Authorities explained how the escrow account system will operate in Uzbekistan's residential real estate market.

Uzbekistan, Tashkent – According to AN Podrobno.uz, banks acting as intermediaries between developers and buyers will be required to complete unfinished residential constructions before they can be put into operation. This is one of the measures proposed as part of the implementation of an escrow account system for shared construction projects. Additionally, citizens will have the option to sell their stake in the project if their plans for purchasing a home change, reports Podrobno.uz correspondent.

https://podrobno.uz/cat/economic/vlasti-rasskazali-kak-budet-deystvovat-sistema-eskrou-schetov-na-rynke-zhiloy-nedvizhimosti-v-uzbeki/2024-12-19 08:12:31

In an interview with the television channel "Uzbekistan 24," the Minister of Construction and Housing, Sherzod Khidoyatov, stated that currently, the majority of residential buildings in Uzbekistan are being constructed using funds from investors. However, this process is quite chaotic.

Often, contracts with developers lack official registration, while funds for construction are handed directly to them. This situation benefits unscrupulous companies and poses risks for buyers: project completion deadlines are frequently delayed, citizens' funds can be frozen, and in some cases, they may even lose their money due to fraud.

To address these issues, President Shavkat Mirziyoyev has instructed the regulation of this matter and the development of a reliable system to protect citizens' rights. The country plans to start implementing escrow accounts for this purpose. These accounts will be opened in commercial banks for each construction project.

Thus, the responsibility for citizens' funds will be transferred to the banks: individuals will be able to deposit their money not directly to the developer, but into their escrow account. The bank will release funds to the construction company solely for the project part that has been paid for by the buyer and will monitor the project's timelines. Redirecting the received funds to other projects will not be permitted. Additionally, the developer is also required to complete 30% of the work using their own funds.

All projects financed through shared participation must be registered on the electronic platform "Transparent Construction." After registration, any changes to the project and re-planning will require mandatory approval.

The sale of land plots with unfinished projects will be prohibited, and cadastral documents will only be issued after the construction is completed. If the developer fails to finish the construction, the project will be handed over to the bank, which will be obligated to bring it to completion.

Furthermore, there are plans to implement a system that allows assets to be sold through escrow accounts if the buyer decides to change their plans regarding the purchase of housing.

It is noted that in the future, the system is proposed to be extended to the commercial real estate market.

For reference . An investor is a citizen or company whose funds are attracted for shared construction of apartment buildings. An investor acquires not ownership rights but the right to claim. This is the main risk, as the investor can only demand the registration of the apartment in their name after the new building is commissioned.

An escrow account is a special account for securely processing transactions between the buyer and seller. It is also known as an escrow account. The buyer deposits money into it, and the seller can withdraw the funds once they fulfill the conditions specified in the contract. The bank, as an independent intermediary, ensures that these conditions are met.