Who is a Developer in construction, what is the difference between a Builder and a Developer in real estate

Definition of a developer under current legislation

Based on legislative standards, we can give the correct legal definition of a developer:

According to Art. 2 clause 1 FZ-214 . These are any legal entities that plan to build apartment buildings and/or real estate (in addition to industrial ones) on a personal or rented land plot. Financial base – cash investments of members of shared construction. The basis for performing these works is a construction permit.
According to Art. 1 clause 16 FZ-190 + Town Planning Code . This is an individual or legal entity that makes capital investments to ensure the following types of work are carried out on a personal or rented land plot: construction, repair, reconstruction, etc.
According to Art. 4 parts 2 FZ-39 . If the developer does not have personal funds to implement the planned work on the land plot, he can use borrowed funds. In this situation, the developer also acts as an investor, that is, he is a developer-investor.
According to the Code of Rules 30-102-99 (on the planning and development of territory with low-rise residential buildings), the developer can act as an individual developer. On a plot of land, he can organize the construction of a residential building and agricultural buildings, using personal funds or investments received from third parties or construction companies.

Who is a contractor

Is the developer the client or the contractor? A contractor is a person who is directly involved in the execution of work. They carry out their activities on the basis of instructions from other persons. Their role can be customers or developers.

It is the responsibility of the customers to provide all conditions for contractors to carry out the work. The performers (contractors) must act in accordance with the assignment and provide the result of the work within the deadlines established by the contract. Construction must be carried out strictly within the framework of approved projects, building rules and regulations.

Developer functions

To find out exactly who the developer is, it is worth determining what the range of his activities is:

Real estate developer

In the real estate industry, Developer is a rather broad and unformalized concept, that is, it is not present in official construction documents - approvals, permits, etc. Literally, a Developer is someone who is engaged in the development of real estate (from the English develop - to develop).

Development is understood as any action aimed at increasing the market value of real estate, such as repairs, reconstruction, changing the functional purpose, but most often - construction.

Real estate refers to both a building and a plot of land on which the Developer intends to develop/construct something.

A developer is also the one who manages cash flows (both his own and others) in a construction project.

In practice, Developers call themselves Developers (they say, construction is going on on my land), and Investors (they say, everything is being built with my money), and Customers (they say, we keep all the documentation).

Companies that have nothing to do with land rights or construction financing also call themselves developers - these are professional management companies (the so-called fee-developer), which specialize in organizing the entire process of preparing and conducting construction, and putting the facility into operation , for a certain fee. Such a company is hired by the General Investor , and can serve as both a Technical Customer and a third-party Manager over all participants in the construction process: Customer Service , General Designer , General Contractor .

How to collect a penalty from the Developer for delay in transferring an apartment under the DDU? – see in a separate note at the link.

For the purposes of this Resource, in the text of the STEP-BY-STEP INSTRUCTIONS, we call the Developer the one who attracts money from shareholders and is the owner/master of the construction project. Those. the one who is responsible to the shareholder for the progress of construction and the transfer of the completed apartment to him.

In the real estate market, it is usually accepted that the Developer and the Builder are the same legal entity. In our INSTRUCTIONS we will adhere to the same opinion. However, for a more precise understanding, it should be clarified that in large holding companies the Developer is the head structure of the holding (for example, the Group), and developers are the subsidiaries included in the group, ABV-Novosibirsk, etc.).

This difference may be important for the Buyer of a new building, because... He enters into an agreement with a local development company, and can make all demands only to it.

Responsibility

In a number of cases, in case of violation of its duties, the developer bears administrative liability:

The developer must promptly publish reliable information about the project declaration in the media, otherwise he will have to pay a fine: for officials - from 5,000 to 15,000 rubles, and for legal entities - from 200,000 to 400,000 rubles.
The developer must obtain a building permit. If there is none, he does not have the right to publish information about the construction in the media, organize advertising, etc. Violation of this rule entails a fine, the amount of which varies from 100,000 to 500,000 rubles.
The developer does not have the right to attract shareholders if he does not have a construction permit. Violation of this rule will result in administrative liability in the form of a fine from 500,000 to 1 million rubles. It should be noted that a fine will be assessed for each participant who illegally signed a share agreement.

To avoid having to pay fines, the developer must obtain a construction permit and promptly provide the media with reliable information about construction.

What is the difference between a builder and a developer?

The developer is the owner or tenant of the land plot, which is not a mandatory condition for the developer. The latter is an entrepreneur who works in the field of development and can perform the following work:

Approve design documents on the basis of which commercial real estate objects will be built. These include office premises, shopping and entertainment centers, warehouses, hotel complexes, rental buildings, etc.
Prepare a business plan.
Purchase a plot of land.
Organize an advertising campaign.
Choose a developer to sell the property and get maximum profit.

