How to Improve eRecovery Legislation

The Verkhovna Rada defined the mechanism for providing compensation for objects damaged as a result of the armed aggression of Russia by law. In turn, the government regulated the procedure for providing such compensation using the eRecovery electronic service in the Diia application (hereinafter referred to as the Procedure) by Resolution No. 381. Since May 10, Ukrainians whose property was affected by the actions of Russia have had the opportunity to submit an application. The mechanism was launched rapidly, considering the conditions, but by the end of September, it had already helped almost 16,000 Ukrainian families repair houses damaged by the war.

Anna Kuts, TI Ukraine’s legal advisor, helped her family apply for eRecovery and was able to see the benefits of the program. In addition, she came across some things that needed improvement. Together with Andrii Shvadchak, another legal advisor, they analyzed the legislation in detail to identify its shortcomings and gaps. Based on this analysis, proposals were formulated on how to improve the legislation regulating the eRecovery mechanism.

Application consideration may be suspended for a long time

The first problem that the applicant may face before the commission’s visit to the object is the suspension of application consideration. The commission may suspend or resume consideration of the application, and it may remain so for quite a while, for example, a month or three, because the Procedure does not contain restrictions. That is, despite the fact that the term of consideration of the application should not exceed 30 calendar days from the date of its submission, the consideration itself may stop unpredictably for any period of time.

The procedure requires that the commission notify the applicant of the suspension within the next business day and indicate the information and/or documents that the latter must attach. But if the representatives of the commission or local council do not contact the applicant about the suspension or explain the suspension by technical failures in the register, then the applicant has almost no leverage over this situation.

As a result, it may be difficult for the applicant to control whether a suspension decision was adopted and, if so, why it was adopted. Norms mainly provide for one-way communication on the initiative of the commission. 

Difficulties in contacting the commission

The already existing problem is also aggravated by the fact that the Procedure does not oblige the commission and/or the body that created it to publish contacts of the commission. Therefore, applicants are forced to call the housing department or other local council bodies and look for someone who can provide contacts of the commission.

According to the rules of the Procedure, the website of the body that formed the commission should publish information on the location of the commission, its composition, the procedure for work, and information on the results of meetings of the commission (the number of applications considered, decisions adopted by the commission, etc.). Some local councils create chatbots so that applicants can additionally monitor the stage of application consideration and request a call from the commission, but this is only a local practice, not a legal requirement.

No specialist to inspect a damaged object

To adopt a decision on the provision of compensation, the commission must determine whether it is possible to restore the apartment through current or major repairs, or whether the building is subject to major repairs. The positive decision of the commission directly depends on this: if the apartment can be restored through major repairs, then compensation shall be appointed, and if the apartment building is subject to such repairs, then no.

To distinguish between these cases, the special commission conducts an inspection of the damaged object; based on the results, it draws up a commission inspection report or a technical inspection report, depending on the degree of damage to the housing. Such a document contains conclusions regarding the volume and probable causes of damage to the object, the possibility of its restoration by current or major repairs, the qualification of the repair and restoration works performed, the damage to the common areas of the building, and the need for its major repairs.

Obviously, the provision of relevant conclusions is impossible without the participation of a specialist in the inspection who has the necessary knowledge and qualifications in the field of construction. The legislation requires the engagement of such specialists in the commission, however, in practice, the inspection is often carried out not by the entire commission, but by a group or groups of its representatives. Moreover, they can conduct inspections in parallel, which excludes the possibility of engaging a specialist in the inspection of all damaged objects.

As a result, this may affect the quality and completeness of the documents based on the results of the inspection; thus, the commission will adopt an erroneous decision to grant or refuse to grant compensation.

Refusal due to the need for major repairs of a building or common areas

One of the grounds for refusing to grant compensation under the Procedure is when the damaged apartment is in an apartment building in which the common areas are damaged.

What exactly are the common areas? According to the Order of the Ministry of Regional Development, Construction and Housing and Communal Services of Ukraine No. 315, these are public places in the building/house (lobby, common corridor, staircase, common kitchens, common showers and bathrooms, common laundries, hallway of the apartment, etc.), except for auxiliary premises.

