It is common practice for a real estate developer to take an order or advance payment from customer for an apartment building, obtain an uncompleted building certificate from the state registry, and pledge the certificate to a bank or non-bank financial institution and obtain loan in order to finance the project.
According to the State Registration Agency, as of September 30, 2020, 552 uncompleted buildings in Ulaanbaatar were registered as real estate. Of these, 123 uncompleted buildings are pledged as collateral for loans from banks and financial institutions. In addition, there are 333 people who have not been able to obtain a real estate certificate even though the building has been completed and people has purchased the apartment. Moreover, bribery of the General Authority of State Registration in order to obtain a real estate certificate, as well as the creation of a network of bribes through acquaintances, is due to the regulation of registration of uncompleted buildings as real estate.
Therefore, taking into account the above circumstances, Article 10.10 of the Law on State Registration of Property Rights” amended as “An apartment building will not be registered in the state registry of property rights until it is commissioned/ handed over for permanent use” and the amendment was supported by the relevant standing committee and was recently submitted to the plenary session of the Parliament.
It is an important to change the regulations that corrects the practice of registering uncompleted buildings as real estate which violates citizens’ property rights, and creates new regulations related to the rights of public apartment and surrounding land. In addition, the amendments are based on the need to harmonize the Civil Code and the Land Law, including the need to change and improve the regulation of serious violations of citizens’ property rights related to public housing/apartment.