Thus, a developer engages in entrepreneurial activities to obtain financial benefits. However, he may not be the owner or tenant of the land plot where it is planned to build commercial real estate, which is what distinguishes him from the developer.

Who is the client-developer?

The concept is defined by the 16th Resolution of the USSR State Construction Committee, and it is still relevant. This is a legal entity involved in the management of financial investments that will be used as capital funds, and tangible property that is included in capital construction.

In his person are:

Various institutions, including government ones.
Various unitary enterprises, as well as directorates.
Non-state commercial companies that received funds from the state to build facilities. As a result of such transactions, as a rule, part of the shares of these companies is transferred to the state.
Representatives of state or regional authorities who are assigned buildings and facilities that are under operational management. In this case, the developer receives capital investments from the federal budget.

Regardless of who exactly the developer-customer is, he performs the following functions:

Approves design and estimate documentation.
Attracts the specialists necessary to perform the assigned work.
Engaged in the purchase/rental of all necessary equipment.
Pays employees for completed construction and/or installation work.
Monitors the implementation of all work, as well as compliance with the contract prices that were approved in the estimate.
Responsible for the transfer of facilities and/or production facilities into operation within previously determined time frames.

Thus, the developer-customer must ensure the complete implementation of the necessary work on the land plot - up to the transfer of objects for use.

Why do developers leave affiliated management companies in new buildings?

What factors, according to new residents, most influence their quality of life? Such a study among residents of residential complexes was conducted by one of the large development companies operating in St. Petersburg.

The result was surprising: it turns out that the biggest influence on the opinion about residential complexes is... the activities of management companies.

The way they cope with all the communal problems of the residents influences their ratings by 30 or even 50 percent.

Management companies are required to provide exemplary maintenance of local areas. Konstantin Chalabov/RIA Novosti

These figures were cited by the general director of one of the management companies, Igor Sinkevich, explaining why now many developers do not leave projects after their completion, but continue to supervise their construction projects, creating special management companies affiliated with them in the housing and communal services sector.

Who to trust?

What does this innovation bring to residents - good or harm? It is important to understand this, especially now, when developers not only of luxury housing, but also of more democratic neighborhoods have begun to actively create their own management companies serving housing and communal services.

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However, experts studying this issue do not have a consensus.

On the one hand, says Igor Sinkevich, this is an undoubted blessing: as soon as the developer has a “spot” for construction, the management company working under his leadership is right there - its engineers look through the entire wiring system of communication networks, delve into all the details of the life of the future house at the stage its origins, which means they can skillfully make the necessary diagnoses in the future if something goes wrong, and most importantly, skillfully eliminate the shortcomings.

“In my LLC I have landscaping specialists, heat and water supply engineers, qualified electricians,” says Sinkevich. – Developers are naturally afraid of their acceptance when handing over a house as the strictest technical supervision. Because these people know all the secrets of builders, nothing can escape their picky control.

Moreover, it is this involvement that allows “their” management companies to quickly eliminate identified shortcomings. In addition, developers are interested in the effective management of built houses, since this significantly affects their reputation, and therefore future sales.

Developers of not only luxury housing, but also more democratic neighborhoods began to create their own management companies

Independent experts express a different point of view. Thus, Alexander Ivanov, who has worked closely with one of the St. Petersburg HOAs for a long time, knows: affiliated management companies, for obvious reasons, always play on the side of the developer.

They are just a division of a large business structure, and therefore are interested in the same thing as the parent company: to get greater benefits with less investment. Which is not always to the benefit of the tenant-consumer.

And the facts, when a developer tries to close some shortcomings at the expense of his management company, alas, are not such a rare case.

What will the “smart home” say?

Alexander Arsenyev, another expert from the developer side, is sure that the root of the problem lies in one thing: the housing and communal services industry in relation to the client lags far behind other services.

Moreover, if in all other areas the client can “kick on his feet” - simply not come to the store where he was poorly served, not use the services of a doctor whom he does not trust, then in the housing and communal services sector it is very difficult for residents to change the management company.

And, unfortunately, people often come to the management of HOAs and management companies who see this activity as a kind of sinecure for themselves. There are few decent, qualified, unselfish and strong-willed people who would combine all these properties at the same time.

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Another problem is the pricing. It is no secret that the services of property management companies are more expensive for clients. But on this issue it is difficult to disagree with expert Alla Vinnik, who states:

– It all depends on what level of service the management company provides.

A modern house is literally crammed with “smart” stuffing - there is video surveillance, intercoms, barriers, and landscape design. You have to pay for all this, as well as for maintaining fences and fences. And the fee for these services, of course, does not fit into housing and communal services tariffs.

Alas, residents are not always ready to understand and accept such a point of view. For example, in the United City residential complex, where a lot of social housing is concentrated, residents, according to the general director of the management company, demonstrate real consumer extremism:

“People want to live according to the standards of luxury housing, like on Krestovsky Island,” she says. – And pay at the lowest rates.