There may be damage to the common areas, but this does not affect the possibility of repairing the apartment; for example, it is located in another entrance at the other end of the building. However, the Procedure does not contain exceptions for such cases, and damage to the common areas remains the basis for refusal.

Moreover, the concept of common areas does not cover those elements of the house that are not premises, such as walls or roof. They could be covered by the concept of “common property of an apartment building,” which is contained in the Law On the Features of the Exercise of Ownership in an Apartment Building and is wider than the concept of a common area. Thus, the common property of an apartment building includes not only common premises but also load-bearing, enclosing, and load-bearing enclosing structures of the building, mechanical, electrical, plumbing, and other equipment inside or outside the building that serves more than one residential or non-residential premises.

But it would be inappropriate to refuse to grant compensation because of the damage to such common property. After all, if the applicant is denied the application, they will have to reapply and get in this line again when the common area/joint property is repaired. A similar situation is observed when the applicant is denied due to the fact that the house needs major repairs.

Instead, for such cases, it will be rational to provide that the consideration of the application is suspended if the damage to the common area and/or the common property of the apartment building and the need for its major repairs impede (make impossible) the repair work specified in the inspection report. It is advisable to suspend consideration of such an application until major repairs of the building are completed and the damage to the common area and/or the common property of the apartment building is eliminated.

The risk of such an idea may be that the applicant and the commission on eRecovery have no information on whether the major repairs have been completed or on the delay in resuming application consideration. To avoid this, eRecovery commissions need to share information with those responsible for centralized repairs. Ideally, for centralized major repairs, cities with many damaged houses could create a single line of houses. Information on the deadline of repairs and progress in the line should be available to the eRecovery commission and the applicants so that these processes are transparent, and the commission resumes the consideration of applications from each building for which major repairs are completed in a timely manner.

Difficulties of independent major repairs of the apartment

If the applicant is granted compensation for major repairs of the apartment, it is difficult to order such repairs independently since major repairs require the development of project documentation. But the checklist, which determines the scope and cost of work to grant compensation, does not contain services for the development of project documentation. It is unknown how exactly the applicant should ensure such documentation, how they can personally order major repair works, and what kind of work to order, without being a specialist in the field of construction.

Damages shared with a neighbor 

If neighboring apartments share damages, the question arises: how to make repairs at the same time with all neighbors? The order of allocation of funds to individual applicants is not tied to the building in which their apartments are located. Consequently, there may be a situation where one neighbor is granted compensation earlier and the other later. Some neighbors might have failed to apply for compensation if, for example, they were abroad. All those who will be granted a compensation must make repairs within a year or one and a half in accordance with the Procedure. In addition, it is not obvious how to distribute the amount of compensation between several neighbors if each of them cannot use it independently, for example, if the wall between two apartments is damaged, or when there is a hole between the floors.

Temporary collisions of internal and centralized repairs

If the commission makes a positive decision and assigns compensation, applicants have a year to use the compensation (for those with an amount of compensation exceeding UAH 200,000—a year and a half). But there are cases when some damage is shared by several apartments and requires centralized repairs. These repairs are performed by contractors of the local council, and their deadlines are unpredictable. Therefore, it may turn out that internal repairs will precede the centralized ones and will be disrupted by them. 

The processes of centralized reconstruction of apartment buildings, the order of this process, coordination with the eRecovery program are not properly regulated by law. That is, the city council bodies do not have a final deadline by which apartment buildings should be repaired. In addition, at the legislative level, the exchange of information between the eRecovery commission and the city council bodies on the organization of the part of repairs that should take place in a centralized manner is not regulated.

The algorithm of actions of local authorities regarding the reconstruction of apartment buildings needs to be regulated by law and coordinated with the stages of the eRecovery program.

Pitfalls of independently conducted repairs

To protect the apartments from further destruction, animals getting inside them, and weather conditions, victims often closed the holes in them with boards or foam blocks. In preparation for the heating season, housing offices and municipal enterprises responsible for the heating in the city strongly appealed to the residents of the damaged houses so that the latter repaired the exterior of the houses to heat them. When applying for eRecovery, such repairs can cause problems.

