soums per square meter, and housing prices have risen dramatically over the past four years.
According to the newspaper, the head of Aziya Invest Favorit Khairullo Hatamov was imprisoned, because of which the company’s employees inform residents about the suspension of the firm’s work.
Another applicant reported that on February 14 he made a payment to buy a house. The client was shown a plot of land on Izzat Street and told that the 58th house would be built there.
“It is now clear that the company has no ownership rights to this land. The company’s managers deceived more than 1,000 people and sold unfinished houses without obtaining construction permits from the relevant organizations. As a result, more than 1,090 buyers were left without money and without housing,” the complainant said.
The developer supposedly did not initially intend to build houses. He set the lowest price per square meter in the capital, “thus trapping many people”. Law enforcement agencies ignored this fraudulent scheme, although complaints were sent long ago, Kun.uz writes.
Residents have already made a public appeal about the activities of Aziya Invest Favorit in the summer of 2021. It was reported that the developer did not issue cadastres to owners and without notifying them pledged 14 apartments as collateral to obtain a loan from Asakabanka.
“We purchased an apartment in this complex in September 2020. We moved in here in October 2020. According to the contract, the developer was supposed to give us a cadastre by December 2020. As of today, by August 2021, there is still no cadastre. Moreover, we found out that our apartments are being pledged to the bank. The bank got our apartment from the developer, is going to put it on auction and sell it. This will leave us on the street. It turns out that the payment for the apartment, which we made in 100 percent, will go into the air,” said the resident.
According to her, at that time all eight houses were under arrest, none of the residents could get the cadastre. Due to the fact that the developer did not pay the loan, the bank sued and won, becoming the owner of 14 apartments. The tenants remained under the threat of eviction.
The bank reported that it had issued a loan for the construction of two multi-storey buildings. Due to financial problems and failure to sell the apartments on the real estate market, the developer offered the bank several apartments to take on the balance sheet to repay the overdue loan debt. After that the bank put the apartments up for auction.
Thus, despite the scandal and non-payment of the loan, the company continued to obtain loans from other banks through its employees for the next two years, leaving the owners’ apartments as collateral.
Kun.uz, citing a source in the prosecutor’s office, reported that the damage to residents exceeds 300 billion soums (about $25.9 million), and representatives of the company “hid to avoid criminal prosecution”.
The Yashnabad district prosecutor’s office opened a criminal case under Article 168, Part 4 of the Criminal Code (large-scale fraud) and is investigating.
On July 7, the deceived tenants went to the Cabinet of Ministers, where they were received by government representatives. A government commission to address the situation was established, headed by Deputy Prime Minister Achilbay Ramatov and Justice Minister Akbar Tashkulov.
The Ministry of Construction and Housing and Communal Services said it was studying the situation.
The Tashkent City Department of the Cadastre Agency noted that investment agreements with citizens and agreements on participation of citizens as shareholders in the construction of multi-storey buildings cannot be the basis for state registration of ownership rights. For this purpose there must be a notarized contract of sale and purchase on the part of the construction organization, which is approved by the regulations on state registration of the right to real estate.
Because of the situation, the prosecutor’s office imposed a ban on these houses, the statement said.
About the company
Aziya Invest Favorit was registered on September 25, 2009. The authorized capital is 30 billion soums. It is engaged in construction of residential buildings. The founders are Kamalitdin Tashpulatov Jurayevich (33%), Khurshid Tashpulatov Khamidullaevich (33%) and Nilufar Khatamova Isroilovna (34%).
Tashkent residents who bought houses from the Aziya Invest Favorit construction company met with Uzbek Prime Minister Abdulla Aripov on July 21.
Prime Minister said that a government commission headed by Deputy Prime Minister Achilbay Ramatov had been set up to solve the problem of 1091 shareholders.
