A Housing and Construction Cooperative (hereinafter – HCC) is a legal entity established by at least three founders on the principles of membership and self-governance. The primary goal of the cooperative is the construction of housing using the funds of its members and the subsequent management of the building. Unlike classic development schemes, where the buyer is essentially a third-party investor, an HCC participant becomes a co-owner of the process and can influence key decisions: from choosing a contractor to controlling the budget.
The creation of a cooperative begins with an initiative group that prepares a draft charter and convenes a statutory meeting. At this meeting, the decision to create the cooperative is made, the charter is approved, the chairperson and audit commission are elected, and the amounts of entrance and share contributions and the procedure for their payment are determined. This is not a formality but a moment when future neighbors discuss the rules of coexistence and agree on a common goal: to build their home. From this moment, the cooperative is formally created, but it acquires the status of a legal entity only after state registration. Following this, the organization can open accounts, enter into contracts, and officially conduct economic activities.
Construction financing is carried out through share, additional share, and target contributions. A share is a refundable contribution that forms the participant’s property rights: upon withdrawing from the cooperative, they can receive their share in monetary or physical form. The entrance fee is non-refundable and is directed toward the formation of the cooperative’s indivisible fund. Importantly, if the HCC is included in the register of non-profit organizations, the received share contributions are not subject to corporate income tax. This allows for the most efficient use of funds for construction and avoids unnecessary tax expenses.
A significant advantage of an HCC is the possibility of obtaining a land plot for development free of charge in accordance with the Land Code of Ukraine. This significantly reduces the project cost and makes it more attractive for participants. After obtaining the land plot, the cooperative acts as the construction customer: it obtains permit documentation, enters into contracts with contractors, and monitors the progress of work. This provides the opportunity to influence the quality of materials, deadlines, and construction costs.
Upon completion of construction, the HCC registers the title to the finished object. Subsequently, each participant’s share is exchanged for a specific apartment or premises under an exchange or purchase agreement, which legally secures ownership and closes the financial obligations between the parties. In many cases, after the distribution of apartments, the residents create a Condominium Co-owners Association (OSBB) for the further management of the building, and the HCC ceases its activities.
The creation of an HCC is a complex process that requires attention to detail and competent organization. It is not just a legal procedure but a real opportunity for future owners to influence the course of construction, control the use of funds, and be confident in the result. Legal support helps to avoid mistakes, protect the interests of participants, and make the journey from establishing the cooperative to receiving the keys as transparent and safe as possible.
