Contracts that the developer enters into and the mistakes he makes

Possible risks

Having decided to take advantage of such an offer as purchasing housing from a contractor, you should know that there are several ways:

• registration of a future apartment under an assignment agreement (assignment of rights and obligations), registration in this way makes it possible to subsequently take ownership of the acquired property, that is, after the construction of the house itself is completed. The assignment agreement indicates the existence of a transaction with the developer himself and all the necessary information regarding the transaction. An agreement of this kind is only possible when the house is under construction;
• re-registration of real estate in connection with the assignment of rights is probably the most unsuccessful way to acquire real estate, since in this case the housing under construction is transferred from the developer to the contractor, and from him to smaller subcontractors. But since no organization has property rights, and the premises are, in a way, payment for services, the risk is quite high due to the fact that one of the contractor organizations may go bankrupt before completing the work under the contract. Accordingly, the housing will be returned to the owner, that is, the developer;
• Well, the safest option is to purchase residential premises under a purchase and sale agreement; in this case, this acquisition is carried out in a completed house, and accordingly, the cost of the apartment will be an order of magnitude higher.

What can be attributed to the risks of purchasing from a contractor, in this case these could be:

• the house in which the apartment was purchased is not worthy;
• when receiving housing, after you get a house, you will get an apartment of a different layout, square footage or on the wrong floor, in fact it’s not so scary, here you can even take advantage of the situation and ask for an additional reduction in the cost, but if not, then the invested part of the funds will be returned and the housing will be put up for sale again;
• encounter scammers, here, of course, everything will depend on how carefully you approach the purchase, that is, you should not purchase an apartment from a contractor you have never heard of before, much less make a deposit without checking him.

The risks are, of course, great, especially if you stumble upon fraudulent schemes, so you should not neglect and skimp on a lawyer.

ATTENTION !!! Due to the existing risks, purchasing an apartment with a mortgage from a contractor will most likely be impossible. So, security services carefully study construction organizations, which can take a lot of time, and as a rule, contractors need to sell housing as early as possible and therefore they do not agree to sell on a mortgage.

Investment agreement

The use of investment agreements is only possible when purchasing commercial real estate and apartments. The purchase of apartments is possible only under equity participation agreements.

At the same time, a transaction under an investment agreement is the most risky. In this case, the buyer becomes a partner of the developer and shares the commercial risks of construction with him.

An investment agreement does not require state registration and can be concluded by the parties in any form, which allows the developer to prescribe the most favorable conditions for the sale of real estate and transfer the risks to the buyer as much as possible.

The main differences between an investment agreement and an equity participation agreement (EPA) are as follows:

1. Registration with Rosreestr is mandatory for DDU, but not for an Investment Agreement.
2. The DDU comes into force only after registration, and the Investment Agreement – ​​immediately after signing.
3. The responsibility of the parties under the DDU is determined both by the terms of the agreement itself and by the strict provisions of the Federal Law No. 214, and in the case of an Investment Agreement, the scope of the parties’ responsibility to each other is limited only by the terms of the agreement.
4. According to the DDU, only the shareholder himself can be the recipient and owner of the real estate, and in the Investment Agreement, the final recipient of the real estate can be either the investor himself or a third party appointed by him.
5. Collection of penalties under the DDU is regulated by law and does not present any difficulties, but collection of penalties under the Investment Agreement is very problematic.

Thus, I strongly discourage the purchase of commercial real estate under this type of agreement.

Purchase nuances

Having decided to take such a step as a transaction with a contractor, you should prepare for it with special care, take into account all the nuances and features, so you should start with:

• You must definitely check all the information about the company involved in building a house, find out whether the projects are being delivered on time, and whether they have financial debts (you can read about this on the Internet or from reviews of shareholders). By going to the company’s website, you will get acquainted with all the documentation they have, construction permits, licenses, etc.
• Having chosen an object and premises for purchase, it is worth visiting Rosreestr in order to exclude the fact that a number of possible restrictions or encumbrances are imposed on the house or residential complex;
• if a DDU is present when purchasing from a contractor, then there must be mandatory registration of it, in this way the buyer will protect himself from double resales;
• It is best if the contractor also provides a document stating that the housing was transferred for work already completed, that is, there are no claims from the developer;
• the best option is to purchase housing that is owned by the contractor from the contractor; therefore, it is necessary that a document confirming this fact be provided;
• When conducting a transaction, it is necessary to check in the contractor's contract whether there is a clause that states that the developer gives the right to resell the meters issued as payment for the work.