“One thing should be noted. The state has not said to any of you: ‘Buy a house here’, taking you by the hand. Right? That man is an entrepreneur who is doing this. He’s not a thief, he didn’t run away. We didn’t put him in jail. If you make a fuss now, we’ll lock him up, he won’t be able to pay the money and he won’t finish the house. You need a house, right?” – he said.
Abdulla Aripov promised the assembled residents that the issue would be resolved legally.
“I was sent by the honorable president because the president is behind you. Therefore, do not be afraid. I will meet with each of you, we will discuss and resolve everything. I cannot tell you that I will solve this issue in a week, three days, a month. But we will consider everything step by step, “- Prime Minister assured.
He noted that the options of returning the money or providing housing were being considered. Residents immediately objected that due to inflation, housing prices had increased many times over the past four years. They bought apartments for 3.5-4 million soums per square meter, such prices do not exist in Tashkent now.
Abdulla Aripov noted that those who paid 100% will be provided with housing, “they can not worry”. One of the residents asked what will happen to those who paid 50%. Aripov stated that she would be refunded that money.
“The issue of additional payment and getting housing will be considered. If construction materials have gone up in price, there was indexation, you will pay according to the indexed prices,” the head of the government said. These words again raised an objection.
The Prime Minister specified that five or six developers, who may have different calculations of the cost of housing, are planned to be involved separately in the construction of houses. “We will not allow them to make a single sum on you. I promise. I will compensate the builder’s profit in a different way. I will issue a separate decree. I can read it out to you,” he informed.
He reiterated that he was sent by the President with the instruction to “solve the problems of my people”. According to him, the remaining houses are scheduled to be completed by the end of 2024.
The Prime Minister said that within two weeks he will discuss with First Deputy Construction Minister Davron Adilov the choice of contractors and construction sites, and then will meet with the shareholders again in early August to propose options for solving the problem. At the end, those gathered raised their hands in prayer, part of which was dedicated to the president. “May for our happiness our esteemed president, who thinks about our lives, be healthy. May he stand, be our leader as long as the world stands.”
A government commission set up to solve the problem of nearly 1,100 defrauded sharecroppers in Tashkent suggests replacing the apartments with other developer’s property to pledge to a bank, completing the houses with the help of other developers, or compensating for the damage by selling the property.
According to court decisions and settlement agreements, 652 apartments in four buildings under construction were transferred to the balance of banks as collateral. The Commission proposed to replace the housing of citizens in the pledge with the property of the developer and the property arrested during the investigation, which is estimated at 227.8 billion soums.
In addition, it is proposed to complete the houses under the control of the government commission at the expense of the proceeds from the sale of property of the contracting organization (16 billion soums) and payments to be made by citizens under the sale and purchase agreement (27 billion soums). Construction works are planned to be completed in a short time and cadastral documents will be issued to citizens.
It is also reported that the developer collected money from clients for illegal construction. As the first option it is proposed to cover the damage of citizens at the expense of the sale of the property of the construction company following the results of the investigation, by way of exception, without waiting for the final decision of the court. According to preliminary calculations, we are talking about 161.7 billion soums, which the developer received from residents.
The second option is to adopt a government resolution to return 4.5 hectares of land belonging to Toshkent Shahar Suvta’minoti LLC to the Tashkent Hokimiyat, and then sell it through a separate auction if it is not possible to obtain the money of the majority of citizens.
It is proposed to build 25- and 16-storey buildings for 2,000 apartments on the basis of the project proposal of the Ministry of Construction and Housing and Communal Services with the involvement of competent contractors who will buy the land at a closed auction.
Within a month, the Ministry of Justice and the Prosecutor General’s Office have been instructed to develop and submit to the government draft regulatory legal documents to strengthen the rights of buyers of apartments in new buildings within the framework of the agreements concluded.
It is about insurance of payments, definition of property rights, increasing the liability of legal entities and individuals who fail to comply with the requirements and norms, strengthening guarantees for the return of funds.
Translated and resumed by Farida Sharifullina
Sources:
Aziya Invest Favorit / Fuqarolar – YouTube