It would seem that the best option for residents is to manage their houses with the help of an HOA, notes Alexander Ivanov. This structure is closest to the residents.

But there is one significant drawback: when creating an HOA, technical issues of managing a house, especially with regard to complex modern equipment, are not easy to solve.

The only way out is to attract outside specialists on outsourcing terms.

Professional standards for a professional master

In general, the issue of qualifications of specialists in the housing and communal services sector is becoming one of the key ones today. And it is no coincidence that the eyes of experts turn with hope to universities, which, in theory, should train such specialists. Moreover, they own the most modern technologies in servicing apartment buildings.

Alas, here too there are still more problems and questions than there are ready answers to them: professional standards in the housing and communal services sector have not yet begun to be implemented everywhere, and educational standards correlated with them have only recently been approved.

“A year ago, we tried to recruit a group of students of the relevant profile on a commercial basis,” emphasizes Ekaterina Trushkovskaya, associate professor of St. Petersburg State University of Civil Engineering, head of the “Housing and Communal Infrastructure” department, “But we were unable to recruit students. Next year, fortunately, we were given the opportunity to study this specialty on a budget basis. So in five to seven years (bachelor’s degree plus master’s degree), specialists of the required profile will appear on the labor market.

How to buy an apartment with one salary

By the way, other experts also agree with this prospect. And it’s not just a matter of time to train qualified personnel.

“The reasons are that the industry will develop,” says Olga Mitselovskaya, general director of an independent management company, “and the developer will begin to shed unusual, non-key functions from his shoulders.

The business is segmented, and the market will form a network of independent management companies, which, on the one hand, will have the qualifications of management developers, and on the other, will not be financially dependent on developers.

And an increase in the number of serviced objects will help to significantly reduce costs, which will affect the final prices of services for consumers, emphasizes Zukhra Efimova.

In her opinion, independent management companies more actively defend the interests of residents in disputes with the developer during the warranty period.

Alexander Ivanov also agreed with this assessment, and emphasized: in the first years after putting a house into operation, it is preferable to manage a company that is part of the developer’s structure, and in the future, a qualified independent management company, rather than a HOA.

Opinion

Anna Gorbenko, consultant-lawyer of the real estate commission of the Consumer Society of St. Petersburg and the Leningrad Region:

– “Consumer extremism” is, in fact, present in relations with the Criminal Code. But management companies, as our experience shows, often make mistakes in calculating payments; instead of correcting defects under the guarantee, they write unsubscribes, stall for time, and wait until the warranty period expires.

Often in response letters they get off with references to articles of the law without deciphering them, and the average consumer does not understand what they are talking about.

At the same time, where the company conducts an honest and open dialogue with citizens, promptly responds to problems, all issues, even if they arise, are resolved pre-trial.

By the way

Two new accredited areas of training for bachelors and masters in “Housing and Communal Infrastructure” are opening in St. Petersburg.

Despite the fact that the term “housing and communal services” is of Soviet origin, it is a complex of economic sectors that use modern technologies.

Thus, to improve the management efficiency of these industries, digital technologies are used: digital maps of the city are compiled, stored and used with the location of utility and sewer networks, roads, buildings and other objects.

Modern accounting and settlement systems for the consumption of housing and communal resources and services are being developed and implemented. In each region, Internet portals of the GIS Housing and Communal Services of Russia have been created with personal accounts for each consumer of housing and communal services services and resources.

A new direction is being developed - IoB (Internet of Buildings) - systems for monitoring the condition of building structures and regulating and accounting for the consumption of utility resources and services.

The knowledge that students will receive includes competencies in the economics of housing management and its technical maintenance, including major repairs, modernization and reconstruction of buildings.

Source: https://rg.ru/2018/10/16/reg-szfo/pochemu-developery-ostavliaiut-v-novostrojkah-affilirovannye-uk.html

Video: Who is a developer?

In the following video, an expert will determine who a developer is, what he does, and why, in fact, he is a developer:

In essence, a developer is a developer who, on his own or leased land, organizes and commissions construction projects. In this case, this can be either an individual or a legal entity. The exact definition of development is provided by legislation, which creates a number of requirements for this person, the violation of which will result in administrative penalties.

Who is an investor

Investors allocate funds for specific purposes

This concept is disclosed by the provisions of the above Law No. 39-FZ. Investors can be any person, regardless of their status. They are organizations, citizens and even foreign entities.

Their main activity is making investments for the implementation of any projects. In the construction industry, funds are invested for the construction of various buildings. Both own and borrowed funds can be invested. It is possible to combine these two investment options.

At the same time, investors allocate funds for specific purposes and have the right to check their correct expenditure. An investment is an investment that is expected to bring profit to the investor later. They can be short-term or long-term in nature.