Equity was widespread in Russia. Companies attract investors, they build a house with their funds, which then becomes the property of the latter. Thus, you can buy an apartment by installments and pay off the debt until the completion of construction. But this is not all the opportunities provided by shared construction. What you need to know about this process to the parties to the transaction, what to pay attention to - read on.
Nuances
In theory, everything is simple and clear, but in the media this process is highlighted in a negative way. Why it happens? The interests of the parties to the transaction are protected by the Law "On shared construction", which was adopted back in 2004. He introduced stringent requirements for developers. At the moment, this is the only normative document regulating shared construction. What does a client need to know when concluding a contract?
Developer and transaction object. If a company has been operating in the market for a long time, has a number of objects sold, then it can be considered as a contract partner. Contacting unverified organizations, especially people who make a deal for the first time, is not worth it.
Law "On shared construction" No. 214 is valid for only contracts of the same name. Another wording is not acceptable. If the developer proposes to sign the "Investment Agreement", then he is trying to avoid the spread of the requirements of such normative acts: the law "On shared construction", the Federal Law "On Protection of Consumer Rights".
Before you certify the documents, ask the company to provide a building permit, find out where the project declaration is located, and read it. According to the law, the publication is a mandatory requirement for the developer.
The shared construction agreement is considered concluded from the moment of state registration. Otherwise, it will be considered invalid. The paper must contain a description of the object, the transfer date, cost and settlement procedure, and a guarantee.
Check documents
The Federal Law stipulates that a company can raise funds only after obtaining permission, publishing a project declaration and registering ownership. If at least one of these conditions is not met, a citizen may demand a refund with interest. They are calculated at a double refinancing rate. Under the contract, the company must build the property within the agreed time, and after receiving permission from the government agencies for commissioning, transfer it to the participant in the transaction. The other party undertakes to pay the agreed price and accept the object (subject to permission).
A written contract of shared participation in the construction must be registered. Only after that will it take effect. Before signing the documents, a citizen has the right to familiarize himself with the following papers:
- constituent documents of the developer;
- certificate of state registration;
- Certificate of tax registration;
- approved annual reports for the last three periods of entrepreneurial activity;
- audit report.
Improving transaction security
Since 2014, the Federal Law “On Developers Liability Insurance” has come into force, which applies to shared construction. What does it mean? In case of default or bankruptcy of the company, a person will be able to return the money. During state registration of documents, the developer must provide a liability insurance or guarantee agreement. Earlier it was provided for the possibility of providing collateral as security for the transaction.
Insurance Nuances
The agreement is concluded in favor of the beneficiary - a citizen or legal entity whose funds were raised for construction.
Insured event - full or improper performance of the obligations of the developer, which is confirmed by a court decision.
The validity period of the document is similar to that specified in the shared construction agreement. But the beneficiary can receive a refund even two years after the expiration of the transfer of the premises.
The minimum insurance amount is calculated based on the cost of housing. But it cannot be less than its market price.
This is how equity in construction is ensured. The Federal Law also provides for the following calculation procedure:
1. A contract of guarantee was concluded. If the developer has not fulfilled his obligations or has not provided a clear answer within the agreed time, then the client can apply with a corresponding request to the guarantee bank.
2. The transaction was secured by an insurance contract. The beneficiary must contact the company or mutual insurance company (MIA) within the specified limitation period for the subject of the pledge. The law stipulates that payment must be made no later than thirty days from the date of submission of documents. In this case, the presence of the debt of the developer to the insurance company does not matter. This decision is valid only for contracts concluded after 2013.
Ways of securing obligations
We have already considered in what ways (under the law) the client can return the money spent. However, the presence of this clause in the contract does not guarantee compensation. In the document, you can enter various conditions and reservations, with which you can drag out the time to fulfill obligations. And all these “ifs” may not go beyond the law.
When construction is carried out slowly or does not start for a long time, the client may, not wait for the deadline, demand to terminate the document in court. Such an opportunity is provided if:
1) there was a cessation or suspension of the construction of the house, which includes an equity object, if there are circumstances indicating that the object will not be transferred to the participant in the transaction within the time period specified by the document;
2) there are more significant changes in the design documentation, including significant correction of the size of the shared object;
3) there is a decrease or increase in the total number of apartments included in the new house.
What else do you need to know about shared construction?
The date of putting the facility into operation should be clearly stated (for example, “no later than 10/15/14”). Very often, developers use the advertising phrase: "in the IV quarter of 2014." This wording is incorrect. After two months from the indicated date, the shareholder may unilaterally terminate the shared construction agreement. You only need to send a written notice. The developer is obliged to return the money received to the client’s account and pay him penalties within 20 calendar workers. Or deposit this amount into a deposit that is open in the name of the shareholder.
