Is it worth buying an apartment in a new building from a contractor?

Buying an apartment in a new building is the dream of millions of Russians.

You can purchase housing on the primary real estate market from a developer, investor or contractor - a company that performs certain types of work at a construction site in accordance with an agreement with the developer.

It turns out that when purchasing an apartment from a contractor, the transaction price is often lower than that from the developer.

However, not everything is so smooth and pure in this scheme of purchasing a home, so it is worth understanding all the pros and cons, with pitfalls, when deciding to purchase an apartment from a contractor.

How does a contractor get apartments?

Contractors are companies that perform certain types of work during the construction of a facility under an agreement with the developer (for example, they do glazing, carry out electrical installations, perform plastering work, do landscaping of the yard, etc.).

Very often, developers and contractors calculate by square meters . This is how a barter transaction is carried out: an apartment in exchange for a service. Of course, contractors don’t like this kind of barter; they need cash, so you can often find an offer to buy an apartment from a contractor on message boards.

So, what does an apartment from a contractor mean? Apartments are formed on the balance sheet of the contractor as a result of joint activities between the developer and the contractor.

Many developers pay contractors by square meters. An assignment agreement is drawn up between the contractor and the developer; its essence is that the obligations and rights that one person has are transferred to the other (the person acquiring these rights pays for them).

Buying apartments from contractors is characterized by the fact that it is profitable in monetary terms. The contractor, who received the apartment as a result of settlements with the developer, sells it at different stages. And often the sale price is much lower than the price for the same apartment from the developer.

What is the reason for this difference in price? Why are apartments from a contractor cheaper than from a developer?

Everything is very simple:

• the contractor needs “real” money because he employs people who need to pay wages, pay taxes, buy building materials, etc.;
• It is important for the contractor to get money as quickly as possible, which is why he often reduces housing prices.

Tax deduction and other features

The big disadvantage of concluding such transactions is that it will most likely not be possible to make a tax deduction. When the real estate does not become the property of the contractor, he acts as a kind of intermediary. In this case, an offset scheme is used, which makes it impossible to return income taxes.

Expert opinion

Stanislav Ershov

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If the future owner purchased housing by transfer, bypassing the developer, the latter does not have the right to issue documents to the final buyer about expenses for the tax authority. Nothing can be done about this, because the agreement was concluded with the contractor.

The only thing that builders can do is provide a certificate stating that the square meters have been fully paid for. But this paper is unlikely to satisfy government officials. Of course, the price of housing purchased from contractors is already lower, but you shouldn’t count on a pleasant bonus in the form of a tax deduction.

Problems may also arise for those who purchase real estate with a mortgage. To get a loan, you need to bring to the bank a complete package of papers for housing under construction. This will require the participation of a contracting company, which will act as an intermediary between the builders and the future home owner. As a rule, such transactions drag on for a long time, and contractors are not at all interested in this.

Ways to formalize an agreement between the developer and contractor in 2021

The parties to the transaction can formalize the relationship in several ways:

1. The developer signs an investment agreement or assignment agreement with the contractor company. In this case, the contractor has the right to sell the apartments before he has completed all the work. And herein lies the biggest danger for the buyer. So, if the developer does not like the quality of the service provided, then he can cancel the contract. Then the contractor will not have any rights to the apartments even if he sold them. And even if the buyer goes to court, the law will remain on the side of the developer.

2. 
   The developer pays with ready-made housing. He formalizes ownership of the property and then transfers it to the contractor under the purchase and sale agreement. In this case, the buyer no longer risks being left homeless.

3. If there is no house ready for commissioning, but the contractor is already the owner of the apartments in the new building. Accordingly, he can already sell such apartments by right of assignment. It is important to understand that if the apartment was registered to the contractor as an individual, then the transaction must take place on the same day (transfer of money and submission of documents for registration - everything must take place on the same day). If the apartment is registered in the name of a legal entity, then the transaction must take place in a different order: first it is necessary to submit the assignment agreement for registration, and when the agreement is registered, then the buyer can transfer the money to the contractor.