The object is inspected by a commission or its part, which may not include a specialist capable of assessing whether it has undergone major repairs or whether the measures taken are only temporary protection. This can be a crucial issue to understand which kind of compensation victims can claim: funds for repairs or compensation for repairs already made.

If the commission concludes that the object has been repaired, it will not grant compensation for its repair. Instead, it is logical to apply for compensation for repairs already conducted. But its prerequisite is to have a commission inspection report and/or a technical inspection report recording the fact and volume of damage. However, in practice, the commission might not have visited the site before independently conducted repairs and might not have recorded the damage. This means that the applicant will not be able to receive compensation. 

However, money risks are only half the trouble. Neither the commission nor other agencies assess whether independently conducted repairs meet the requirements of the state construction regulations, for example, when it is an independently conducted restoration of the wall. It is possible that it might need removing and rebuilding, but the applicant does not have this information. Moreover, such a need is not covered by the List providing reasons to claim compensation. Even if the applicant expected that their structure would be temporary, the commission may not record any shortcomings in this part of the object. In accordance with the Resolution of the Cabinet of Ministers No. 473, the commission must inform the authorized body in writing if, when inspecting, it detects defects and damage that can lead to a sharp decrease in bearing capacity or collapse of individual structures, pose a threat to life and health of people, etc. Here, we face the problem of providing commissions with qualified personnel again: it may not have a specialist capable of detecting these defects. The Procedure requires that the commission includes a specialist with higher education in the field of Construction and Architecture or experience in the field of construction. But this might not suffice, and it is not a given that the specialist is present when the commission is inspecting a particular site.

Monitoring stages of the application

Practice shows that when arriving at the site, the commission might not calculate the compensation itself, not make decisions, and not enter information in the Register of Damaged and Destroyed Property. Consequently, all these actions must be performed by the commission in its entirety at its meeting. According to the Procedure, the commission holds its meetings openly, so those willing can theoretically be present at the consideration of their application. But the question of how to find out when and where it will be considered again comes down to the lack of contact details.

Identifying the reason for refusal and appealing it

The applicant has the right to appeal the refusal of the commission to grant compensation within five working days from the date of the notification of the commission’s decision. The applicant may also apply for an extension of this period for another 5 working days. Thus, the deadlines for appealing the decision of the commission do not begin from the moment of receiving the full text of the decision but from the moment of the notification (!) in Diia. However, the Procedure does not provide for sending the full text of the decision to the applicant together with the notification of its adoption, nor does it determine the requirements for how detailed the commission should set out the reasons for refusal. Therefore, 5 days for appeal may expire before the applicant receives the full text of the decision and learns the reason for the refusal. Given that there may be no contact details of the commission on the website of the local council, it becomes a difficult mission even to find out the full reason for the refusal, let alone appeal it in time.

In addition, it is possible to appeal against the inaction of the commission within 5 working days from the date of the deadline when the commission had to take action or adopt a decision. It can be difficult to clearly define this deadline in practice, since the commission could repeatedly suspend consideration and continue it again: accordingly, the deadlines have shifted.

How to fix it

To solve the outlined problems, the following proposals for improving the legislation can be put forward:

1. To exclude damage to the common area and the need for major repairs of the house from the list of grounds for refusal to grant compensation. Instead, to attribute these cases to the grounds for suspending application consideration; provided that the damage to the common area/the need for major repairs makes it impossible to carry out all internal work specified in the checklist of eRecovery. Such a suspension should last until the obstacles are eliminated: the restoration of the common area or the completion of the major repairs of the house. Due to the suspension of application consideration, the owner will remain in legal relations with the commission, will not lose their place in the line, will be able to control the course of events. It is likely that this will have a positive impact on the progress in centralized repairs because suspended applications will remain in the field of attention of the commission and the city council. It is also advisable to add cases of damage to the common property of the owners of an apartment building to the group of these circumstances, also provided that it makes it impossible to carry out all works according to the checklist.