But the best thing you can do when planning to purchase housing from a contractor is to seek help from qualified lawyers. He will independently check all the necessary documents to ensure the reliability of the parties, and if such a transaction turns out to be dubious, he will warn the buyer, thereby preserving his budget and nerves.

Registration procedure and required documents

Registration of real estate purchased from a contractor is subject to mandatory registration, as with any other purchase.

If the acquisition takes place of a premise that has already been registered in possession and the owner has in hand a certificate confirming the right to real estate, then:

• a purchase and sale agreement is drawn up between the parties;
• Next, an act must be drawn up regulating the procedure for accepting the transfer;
• documentary evidence of payment for the transaction.

The contractor will additionally be required to provide documents such as:

• confirmation that there is no registration of any persons on the area for sale is provided in the form of a certificate;
• a paper certifying the absence of any debts for the provided housing and communal services;
• An extract from the general register recording real estate (EGRN) stating that no encumbrances or seizures have been imposed on the premises can be obtained from Rosreestr.

When purchasing from a contractor organization that does not own the property rights to the premises, but has a share participation agreement, that is, the property is under construction, in this case the parties will have to:

• to formalize under the agreement the assignment of rights and obligations of the contractor party, as an equity holder to the buyer, according to the agreement corresponding to this procedure.

From the seller, whose role is the contractor, the following documents will be required:

• documentary evidence of the absence of various types of encumbrance or arrest from the Unified State Register of Real Estate;
• confirmation of repayment of the amount for the period during which the contractor was the owner.

ATTENTION !!! Carrying out a transfer transaction is not a purchase and sale agreement; the document drawn up for such a transaction must be registered.

So, despite the fact that the price for residential premises from the contractor’s seller is very tempting, you should remember that this transaction is accompanied by certain risks and nuances. If, nevertheless, the buyer decides to purchase an apartment in this way, then it is safest to resort to the help of a qualified lawyer, in this way you can avoid the loss of financial resources due to an unsuccessful investment. It should also be taken into account that when planning to purchase an apartment under an assignment agreement, the risks increase several times, so if we consider the contractor as a seller, then it is better that he is already the owner of the property being sold.

Types of contracts when purchasing an apartment in a new building

Consultations, clarification of judicial practice and representation of interests in court by phone. 8(926)860-62-79

It is necessary to begin by listing the main types of contracts with companies that attract funds from citizens for the construction of multi-apartment residential buildings, namely:

— agreement of shared participation in construction;

— investment agreement;

— agreement on the assignment of the right of claim (cession);

- preliminary agreement;

— agreement for accumulation of shares in housing cooperatives.

Now it makes sense to pay attention to the main disadvantages and advantages of these agreements.

1. The agreement of shared participation in construction has priority over other types of contracts, as it is regulated by Federal Law No. 214-FZ “On participation in shared construction of apartment buildings and other real estate and on amendments to certain legislative acts of the Russian Federation” dated 30 December 2004. The contract for shared participation in construction provides some guarantees from developers regarding compliance with construction deadlines, violation of the quality of construction and payment of fines and compensation (damages, penalties, etc.) in case of violation of the specified terms of the contract. This agreement, by analogy with the execution of an agreement for the purchase and sale of an apartment on the secondary market, is subject to mandatory state registration in Rosreestr, which insures the shareholder against double sales and allows the recognition and registration of ownership of a share in an unfinished construction project in the event that the developer does not fulfill his obligations for the construction of a multi-apartment residential building in full.

