Many people prefer to buy apartments at the stage of construction of an apartment building. This allows you to buy objects at a reduced cost. This process is called equity participation in construction. In order for the interest holder to be reliably protected from the loss of funds, one should competently approach the choice of the developer, as well as study a carefully drawn up contract. It is this document that protects the rights of buyers of unfinished objects.
Essence of equity participation
The process assumes that multi-apartment buildings are being built at the expense of future apartment buyers. They invest in the construction of a house, and after its commissioning, they can register the ownership of the apartment.
The process is regulated by a special law of the Federal Law No. 214 “On shared construction”, and various changes are regularly made to it to guarantee the protection of the rights of equity holders. The main features of equity participation in construction include:
- the rights and obligations of each party appear only aftersigning the contract;
- the DDU specifies all the nuances of cooperation, and it has signs of different agreements, which include an investment and contract agreement, as well as the provision of services and sale and purchase;
- an apartment is bought under such an agreement, which is located in an unfinished house;
- under such conditions, numerous equity holders are attracted, which makes it possible for the developer to build an object with minimal own investment of money;
- not only an individual, but also a company can become a shareholder;
- participants cannot influence the change of the project, terms of reference and other conditions for the construction of the house.
Often, citizens who buy apartments in houses under construction face fraud or bankruptcy of developers. In this case, the rights of the shareholder are protected by the provisions of the DDU. In difficult situations, the assignment of equity participation in construction to other companies or persons involved in the collection of funds can be carried out.
Legislative regulation
When buying a home in an unfinished facility, you should pay attention to the provisions of the basic law of the Federal Law No. 214. It was adopted back in 2004, and it is he who regulates all relations that arise between developers and equity holders. There have been many changes and amendments to this legislative act. It is divided into numerous parts and paragraphs, each of which has its own purpose. Key changes and provisions include:
- rules are indicateddrawing up and terminating an agreement on equity participation in construction;
- the possibility of transferring rights to third parties is prescribed;
- there is criminal liability for developers if they do not fulfill their obligations under the agreement;
- by all means, developers must open special accounts intended for the transfer of funds by equity holders, and the money can be used exclusively for the construction of the facility;
- developers must have their own official website, which discloses all the information about their work, which includes projects, permits and other documents.
Now all developers open an escrow account designed to transfer money to equity holders. The Federal Law on participation in shared construction indicates that such an account is closed only after the full use of funds. Such conditions cannot become an obstacle to the assignment of the right.
Additionally, the legislation provides for the need to create a compensation fund. It is represented by insurance for equity holders, because if for some reason the developer does not fulfill its obligations, then losses to equity holders are covered at the expense of funds from this fund.
Advantages and disadvantages
Using DDU to buy a home has many advantages for every homebuyer, but it is important to consider certain disadvantages of such a solution. Participation in shared construction of real estate objects is considered risky, asthere is always a possibility that the developer will fail to fulfill its obligations for various reasons.
| Pros | Cons |
|
A low cost is set on objects, which is much less than the price of finished apartments in the primary or secondary market |
Will have to wait long enough for the housing to be completed, so this opportunity is used by people who already have a place to live |
| Many developers offer installments for the entire period of building a house, which allows you to buy an apartment without the initially required amount of funds when drawing up a DDU | Often, equity holders have to deal with a delay in the delivery of an object, so it becomes necessary to collect a pen alty through the courts |
| Receiving housing is guaranteed by law, so equity holders will still be able to count on an apartment or compensation for losses | If, for various reasons, the apartment exceeds the previously agreed size by square, you will have to pay a certain amount of funds |
| The law imposes strict and numerous requirements on developers, so you can be sure of the reliability of the company |
It is not uncommon to encounter fraud, for example, the developer sells one apartment to several shareholders or other schemes are used to circumvent the law, which leads to the need for litigation |
| If the company does not hand over the house by the appointed date, then equity holders can count on a good pen alty, calculated for each day of delay | Often a company declares itself bankrupt, which leads to the transfer of the house to another developer, and all this negatively affects the construction time of the object |
Due to the above pluses and minuses, each person must decide for himself whether equity participation in construction is appropriate and beneficial for him.
How to buy a house on DDU?
The process is not considered too complicated, but to make sure it is profitable and effective, potential buyers must follow certain sequential steps.
Before contacting the developer, it is important to find out reviews about him, study the official documentation, and also check how quickly the construction of a particular house is carried out.