Rules for purchasing an apartment from a contractor

Before agreeing to a real estate purchase or sale transaction with a contractor, a potential buyer must:

• check the developer and the construction site itself;
• check whether the share participation agreement is registered;
• obtain an extract from the Unified State Register to check the presence/absence of encumbrances;
• make a request to receive an extract from the Unified State Register of Legal Entities (Unified State Register of Legal Entities) to verify the powers of the contractor’s director at the time of conclusion of the transaction;
• familiarize yourself with the contractor’s charter to determine whether it has the authority to carry out a major transaction without the permission of the founders;
• request from the contractor a document confirming the absence of material claims against the developer;
• find out from the developer whether he has submitted documents on the commissioning of an apartment building to Rosreestr. If he has already transferred the documents, then it will no longer be possible to conclude an agreement on the assignment of rights.

After passing the necessary checks, you can begin to figure out how to buy an apartment in a new building from a contractor:

1. Choose a residential complex based on parameters such as price, location, layout.
2. Check the reliability of the contractor (request a construction permit, etc.).
3. Check the title documents for the contracted apartment. The buyer must receive a share participation agreement for the apartment between the developer and the contractor, and an act of offset of counterclaims.
4. Sign the assignment agreement (at the developer’s office or with his written consent). This is a tripartite agreement, the parties of which are the contractor, the buyer and the developer, fixing the transfer of rights under the agreement.
5. Make payment under the assignment agreement.

Customer - developer - contractor

We have already written about the difference between a developer and a construction developer. The first organizes all processes and has the right to accept funds from shareholders into their accounts - in fact and legally, the developer is the seller of the apartments (the rights to their subsequent registration as property). He is also responsible to the shareholders (buyers) for failure to meet deadlines, violation of the procedure for handing over the object, and the impossibility of completing it.

We move further along the chain - we understand the relationship between the customer and the contractor. These are the main links in the construction process, on which everything depends, from the timing of the project’s delivery to the final quality of the new building and subsequent relationships with buyers.

Customer for the construction of a new residential complex

The construction customer is a subject of civil law, a concept enshrined in the Civil and Urban Planning Code of the Russian Federation. The customer’s function is to entrust the execution of work to a specific contractor, observing all formalities and standards. His responsibilities include creating conditions for completing tasks, including the need to attract licensed firms, and searching for performers for survey and design work.

Customer and developer rolled into one

This role can be played by the developer, who by definition is obliged to take all necessary measures to organize construction. The functions and responsibilities of the customer do not imply the obligation to own the land for construction, but this is the responsibility of the developer. As well as the need to obtain a construction permit, draw up other documents, and attract a contractor.

Municipal customer

The customer can also be local authorities - for example, in the complex development of large territories. The law does not prohibit a developer from being a customer, but this is inconvenient from the point of view of the process of transfer of powers.

Developer and guarantor

There is another interesting detail - the developer who actually organizes the construction may not have his own funds, and then the investor, developer or customer can issue him a guarantee for a certain amount. From the point of view of the law, this is transparent, since the contract stipulates the responsibility of the guarantor to the shareholders.

Useful tips

1. When purchasing an apartment from a contractor at the construction stage, the buyer does not acquire the apartment itself, but the right to claim this apartment from the developer after the house is put into operation.
2. The share participation agreement, which is concluded between the contractor and the developer, must go through the registration procedure with Rosreestr. Without registration, such an agreement is invalid.
3. When drawing up an agreement for the assignment of the right of claim before the contractor performs work under an agreement with the developer, the potential buyer risks being left both without an apartment and without money (for example, if the contractor goes bankrupt).

What do you need to become a contractor or subcontractor?