2. The investment agreement is regulated by the Federal Law “On investment activities in the Russian Federation, carried out in the form of capital investments” No. 39-FZ dated February 25, 1999, which does not make it absolutely safe and does not protect against double sales, since this type of agreement does not subject to mandatory registration with Rosreestr.

3. Assignment of the right of claim or assignment. This is an agreement between individuals or between a developer and an individual, as well as between a developer and an investor, which is concluded when a party decides to sell an apartment under construction before registering the ownership in their name. Here it is necessary to distinguish between two legal nuances:

— the assignment of the right of claim under a concluded and registered agreement for participation in shared construction complies with the norms of 214-FZ and is safe, since the agreement is signed with mandatory notification to the developer and is subject to state registration;

— assignment of the right of claim under an investment agreement and other agreements is fraught with significant risks and costs, since it is necessary to establish in certain cases the developer’s consent to the assignment of the right of claim, the existence of rights of the assignor (the creditor assigning the right of claim), confirmation of the rights of the assignor to the subject of the agreement etc. There are also risks of repeated assignment of rights to an apartment by the assignor, which is impossible to verify in the manner prescribed by law.

4. Quite often, developers offer to conclude a preliminary agreement for the purchase and sale of an apartment, including with a promissory note payment scheme. The reason for the developer to offer a preliminary contract is to shift the risks of the transaction entirely to the buyer, namely:

- the developer does not bind himself to any obligations with the buyer except for concluding the main agreement for the purchase and sale of an apartment after a certain time, which is mainly tied to the date of commissioning of the object, and since this event can be agreed upon for a long time, the developer himself relieves himself of all costs of this situation, which in turn fall entirely on the buyer. Also, the developer in such a situation may not have a valid construction permit or land lease agreement;

- also in connection with the change in judicial practice related to the recognition of ownership under preliminary agreements for the purchase and sale of an apartment, it has become impossible to recognize the ownership of apartments in court, since it only implies the obligation of the parties to conclude the main agreement in the future;

— double sales are possible, since the agreement is not subject to registration in Rosreestr;

— the bill of exchange scheme for paying for this agreement also poses a risk, since the bill of exchange is often not directly related to the purchase of an apartment in a new building.

5. The share accumulation agreement in the housing cooperative provides for the creation of a cooperative (HBC) for future residents of the house and the acquisition of real estate through the payment of a share. This agreement is also not subject to mandatory state registration with Rosreestr, so the same risks of double sales for the shareholder remain. A more or less positive effect of this agreement is achieved in the event of bankruptcy of the developer, since the shareholders, having united in a housing cooperative, independently manage their created real estate. After completion of construction of the property, the future owner of the apartment, in addition to the transfer and acceptance certificate of housing, will also have to receive a certificate of payment of the share.

Consultations, clarification of judicial practice and representation of interests in court by phone. 8(926)860-62-79

Contractors and contract apartments

As a rule, investors invest their funds in construction, developers are engaged in the construction of real estate objects, and various types of work to improve the premises and areas adjacent to the objects are carried out by contractor organizations.

It is not uncommon for apartments to be provided as payment for services provided by contractors; their registration in the name of the contractor is carried out by:

• concluding a share participation agreement between the performer of the work (contractor) and the company involved in the construction of the house (developer);
• It is also possible to book premises with their subsequent transfer into the possession of the contractor, that is, upon completion of the work.

Having received real estate under construction or already finished as payment for services, contractors try to sell it as quickly as possible and, therefore, put it up for sale at a price 10-15% lower than the price set for the premises in this house.

Residential premises received by the contractor from the developer can be of two types:

• worked out, those for which the contractor does not owe anything to the developer, that is, it is transferred to account for already completed contract work. For the work carried out, all documents confirming the fact of its completion must be available. In this case, the contractor will have a control agreement that must be registered;
• unworked in this case, they are reserved by the contractor and will be transferred to him under the control system after the completion of the work stipulated by the contract.

