Recently, information about the ARMA’s announcement on selling the seized assets at reduced prices (apartments and parking spaces at Klovskyi uzviz, 7, object on Bolsunovska St. and land plot on Konduktorska St.) was spread in the media.
As the publications refer to the existence of circumstances not taken into account in determining the starting price, in order to prevent the risks of selling the property at below market prices, today, on October 7, ARMA withdraws from sale seized apartment and parking spaces at Klovskyi uzviz, 7.
In future, ARMA will provide the reviewing of evaluation and put this lot for sale, taking into account the results of this reviewing.
In order to avoid any doubts as to the starting price of the real estate sale, ARMA will introduce rules for the obligatory evaluation and the reviewing of evaluation of the real estate lots before they are offered for sale.
Furthermore, ARMA will introduce the practice of placing all advertisements for the sale of seized property on the official website of ARMA, Facebook and Twitter accounts as well as in the national online media publications. Finally, a department responsible for marketing and promoting the competitions on selection of asset managers and selling the seized property will be established within the structure of ARMA.
ARMA is grateful to the proactive Facebook users, in particular to the “kupizalog” initiative, as well as to the media, for timely identifying and disseminating information useful for ARMA, serving to prevent the potential risks.
At the same time, ARMA is forced to pay attention to certain distortions, fragmentation and frankly negative context of some of the media reports regarding the sale of seized real estate.
1) The disposal of seized property is performed exclusively through the electronic auctions, where the sale price is formed by the auction results. In practice, the starting price of the lot can be quite different from the final selling price. At the same time, the low starting price of the lot attracts more potential buyers. Therefore, the identification of the "starting price" and "selling price" in the information plane is manipulative.
2) The offer price of the similar object could be inconsistent with the market price of the seized asset disposed by ARMA - legally unencumbered objects and similar assets encumbered by criminal seizure have completely different market demand.
In particular, after the purchasing of seized property, as stated in the post on the “kupizalog” resource on Facebook, the new owner must apply to the court to cancel the seizure of the purchased property. If the prosecutor and the court agree, the seizure is canceled. The time limits of this procedure are difficult to predict and depend on the willingness and position of the prosecutor and investigating judge to participate in the consideration of the matter. These circumstances directly influence the decision to purchase the seized property by potential buyers and, as a consequence, to the demand pricing.
3) There are frequent cases of legal sabotage (abuse of procedural rights) on the part of the owners of seized property, in particular: appeals against ARMA’s decisions and actions on the sale of property, appeals against the sale contracts, and initiation of claims in a way that forbids ARMA to sell the property. These circumstances also influence the determination of the demand price when purchasing seized property.
The list of circumstances that are essential when ARMA organizes the sale of seized property and which directly affect the demand price, may be continued further more. Consideration (or neglecting) of these circumstances is within the competence of the evaluation entities and goes beyond ARMA’s authority.
Yet, it is time to initiate the development of special rules for the evaluation entities on determining the starting price of lots sold according to the Special law on ARMA. In the nearest future, ARMA will initiate consultations with the State Property Fund of Ukraine on this issue.
ARMA is the first to be interested in the transparent, public sale of seized property at market prices and invites experts in related areas to collaborate in developing reasonable and balanced approaches in determining the starting price for sale of such property.