"Lvivska Mriia", which failed. How were people left without housing and money in Lviv?
The history of the Comfort Hill residential complex on Pid Holoskom Street in Lviv began in 2018 under the name Lvivska Mriia. One hundred and fifty people invested in the construction, believing they had become the happy owners of new housing near the Briukhovychi forest.
However, the owner of the company that raised money for the construction eventually disappeared. The new developer, meanwhile, is in no hurry to hand over the apartments to buyers. The money people invested is being offered back, but without accounting for inflation or exchange-rate changes. And to receive homes they have, in effect, already bought, they are being asked to pay almost the full price of the apartment again.
Defrauded investors petitioned the court to recognize their property rights, especially since relevant Supreme Court precedent already exists. It would seem the case is straightforward and that the court would quickly resolve the matter. However, this high-profile case risks coming to nothing, potentially ending not with the establishment of the truth, but with a boilerplate response. And the same one for all of them.
Why people have to pay for apartments they have already bought
From the outset, the project client was Eurolviv LLC. It was with this company that investors signed, and later re-signed, preliminary real estate sale and purchase agreements. Under the terms of those agreements, they paid the full price of the housing before construction was completed and the building was commissioned.
Construction was to be completed no later than the fourth quarter of 2022. By that same deadline, final apartment sale and purchase agreements were also supposed to be signed with the investors.
However, in 2020, one of the company’s owners stopped responding. According to Andriana Luchko, head of the Eurolviv civic association, who also invested in property there, it was the missing co-owner’s father who came out to explain the situation to investors. He spoke of problems at the construction site and the need for additional payments, saying that one of the developers had misappropriated the money. The investors agreed and paid an additional $250 per square metre. However, that developer also disappeared.
Eventually, in 2023, Eurolviv LLC was sold to new owners at a СETAM auction. It was then that the investors realised there was a real risk of being left without apartments altogether.
Eurolviv sent letters to investors telling them they had to contact City Lviv Development LLC to sign apartment purchase agreements on new terms. Those new terms require them to pay, effectively, the full price of the housing all over again. Alternatively, investors were offered a refund of the money they had invested.
"It should be noted that what is being returned is the exact amount paid before the start of the full-scale war, in some cases without taking into account the hryvnia’s depreciation and overall inflation. In other words, the organisers of the scheme decided that the money investors paid for their apartments was a cheap loan on which no interest had to be paid, and which could now be repaid at a discount of about 50%, the difference between the value of that money at the time of payment and now," the investors told Business Censor.
At the time of purchase, an apartment in the Comfort Hill residential complex cost, on average, the equivalent of $50,000-60,000 in hryvnias. However, what investors will get back is the hryvnia amount. At the end of 2018, the dollar stood at UAH 27.68. As of March 11, the National Bank had set the official exchange rate of the hryvnia against the US dollar at UAH 43.8627 per dollar.
City Lviv Development says that when it took over the project in 2024, it discovered debts left by the previous developer to contractors and the city. The total amounted to UAH 136 million. Another roughly UAH 170 million was needed to complete the building. For that reason, future apartment owners were asked to make additional payments for their housing. However, according to Andriana Luchko, no one presented them with the cost estimate, and neither an audit nor a general meeting was held.
Specifically, investors filed statements of claim with the Shevchenkivskyi District Court of Lviv for the recognition of property rights. This means an individual confirms they are the owner of an apartment under construction and will be the one to receive ownership rights once the building is commissioned. Such recognition prevents the apartment from being resold to another person. A primary concern for the investors. Currently, approximately 50 individuals are attempting to seek justice through the court.
The Supreme Court's case law on such matters is settled, explains attorney Artur Stupak: if an investor has paid the full cost of the housing, it essentially constitutes an agreement for the sale and purchase of property rights. Consequently, the investor’s property rights to the real estate should be recognized from the moment of full payment. However, most cases have already been heard in the court of first instance and partially in the court of appeal. The courts in Lviv are siding with the developer, disregarding the Supreme Court precedent upon which the investors have placed their hopes.
Investors point out that the local court's rulings appeared to be carbon copies, featuring identical phrasing and typographical errors.
"The developer's representative, Mykola Oprysko, has repeatedly stated that he has connections in the judiciary, will 'settle everything,' and that the investors will be left with nothing," the investors complain.