But contractors do not always strive to register a DDU; this is a waste of time and paperwork that they don’t need. In this case, the existing DDU agreement upon sale will be terminated with the organization by the contractor and a new one will be drawn up for the potential buyer.

In this case, the developer will be required to confirm:

• the fact that the contractor has no debt obligations to him;
• all required work has been completed.

With this scheme, the buyer can be considered under the agreement with the developer.

Participation agreement

Equity participation agreements are regulated by Federal Law 214. This is the safest contract for the purchase of real estate under construction with minimal risks for the buyer.

Until July 1, 2021, only shareholders of residential real estate were protected by insurance companies and compensation funds. After developers switched to project financing, banks became the guarantor of the safety of funds, including shareholders of commercial real estate, in whose escrow accounts funds are placed during the construction of the property.

Despite the fact that the structure of the equity participation agreement and the main provisions are determined in accordance with the law, it is necessary to pay attention to the following terms of the agreement, which are determined by the developer:

• The deadline for putting the house into operation and the deadline for transferring the premises to the shareholder.

Typically, developers focus on the time frame for putting the house into operation. But what is important to you is the deadline when the developer actually has to hand over the keys to the premises to you. This period can range from 3 to 6 months after the house is put into operation.

• The amount of permissible deviation in the actual area of ​​the premises and the area under the contract.

The percentage of deviation, above which either the developer makes compensation if the actual area turns out to be smaller, or the shareholder makes an additional payment if the actual area turns out to be larger than the contract area.

• The area of ​​the room and the coefficients used when calculating the cost of loggias, balconies, terraces.

Check that the area indicated in the text of the contract corresponds to the area on the floor plan in the annex to the contract.

• Amount and procedure of payment for the premises.

The law stipulates that all payments under a share participation agreement are made only after its state registration. If the property is purchased in installments, agree with the developer on a monthly payment date that is convenient for you.

• Carefully study the annexes to the agreement .

The appendices contain information about the materials used in the construction of the object, the purpose of the premises (it is important that it is indicated - non-residential premises), as well as in what form the object should be transferred (presence of floor screed, presence of water and sewerage outlets, wall decoration, etc.).

Many clauses of the equity participation agreement refer to project documentation. You can find the project declaration for any facility under construction and all additional documentation for the facility you are interested in on the official website of the Ministry of Construction https://nash.dom.rf. This resource has a convenient search for an object by the name of the developer, the name of the residential complex, as well as searching for an object on the map.

Bill of exchange

Customers do not always pay contractors with residential squares; sometimes they issue bills of exchange for an amount equal to the cost of the apartment as payment. A bill of exchange is a paper issued for a certain amount and obliging the customer to pay it within a certain period; specific dates are usually not indicated. The document is drawn up in accordance with the requirements of the Civil Code of the Russian Federation and the law allows the resale of the existing document to other citizens.

So, in some cases, in order to avoid drawing up a DDU agreement, developers resort to the following scheme:

• issue a bill for an amount equal to the cost of the premises;
• when the payment deadline approaches, this document is replaced with an apartment.

And these bills of exchange are sold by contracting organizations to persons wishing to buy an apartment in a new building. But it’s worth knowing that buying an apartment through a bill of exchange can always take place. The bill itself does not indicate any information that the developer undertakes to provide an apartment in exchange for this document; it only talks about the amount of financial payment during a certain period, thus, by purchasing a bill from a contractor, you may be faced with the fact that the developer will only pay for the place of living space cash.

But if we exclude such an outcome, then purchasing an apartment on a bill of exchange is quite possible and will be accompanied by the following procedure:

• the developer will need to provide the bill itself from the buyer, papers confirming the fact of settlement with the contractor for this document;
• in the office the bill of exchange is exchanged for DDU;
• final signing of the ownership agreement for the new owner.

If we exclude the risk that the buyer will only receive money from the developer, then purchasing an apartment at a reduced price through a bill of exchange is quite realistic and safe, since all actions are carried out in the presence of all participants in the transaction.