Uzbekistan Rules Fines for Contract Termination in Housing Purchases Illegal

Tashkent, Uzbekistan (UzDaily.com) — Construction companies in Uzbekistan are not permitted to impose fines when a housing purchase contract is terminated at the initiative of the buyer, the Committee for Competition Development and Consumer Rights Protection has stated.

According to the agency, from January to August 2025, around one thousand complaints were received concerning construction and purchase of apartments in multi-unit residential buildings. Most complaints involved delays in the completion of new buildings, failure to meet contractual terms, and discrepancies between advertised promises and actual project specifications.

Inspections revealed that some developers included provisions in contracts allowing them to retain up to 10% of the transaction value or advance payments as a penalty if the client terminated the contract voluntarily. The committee emphasized that such requirements contradict the Civil Code.

The law provides for compensation for damages only if they actually exist, whereas apartments in standard multi-unit buildings can easily be resold to other buyers. Furthermore, given high demand and rising prices, developers typically make a profit rather than incur losses.

The agency reminded that, under Article 260 of the Civil Code, penalties apply exclusively when the debtor fails to fulfill an obligation or performs it improperly. In practice, the developer remains the debtor until the building is delivered, while the buyer fulfills payment obligations on time.

“Therefore, imposing a fine when a consumer terminates a contract is considered illegal,” the statement said.

The committee also noted that contract terms that limit consumer rights are invalid under the Law on Consumer Rights Protection. Citizens are advised to carefully review contracts when purchasing housing and consult lawyers if necessary. In case of violations, complaints can be filed in court or with authorized government agencies.

Following inspections, the Committee for Competition ensured the termination of eight contracts, the cancellation of illegal fines, and the return of more than 1.5 billion soms to citizens.