New areas of regulation

The new legislation, which has been designed to protect buyers of homes that are still under construction and which comes into force on April 29th 2012, has been drawn up in a rush, however. The Act is divided into four major areas: pre-contractual disclosure obligations on developers, namely, the necessity to prepare an information memorandum; the classification of a development contract as a defined category of contract and its substantial formalisation (a statutory definition of the scope of the contract and an obligation to execute it in the form of a notarial deed); an obligation to conduct settlements with buyers through open-ended or closed home buyers' escrow accounts; and the introduction of a separate procedure in the event of a developer's bankruptcy. Separate bankruptcy estateUnder the Act, if a developer is declared bankrupt, the funds in a home buyers' escrow account for a project, the ownership right or perpetual usufruct right, as well as any additional payments made