The developer, for their part, claims to have reached a peaceful settlement with 120 investors. However, investors state that only about 10 individuals agreed to the deal. Moreover, even those who signed agreements to waive their claims and receive refunds are not getting their money back, or are receiving only up to 20% of the amount invested.
A widespread scheme
Lawyers say that at one time, the scheme involving preliminary real estate agreements was fairly widespread, and that this method of financing often left people unable to obtain their apartments, which were then resold. That is why the Supreme Court sided with investors in similar cases. The story of the Comfort Hill residential complex also bears the hallmarks of such a scheme.
City Lviv Development LLC was established on March 8, 2024. Roughly two weeks after its registration, this legal entity allegedly entered into an agreement with Eurolviv LLC under which all property rights, construction rights, and the developer’s functions were transferred to it. However, these legal entities are related parties.
According to information from the Unified State Register of Legal Entities, Tradeinvest LLC owns 40% of the corporate rights in City Lviv Development LLC and 100% of the corporate rights in Eurolviv LLC. In other words, the two legal entities have the same owners.
As lawyers explain, the purpose here was not commercial. The assets and liabilities were split in this way. That means City Lviv Development LLC is to keep everything that has already been built, while Eurolviv LLC is left with the debts. The apartments could then be resold through City Lviv Development LLC, as the company itself stated in its notice to investors, offering them either a refund of their devalued money or the option of paying extra for apartments they had already bought.
At present, one square metre in a one-bedroom apartment (48.2 square metres) in the Comfort Hill residential complex costs $1,515, according to the developer’s website.
"The purported purpose of the agreement between Eurolviv LLC and City Lviv Development LLC is to finance the construction. Supposedly, Eurolviv is raising funds from City Lviv Development. But in my opinion, there is no practical or commercial sense in bringing this company in to finance the construction, since the owners could have provided the financing through Eurolviv LLC rather than creating a new legal entity through which the same owners would use the same funds of their own. It may seem obvious that the purpose of involving City Lviv Development LLC is not to finance the construction, but to transfer the property out of the investors’ ownership through a sham agreement," Andriana Luchko stresses.
In addition, the property rights already belong to the investors, since the full price of the housing was paid under the preliminary agreement. Eurolviv LLC therefore had no ability to transfer to City Lviv Development LLC something that did not belong to it.
The investors also cite other arguments in support of their claim that the agreement between the two related legal entities is fictitious. For example, according to the Register of Construction Activity, Eurolviv LLC remains the project client. It has also retained the right to use the land plot where construction is ongoing.
"City Lviv Development LLC has not made any payments under the agreement. In the documents, the parties valued the building at UAH 136,708,035. Under the terms of the agreement, City Lviv Development LLC is to pay the money a year after the building is commissioned. In other words, one party transferred to the other an asset worth more than $3 million and took no payment for it. It can be stated with confidence that such a deal bears no signs of being commercially beneficial or logical, because it is fictitious," the investors said.
Law enforcement delays
The co-owners’ association NGO Eurolviv has also turned to law enforcement agencies, specifically the Bureau of Economic Security (BES) in the Lviv region. However, entering information regarding a potential criminal offense, specifically, the intentional evasion of taxes, duties, and mandatory payments, into the Unified Register of Pre-Trial Investigations (URPTI) required a court order.
The issue lies in the fact that Eurolviv LLC, having transferred the building to City Lviv Development LLC for nearly 137 million UAH, was required to pay 27.5 million UAH in VAT. However, this was not done.
The case within the Lviv BES is progressing very slowly, despite the fact that it seemingly should not present significant difficulty for detectives. According to investors, a Bureau detective personally appeared at court hearings twice to object to entering information into the URPTI and opening criminal proceedings following the report of a crime. This in itself is a unique occurrence that makes the EuroLviv case exceptional.
"A representative of City Lviv Development LLC stated to a group of co-owners after one of the court hearings that 'the BES is with them,' making it clear that there are no prospects for the criminal proceedings to move forward. The representative's words were accidentally captured on an audio recording," the investors shared.
Ultimately, criminal proceedings were initiated by BES detectives, but investors do not rule out the personal interest of responsible officials in "burying" this case.
Regardless, the investors of Lvivska Mriia, which has been renamed the Comfort Hill residential complex, do not intend to give up. They are prepared to go to the Supreme Court to defend their legal right to the square meters for which they have paid every last cent.
