1. The client and the problem
A buyer in an Almaty residential development sought legal help after entering into a shared construction participation agreement. The apartment cost KZT 34.97 million and had been paid for in full using a loan from Zhilstroysberbank.
The problem:
• The developer (the authorised company) agreed to complete construction, commission the building and hand over the apartment by 31 October 2021. Following a legally permitted extension, the deadline was formally moved to 31 January 2022.
• The commissioning acceptance certificate was signed by the customer on 28 December 2021.
• However, the developer delayed state registration of the certificate and the associated paperwork. The apartment was handed over under a share transfer agreement only on 2 August 2022, six months after the extended deadline.
• The delay forced the buyer to rent accommodation for an extended period. The developer rejected a pre-trial demand for the contractual penalty of 0.1% for each day of delay.
The developer denied responsibility, claiming that public authorities had delayed approval of the commissioning certificate and that construction had been completed when the acceptance certificate was signed on 28 December 2021.
2. What we did
Lawyer D. V. Taraskin represented the buyer and developed the following strategy:
1. Reviewing shared construction and architectural legislation:
• We relied on Article 15 of Kazakhstan’s Law on Shared Participation in Housing Construction. Our position was that the developer’s obligations were fulfilled only after commissioning, signing the share transfer agreement and handing over the keys, rather than when construction alone was finished.
• We showed that under Article 75-1 of Kazakhstan’s Law on Architectural, Urban Planning and Construction Activities, registration of the commissioning certificate normally took the authorities just one working day if the documents complied with the requirements.
2. Challenging the claim that public authorities caused the delay:
• The proceedings established that the developer had submitted non-compliant documents to the Urban Planning Control Department and the Urban Planning and Urbanism Department in December 2021 and January 2022. The departments refused the applications and explained the correct procedure.
• The developer then took no action for four months, applying for registration again only in May 2022.
• The lawyer pointed out that the developer had not challenged the authorities’ actions and was responsible for missing all reasonable time limits.
3. Calculating the penalty and preparing the claim:
• We filed a claim with District Court No. 2 of the Almalinsky District of Almaty, seeking a penalty for the 183-day delay from 1 February to 2 August 2022.
3. The outcome
First instance: District Court No. 2 of the Almalinsky District of Almaty:
On 21 November 2022, the court granted the buyer’s claim in part:
• The developer was ordered to pay the buyer a penalty of KZT 6,400,855.
• The buyer was also awarded KZT 64,009 in state duty costs.
• The court rejected the developer’s attempt to shift responsibility to public authorities and found the developer responsible for its inaction.
Appeal: Almaty City Court:
The developer appealed, asking for the judgment to be overturned.
On 21 February 2023, the Civil Division of Almaty City Court ruled that:
• The first-instance judgment remained unchanged.
• The developer’s appeal was dismissed.
• The appeal ruling took legal effect on the day it was announced.
Key lessons from this case for apartment buyers:
1. The acceptance certificate date is not the handover date. Signing an internal acceptance certificate does not release the developer from liability to the buyer if the apartment has not actually been handed over under the share transfer agreement.
2. The developer is responsible for delays in paperwork. Blaming public-sector bureaucracy does not succeed in court where the developer itself submitted non-compliant documents or failed to challenge the authorities’ actions.
3. Shared construction legislation protects buyers’ rights. For each day of delay in handing over the property, the developer must pay a penalty of 0.1% of the full contract price.
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