In order to become a contractor in construction from scratch, you need only three important conditions: • Availability of resources; • Availability of proven experience; • Competitive price of the proposed work. In addition to these conditions, in order to undertake certain types of work, permits may be required. For a whole set of certain types of construction work, this is membership in SROs (self-regulatory organizations), which carry out the statutory control over the availability of the required qualifications and competencies of performers, and also issue permits for these types of work. Some types of work, such as handling certain hazardous substances, high voltage work, and other hazardous work, must be carried out under the supervision of specialized government organizations. This also requires certificates and permits for both personnel and the organization as a whole. Many types of construction work are not subject to legal regulation and their implementation requires only the organization of compliance with work and safety regulations

Customers, when choosing an organization for the construction or repair of a facility, pay great attention to the experience of successfully performing similar work. Therefore, the easiest way to get involved in such a business is to start by partnering with an experienced organization as a subcontractor

Subcontracted work performed with high quality and on time will also be included in the portfolio of successful projects and, over time, will become a calling card for obtaining independent orders.

Required documents

To conclude and register an agreement on the assignment of rights of claim in 2021, you need to prepare the following documents:

• buyer's civil passport;
• agreement between the contractor and the developer;
• agreement on the assignment of the right of claim between the buyer and the contractor;
• application for state registration of the agreement;
• receipt of payment of state duty;
• a certificate confirming that the developer has no material claims against the contractor;
• marriage certificate, spouse's consent or marriage contract;
• the developer’s written consent to the transfer of rights or his notification of such a transfer, provided that this requirement is contained in the agreement between the contractor and the developer.

Features of acceptance of an apartment with fine finishing

Work on finishing the premises is one of the most labor-intensive and costly. If you rush to accept the apartment without recording all possible shortcomings and hastily signing the apartment acceptance certificate, you will have to eliminate them at your own expense. Law No. 214 FZ tells how to accept an apartment from a developer with a fine finish. It provides for a special acceptance procedure, which has several stages:

Alert

The shareholder is notified of the need to accept the apartment by mail. The timing and procedure for notification should also be fixed in the contract. If the approximate deadline has arrived, and the developer does not send an invitation for inspection, you must contact the construction company yourself and request to schedule an inspection of the apartment.

Advice to the shareholder! If the developer ignores the requests of the shareholder or unreasonably postpones the inspection period, it is necessary to go to court and demand termination of the contract and the return of the money paid.

Inspection of the apartment

Before starting the inspection, familiarize yourself with the documents for putting the house into operation, which the developer should have ready by the time the apartment is inspected. It is better to inform the developer in advance of your intention to study the documents in writing, so as not to disrupt or delay the inspection procedure. The following should take part in this procedure:

• developer;
• Management Company;
• the shareholder or his representative on the basis of a notarized power of attorney (a lawyer can act as a representative)

Advice to the shareholder! It is in your best interest to invite a construction expert to inspect the property, who will point out violations and monitor compliance with building codes and standards.

Fixing construction defects

A detailed description of the condition in which the apartment should be rented must be contained in the contract; you should take it with you for inspection. During the inspection you should:

• inspect the apartment for cracks in the walls, ceiling and floors;
• check the ventilation operation using a piece of paper or fire;
• check the operation of windows and doors, the operation of fittings, the absence of cracks and damage to double-glazed windows;
• evaluate the quality of wallpaper and floor coverings.
• check the operation of plumbing and electrical appliances;
• compare the actual layout of the apartment with the technical documentation, it is advisable to double-check the area of ​​the apartment.

All defects should be recorded in your notebook in order to later transfer them to the appropriate documents.

Elimination of defects

If defects are discovered, the shareholder has the right to demand from the developer:

• eliminate defects within a reasonable time;
• reduce the contract price by the amount necessary to eliminate them;
• demand that third parties be invited to eliminate defects at the expense of the developer;

The shareholder can choose any type of requirements at his own discretion.

Repeated inspection of the apartment

After the developer eliminates the defects, the shareholder will be invited for inspection again. The procedure in this case will correspond to that described above.

Signing the apartment acceptance certificate

Only after the quality of the apartment and the finishing touches satisfy the shareholder can you agree to accept the apartment, sign the appropriate acceptance certificate and register ownership of the apartment.

Risks when buying an apartment from a contractor

Today, a big temptation for Russian citizens is offers to buy an apartment from a contractor who offers to buy an apartment at a price lower than the market price by 10–15%. Is it dangerous to buy an apartment from a contractor, are there any risks?

