You're reading: Buyers beware: Apartment scams take years to fight

Ukraine's notoriously corrupt and untruly coutrs may not be helpful overturning apartment theft.

When Austrian chemist of Ukrainian origin Vasyl Novytskyi tried in 2009 to enter two adjoined Kyiv flats that he had purchased in the 1990s, he was shocked to discover they had new owners.

Vasyl Novytskyi

The scientist who has dedicated his life to fighting cancer found out that the apartments had been sold in 2004 by an elderly woman that he had never met.

She claims to have been given power of attorney by him to sell the apartment.

He denies it.

For Novytskyi, the nightmare of dealing with Ukraine’s notoriously corrupt and unreliable courts had begun. Despite providing the clearest of evidence – a passport – that he was not in Ukraine on the day that he allegedly gave the woman power of attorney to sell the apartment, despite expert analysis suggesting that the document and his purported signature on it is a forgery, the lowest to highest of Ukrainian courts have over the years failed to protect his relatively small investment.

“It is very sad that things like this are happening in Ukraine,” Novytskyi said adding that he had planned to live and open his office in these two neighboring flats.

“It’s as if you should not go away for a vacation, because after coming back you may find out that your dwelling doesn’t belong to you anymore,” he added.

The experience of Novytskyi is not uncommon.

Lawyers say big investors are not the only ones who get bilked by venturing into Ukraine. Even transactions as smalls buying an apartment can be outright dangerous. Foreigners often are duped into housing fraud traps.

Maksym Kopeychykov, partner at Kyiv-based Ilyashev & Partners, said his law firm is defending a U.S. citizen whose flat was sold without his permission. Fake sales contracts and forged signatures were involved, he added.

“In this case the notary officer was apparently a fraudster. A criminal case has been opened,” Kopeychykov said. The firm’s lawyers have already won two court cases on this matter, he added.
But Novytskyi was not so lucky.

He has lost a case involving a series of court rulings where he tried to prove that his signature on the power of attorney document was a forgery. Now he is also struggling to convince courts that he was not physically present in Ukraine, hence could not have signed the document.

The Austrian believes that the people who swindled have “high connections,” but he is not going to give up and let them get away with it, pledging to appeal as high up as the European Court of Human Rights if Ukrainian law doesn’t provide proper justice.

Alina Trofimova, associate at the Kyiv offices of Gide Loyrette Nouel, noticed a surge in cases involving real estate fraud during 2008-2009, when the global financial crisis triggered a mortgage and banking crisis. In Kyiv alone, there are about 100 court cases involving alleged theft of flat titles each year, she added.

“There were cases when fraudsters who rented luxury penthouses made copies of the apartment titles, forging them and power of attorney contracts, and later selling the apartments,” Trofimova said. In some cases, the forged power of attorney documents were prepared using forged passports, she added.
Returning an illegally sold apartment to its proper owner can be time-consuming, costly and mind-bending.

“You will be able to get your flat back only after all of these buy-sell contracts are recognized invalid by courts,” Trofimova said. “It will take years.”

Lawyers said it’s near impossible to totally protect yourself from fraudsters in Ukraine’s murky business and unprotected legal environment.

“It’s equivalent to protecting yourself from road accidents,” Kopeychykov said.
But there are some tips to take which can minimize the risk.

Never give strangers title documents on your apartment, certificates of inheritance, and so on. “These documents should be kept in some really safe place, for example in a bank safety deposit box,” Trofimova advised.

Be very careful when signing a power of attorney document. It is important to grant it only to a person that you know and trust.

Grant power-of-attorney for a restricted, short-term period and for a specific operation.
“If you go to the notary officer [to draw your power of attorney] it is good to be guided by a lawyer that you trust,” Kopeychykov said.

Lawyers advise property owners to purchase title insurance and hire or finding someone to check up on the apartments of other residences when unattended for long periods of time.

One trick that offers an extra layer of protection for residential property is to register a child in it. In such a scenario, the flat can only be sold with permission from local child protection services.

“The scammers will not be able to resell such a flat,” Trofimova said. “Or if they do so, [without permission from the local child protection services,] this would be a 100 percent reason to invalidate the buy-sell agreement.”

Kyiv Post staff writer Oksana Grytsenko can be reached

at [email protected].