The total cost of the apartment indicated in the documents is calculated from the price per square meter of housing multiplied by the area of the room. These figures should also be painted. It is also worth paying attention to the description of the living space parameters: location, floor, address, area, number of rooms. The warranty period for the constructed apartment is 5 years.
When studying documents, it is worth paying attention to the moment from which the shareholder must pay utility bills and operating expenses. If this clause is missing, the obligation arises from the moment of signing the acceptance certificate of the apartment, and not the commissioning.
Problems can not be avoided?
Sometimes developers specifically “forget” to include any of the items in the document. But the client may experience material losses even if the contract "Share construction" is correctly executed. What does it mean? The developer may cede ownership of another legal entity. In this case, he will sell him practically at cost the right to all apartments. Then the intermediary company at the market price assigns them to equity holders. At first glance, there should be no problems. However, in the event of a risk of unfinished or bankruptcy of the developer, the shareholder may file a claim on the basis of the amount specified in the contract. But the apartments were sold at cost rather than market price.
Another common pattern
Registration of shared construction contracts counts the moment they enter into force. But very often, borrowers use a different scheme. They offer to sign a preliminary contract. It contains almost the same items as basically, except for information on its entry into force. Such documents are not subject to mandatory state registration. At the same time, the parties come to an oral agreement that the second participant immediately pays all the money for the apartment. The developer is obligated to conclude a basic contract of shared participation in construction sometime in the future. The investor is sure that the transaction is framed correctly. But this “gray” scheme only takes the document out of the law.
And here is another popular maneuver. The developer concludes a contract with the buyer, the subject of which does not indicate the obligation to transfer property to the shareholder, but something else: financing of investment activity, assignment of the right to demand premises and the like. That is, the whole essence of the document is determined by its content. But at the claim of the interest holder, the court may declare it invalid, since in fact the document was created with the aim of evading liability under law No. 214.
In the morning - registration, in the evening - money
The contract is considered to have entered into force only after entering its data into the Federal Register. The developer has no right to accept money until this moment. And that means that this moment should be spelled out in the document. It is not worth trusting the employees’s claims that the documents will be registered “in a heap” later, but the construction money is needed now. In rare cases, such representations are true. Transferring each document individually to the Chamber takes a lot of time. But the client can be deceived. Therefore, it is better to play it safe and wait until a deal for shared construction is registered. The developer may insist on an advance payment. But in this case, ask to show the contract for this object, which was concluded according to a similar scheme. The registered document has a stamp, seal, signature of the person in charge of the Rosestera and number. If the transaction was paid by funds from a mortgage, then this should be evidenced by a seal of encumbrance.
Often, developers themselves do not want to circumvent the law and receive funds before processing documents. But in this case, they need additional guarantees. For example, an open letter of credit at a bank. The client pays funds to it at the time of signing the contract. But the developer will get access to them only after the equity participation in the construction of the house is registered. This measure at the same time guarantees the solvency of the client and allows you to comply with legal norms.
Acceptance of the property from the developer
What you need to know about shared construction at the stage of putting the apartment into operation?
Firstly, this process should be treated with care. Find out all questions before signing the documents. All identified deficiencies must be reflected in writing in the act of non-compliance of the facility. The obligations of the builder are legally considered fulfilled from the moment of signing the document of the transfer of the premises. The participant has the right to demand the gratuitous elimination of deficiencies or a reduction in the transaction price. If defects were identified already during the operation, the developer is obliged to compensate the client for their elimination.
Secondly, do not succumb to persuasion. Below are the most common schemes of action of developers, which are aimed at exerting pressure on the client:
- they ask to sign the papers, assuring that all problems will be eliminated later;
- they claim that they will draw up a “different act” in which all claims will be reflected;
- they threaten that, in case of violation of the deadlines for paperwork, the client will have to pay a fine for not accepting the object.
Competent help
There are many nuances to which you need to pay attention. Therefore, it is better to seek the help of a specialist who knows how to draw up documents for shared construction, what you need to know and take into account at each stage of the transaction. Specialists provide assistance in the following areas:
- Choosing a developer, checking his documents.
- They accompany the procedure for signing papers: they analyze contracts, advise on possible risks, and hold negotiations on changing conditions.
- Prepare and submit documents for registration.
- They accompany the client upon acceptance of the object, regulate issues related to the deficiencies of the premises, deadlines, payment of the forfeit, including in court.
- The document is terminated: they control the return of the paid amount, the recovery of fines, interest on the use of borrowed funds, as well as compensation for losses beyond the penalty (payment for the services of a lawyer). In similar areas, assistance is provided in terminating the preliminary agreement, investment agreement, loan, etc.
Conclusion
You can buy an apartment in the primary market by issuing shared construction. What does a party participant need to know? A lot of nuances. Starting with the rules for choosing an adequate borrower and ending with the peculiarities of filling in the act of acceptance and transfer. Therefore, it is better to use the services of an experienced lawyer who will accompany the client at all stages of the transaction.