Yes, there really are risks, and they are as follows:

1. The contractor usually wants to receive money here and now, and the right to claim the future apartment passes through Rosreestr to the buyer in at least 18 days.
2. The contractor may not fulfill his obligations to the developer.
3. The contractor is in debt, as a result of which the house is not put into operation.
4. The developer may file claims against the contractor, which could result in termination of the equity participation agreement or lengthy legal proceedings.
5. The contractor may not have documents for the land plot or construction permits.

Before enjoying the savings, it is worth assessing the risks when purchasing an apartment from a contractor.

Do I need to contact a realtor?

The benefit that the buyer hopes for in terms of saving money when buying an apartment from a contractor can be significantly reduced due to intermediaries - real estate agencies.

The fact is that contractors do not have their own sales office and experience in working with real estate, so they turn to real estate agents. They add their percentage to the price, thereby making the purchase no longer so profitable.

In addition, such a deal may also be of poor quality, because the realtor offering the apartment may only know about the situation in the new building from the words of the contractor. And perhaps he did not even communicate with the developer directly.

Therefore, if a buyer decides to undertake the purchase of an apartment in a new building on his own, without the help of an expert, then obtaining truthful information will be problematic.

Who can I buy an apartment from in a new building?

Many citizens doubt and do not know who is better to buy an apartment from: a developer or a contractor . Experts note that if the contract for the assignment of rights of claim is drawn up correctly and correctly, then it does not matter from whom the buyer buys the apartment. The main thing is that he is satisfied with the housing and its cost.

If the contractor has not fully worked out the apartment (did not complete some work), then it is necessary to draw up a 3-party assignment agreement, according to which for the worked-out part of the apartment the new shareholder will pay the contractor money at his established price, and for the rest he will make payments at developer account.

In order not to risk entering into an agreement with a contractor to purchase an apartment, it is important to remember the following nuances:

• the buyer has the right to request an agreement between the contractor and the developer;
• he has the right to ask the developer whether the contractor has fulfilled his obligations;
• if the contractor has fully fulfilled his obligations and “worked out” the apartment, then the buyer can enter into an agreement with him directly, but he must inform the developer about his decision in advance.

Financial issues of purchasing a new building

Apartments from the developer are comparable in price to apartments on the secondary market, excluding houses in central areas or those that belong to the category of “historic”, “elite” and the like.

This is why new apartments are so popular among young families and people of retirement age. This is facilitated by additional financial opportunities:

• Apartments with a mortgage loan even for pensioners - large construction companies work closely with banks (VTB, Sberbank, Gazprombank and many others) to simplify and speed up the procedure for drawing up a loan agreement.
• These same banks offer preferential lending terms for clients of partner organizations - 1-2% lower, more favorable insurance conditions and other privileges.
• Installment plans from the developer are possible - if the principal amount is available, installments of up to 20% of the balance can be provided for a period of up to 2 years.
• The use of a military or maternity (family) certificate, while for many developers the maternity capital, the size of which is approximately 450,000 rubles, doubles. This means that 900,000 rubles are included in the payment amount.

You are not obliged to enter into a life insurance contract for a mortgage in the bank where you are getting a loan, because the difference in insurance conditions reaches hundreds of thousands of rubles. In theory, banks are prohibited from providing one service (lending) only if they receive another (insurance). But in practice, bank managers make every effort to retain the client and impose unprofitable insurance with additional options.

Finding a reliable contractor

How to find a contractor to buy an apartment in a new building in 2021? There are several options:

1. Ask your acquaintances, friends, and work colleagues who have already become happy owners of apartments purchased from a reliable contractor.
2. Search for an apartment from a contractor in an electronic database that can be found on the Internet.
3. Use the services of the developer, ask him which contractors he works with.

When choosing a particular contractor, experts recommend contacting those companies that have proven themselves well: they have positive customer reviews, a good reputation, and have been working in the real estate market for a long time.

Buying an apartment from a contractor is a good idea for purchasing a home with savings of 10-15% of the market value. But before concluding an agreement on the assignment of rights, you need to take into account all the risks and pitfalls.