Get company details
First of all, you need to make sure that apartments are being sold according to DDU by a really reliable, verified and officially registered organization. The Federal Law on participation in shared construction indicates the need to obtain information about the developer:
- it must be represented by an officially registered company;
- it is desirable that the enterprise has already built and commissioned facilities;
- there should be no open litigation against the organization;
- all past houses must be entered intooperation within a predetermined timeframe;
- all documents submitted on the website of the organization are carefully studied, and they include projects, work permits, declarations and other papers;
- the company must have rights to the site where the construction process of the facility is taking place.
If these documents and permissions are missing, it is not recommended to draw up a DDU with the developer.
What information does the declaration contain?
Especially much attention is paid to the study of the declaration for construction. It should be located in open sources 14 days before the conclusion of the first agreement with equity holders. This document should contain important information for each construction participant. This includes:
- name and legal address of the developer company;
- permits for work are listed;
- indicate the previously received licenses;
- fit the license validity period;
- lists all founders of the company;
- given the past erected objects for the three years of the company's operation;
- indicate the financial results of the work;
- given accounts payable and receivable;
- indicates other transactions on the basis of which funds were raised for the construction.
A contract of equity participation in construction with equity holders is concluded only after the developer buys or leases the land where the construction of the house is planned.
What shouldinclude project documentation?
It is considered an important document for every construction participant. Documentation must be formed and published 14 days before the moment when the first agreement with the shareholder is concluded. Key information from the project includes:
- information about the developer;
- information about all founders;
- data on the financial condition of the company;
- building permits and licenses;
- the period during which it is planned to build the object;
- location of the house under construction;
- company property;
- construction costs and contractors involved.
It is allowed to change the information in the project documentation if the financial condition of the company changes in one quarter. Moreover, all these adjustments must be published in open sources.
Nuances of drawing up an agreement
As soon as all the information about the developer is verified, it is possible to draw up a DDD with him if he is reliable and verified. Equity participation in construction necessarily implies the execution of this particular document, since other papers will not protect equity holders on the basis of the provisions of Federal Law No. 214.
Of course, this document contains information:
- subject of the agreement, which represents the apartment, and its square, number of storeys, number of rooms, size and presence of a balcony or loggia, exact address, availability of various communications, as well as a set ofother technical parameters;
- property price;
- payment order;
- the deadline for putting the house into operation;
- duration of the warranty period, which should not be less than five years;
- the way in which the finished apartment will be transferred to equity holders;
- conditions on the need to complete residential premises.
With the correct drawing up of a document of equity participation in construction, equity holders will be reliably protected from fraud by the developer or from his bankruptcy. Some developers offer the opportunity to pay for an apartment in installments.
Registration of the contract
After the conclusion of the agreement, it is required to officially register it. Only under such conditions is shared construction legally carried out. The conditions of participation suggest that it is necessary to prepare a DDU, a plan of the facility, a project declaration and personal documents of the buyer, after which this documentation is transferred to Rosreestr.
The registration process takes about 10 days. For this, citizens will have to pay 350 rubles.
What rights do equity holders have?
Based on the DDA, homebuyers have many different rights. These include:
- if the deadlines for putting the facility into operation are delayed, then citizens may be required to pay a pen alty under an equity participation agreement in construction;
- after the registration of the agreement, the equity holders pledge the territory itself and the facility being built on it;
- alloweddraw up a contract for the assignment of the right to claim by agreement;
- ready-made apartment is accepted only upon drawing up a special transfer act;
- if significant violations are detected during the inspection of housing, then the act may not be signed, after which the interest holder may demand the correction of deficiencies.
If various problems are identified after the start of using the housing, then on the basis of the warranty period, the buyer may require the developer to eliminate them.
How is it terminated?
Terms of termination of this contract are written directly in its paragraphs. There may be various reasons for this. Most often, termination of an agreement on participation in shared construction is required if the developer fails to fulfill its obligations, for example, the house is not put into operation on time, there are significant violations, or the square footage of the property does not correspond to the previously established size.
The termination process will certainly be officially registered.
Conclusion
Thus, the participation of citizens in shared construction is considered a popular way to acquire inexpensive and high-quality real estate. At the same time, it is important to correctly choose the developer, with whom the DDU is further drawn up. This document must have the prescribed form and contain all the necessary information about the participants.
Based on the DDA, the home buyer is endowed with many rights that he can defend in a claim or in court.