To avoid difficulties in suspending and resuming consideration, single transparent lines of houses for major repairs should be created in large cities. Applicants, e-Recovery commissions, and responsible persons of city council would have access to information from the line to monitor progress and resume application consideration in a timely manner upon completion of major repairs.

2. If the compensation has already been allocated for repairs according to the checklist, despite the damage to the common area/common property/the need for major repairs of the house, then the period of use of the compensation should be longer, up to 2–3 years, so that the applicant has the opportunity to use the compensation after the contractors of the city council complete the repairs of the common area and/or common property and/or the major repairs of the house.
3. To regulate the processes of centralized reconstruction of apartment buildings by local councils: the procedure for considering appeals, the order of their consideration and further actions on inspection, preparation of project documentation and ordering of works, the right to benefits, etc. It is also necessary to regulate the process of information exchange between the eRecovery Commission and the responsible persons (bodies) of local councils for centralized reconstruction, to synchronize these processes. Information about the line of buildings for reconstruction, the stage of work in them, the results of the inspection (in particular, whether major repairs are required), the number of applications under the eRecovery program submitted by the residents of these buildings should be open or at least available to commissions in both directions (eRecovery and major repairs) and apartment owners.
4. To introduce mandatory publication of contact phone numbers of commissions, as well as display their addresses and phone numbers in the Diia app. To minimize the risk of commission overload, it is necessary to provide for displaying contacts in Diia at least for cases of refusal, suspension of application consideration, or if the consideration stage lasts longer than 30 days.
5. To introduce a mechanism that will make it impossible to abuse the suspension of application consideration. The applicant must have complete and reliable information about the reasons for the suspension of application consideration; the period of suspension, depending on its reasons, must be clearly defined and predicted. In addition, a longer period to appeal the decisions of the commission and inaction on the consideration of the application should be established.
6. To introduce the requirement of mandatory participation of a specialist with higher education in the field of Construction and Architecture, except for Geodesy and Land Management, or a person with experience in the field of construction, namely in the inspection of the damaged object, not just any member of the commission; to add a field to the form of the certificate indicating who from among the present members of the commission is such a specialist.
7. To regulate the algorithm of actions of the apartment owner or issue explanations for cases when the apartment needs major repairs. In particular, to consider the inclusion in the list of works (services) for which compensation is provided of services for the development of design and estimate documentation necessary for the major repairs of the apartment. It is also necessary to consider and settle the issue of providing compensation to several apartment owners with damages they share.
8. In the absence of a commission inspection report or a report on the technical inspection of damaged housing, to ensure the possibility of providing compensation for independently conducted repairs before January 1, 2024, based on photographic materials attached to the application for compensation for damaged real estate or to the information notice of damaged property as a result of hostilities, terrorist acts, or sabotage caused by the armed aggression of Russia against Ukraine.
9. To increase the transparency of the work of the commission and the results of application consideration: to introduce the obligation of the commission to notify about the date, place, and time of the commission’s meeting through the Diia application no later than two days in advance. It is also necessary to introduce a mandatory publication in Diia not only of a notice of the commission’s decision but also of the text of the decision (defining clear requirements for its content), as well as contacts for appeal in case the applicant disagrees.
10. Introduce a repairs’ assessment mechanism for cases where it is unclear whether independently conducted repairs are complete or suitable only as a temporary structure, whether it is advisable to preserve them, or whether it is better to eliminate them and rebuild the object properly. This can be an individual assessment of such repairs at the request of the owner, possibly with the engagement of specialists from State Architectural and Building Inspection and outside the eRecovery process. First of all, it will serve the purposes of security and the proper functionality of buildings. It is also advisable to consider the idea of compensation for the cost of dismantling conservation structures if, according to the conclusion of a specialist, they do not meet the construction requirements.

We have sent a letter with recommendations to the Ministry of Development of Communities, Territories and Infrastructure. We hope that they will help make such an important program more effective.

The material was prepared within the framework of the USAID/UK aid TAPAS Project/Transparency and Accountability in Public Administration and Services.