Uzbekistan continues its push toward financial transparency and digitalization by introducing a mandatory framework for conducting settlements in real estate and vehicle sale transactions through electronic, bank-verified channels.

The new regulation establishes a structured system of electronic data exchange between notaries and banks, fundamentally changing how payments under sale and purchase agreements are confirmed and processed.

Scope and Objective of the Reform

 

The new mechanism applies to:

• real estate transactions;
• vehicles (categories M, N, O, G) not older than 10 years;
• special-purpose vehicles.

The reform is aimed at:

• promoting cashless payments;
• reducing the shadow economy;
• ensuring reliability and traceability of transaction data;
• strengthening financial and information security in high-value transactions.

Core Mechanism: Escrow-Based Settlement System

 

At the center of the new framework is the mandatory use of escrow accounts, which serve as a secure intermediary for settlements between buyers and sellers.

The process is structured as follows:

1. The buyer (or representative) applies to a bank and opens an escrow account;
2. The agreed transaction amount is deposited into the escrow account (in cash or non-cash form);
3. The parties apply to a notary for certification of the transaction;
4. The notary verifies, in real time, the availability of funds via electronic data exchange with the bank;
5. Upon notarization, the bank automatically transfers funds to the seller’s account.

This fully digital workflow ensures that no transaction can be certified without confirmed payment, eliminating risks of non-performance and informal settlements.

Role of Notaries and Banks

 

The reform significantly expands the functional interaction between notaries and financial institutions:

Notaries:

• verify availability of funds through an automated system;
• certify agreements only upon confirmed payment data;
• transmit transaction confirmation electronically to banks.

Banks:

• maintain escrow accounts;
• provide real-time confirmation of funds;
• execute automatic transfer of funds upon notarization;
• support various funding models, including credit-based transactions.

If sufficient funds are not available, the notary is required to refuse certification of the transaction.

Flexibility in Payment Structures

 

The regulation accommodates various transaction scenarios:

• Credit financing - banks notify notaries electronically and release funds upon certification;
• Deferred payments - initial agreed amounts are deposited into escrow;
• Multiple sellers or buyers - funds are distributed accordingly;
• Use of existing accounts - including bank cards, demand accounts, and e-wallets as escrow mechanisms.

This flexibility ensures that the system remains practical while maintaining strict control over payment verification.

Data Protection and Confidentiality

 

All participants including banks, notaries, and their employees are subject to strict confidentiality obligations.

Information obtained during transaction processing must be protected and used solely within the scope of official duties, reinforcing trust in the system.

Regulatory Limitations

 

The framework does not apply to sale and purchase agreements concluded under investment contracts related to housing construction, which remain subject to separate regulatory treatment.

Practical Implications for Market Participants

 

For businesses and individuals, the reform introduces several key implications:

• Elimination of informal payment practices in property and vehicle transactions;
• Increased transaction security through escrow mechanisms;
• Greater transparency and auditability for regulators;
• Mandatory alignment with banking infrastructure for deal execution.

For legal practitioners and transactional advisors, this marks a shift toward fully digitized, bank-integrated deal structuring.

The new procedure enters into force on 1 April 2026, after which all applicable transactions must comply with the electronic settlement framework.