It is important to check whether the contractor has fulfilled all the conditions specified in the agreement between him and the developer, whether he has any debt, etc. The buyer must be sure that the contractor has completed the work, provided the necessary services, and that the developer has no claims against him . If the developer has questions about the work of the contractor, then he can prohibit the sale of housing.

A few rules for a safe transaction

Although it is problematic to buy an apartment without any risk, you can reduce the likelihood of being among the victims. Buyers who enter into a transaction without an agency or the assistance of an experienced lawyer should be especially careful. There are several recommendations that will help you avoid losses and get the long-awaited housing:

1. It is necessary to obtain as much information as possible about the developer. It is worth finding out all the details regarding his activities: how long he has been working, how many objects he has built, how many lawsuits he has participated in. Of course, investors should also be wary of complaints against the developer, if there are any.
2. The contractor's reputation should also arouse keen interest. If possible, it is advisable to find its financial statements on the Internet. You definitely need to ask what explains the low price of real estate and why the contractor is in such a hurry to part with it. It is important for the buyer to understand whether the contractor is able to fulfill his obligations to the builders or whether this is not part of his plans.
3. Don’t be shy about studying each document thoroughly. This includes the initial contract, the assignment agreement, and the paperwork for the construction of the building. It is also necessary to pay attention to the contract agreement on the basis of which the contractor performs the work. From it you can find out how much of the services the contractor has already provided, and how much remains to be done.
4. It is necessary to request from the contracting company a certificate of the full cost of the residential premises and that payment for it was made (if any). Another useful document is a certificate confirming the offset of the cost of housing with acts of work performed by the contractor. A conscientious counterparty will not refuse to provide such documentation. This is especially important for the buyer: scam contractors often use schemes that allow them to transfer the debt to the final buyer.

Providing information from the Unified State Register of Legal Entities/Unified State Register of Individual Entrepreneurs - egrul.nalog.ru

Tax check

Check the contractor's debts - fssprus.ru

Federal Bailiff Service

Check for bankruptcy and arbitration processes - kad.arbitr.ru

Arbitration processes

Search by court cases (select the district court where the company is building real estate) - mos-gorsud.ru

Moscow court, search for court cases

In addition, you need to remember that both parties participate in drawing up the contract. If the buyer is confused by some of his points, he has the right to insist on changes.

Before you buy a finished or unfinished home from a contractor, you should carefully study all the nuances. There are many scams in the real estate market, and inattention can be very costly.

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How to avoid problems and save money

Not all apartments are sold before the building is put into operation; often, after several years from the commissioning of the property, apartments are unsold. In this case, that is, when the living space is registered as a property, you can buy it. The discount, of course, will be lower, but risks are practically eliminated, since a purchase and sale transaction is being completed.

In addition, there are a number of factors that need to be taken into account in the process:

1. It is worth checking the reputation of the developer, how intensively the properties are being delivered, whether there are cases of non-delivery, financial situation, etc. You need to check all permits to see if there are any debts.
2. The DDU must be registered; only in this case will it be possible to exclude double or triple sales.
3. The contractor must have a certificate of full payment for the apartment, copies of the document on offset for the real estate. This will mean that mutual obligations have been fulfilled.
4. If the apartment is registered as a property, this is an ideal option.
5. You need to request a document about ownership and equity participation in the unified register.
6. If the contracting organization is a joint-stock company, it is worth checking whether the person offering the apartment has the authority to take such actions.

Sale of an apartment in a new building by a shareholder

If you missed out on your apartment at the beginning of construction, do not despair. Your property may appear on the market later - it will be put up for sale by a more efficient investor.

The rights to housing under construction, obtained by the primary investor on the basis of an agreement concluded with the developer, can be transferred by the investor to a third party. Such a transaction is called an assignment of claim or assignment. There is no need to look for a catch - the transaction is absolutely legal. A new building can be sold by a shareholder for various reasons: return of investment with income, loan repayment, divorce, entry into inheritance rights, moving to another city and other life circumstances.

When assigning rights of claim, the rights and obligations of the original participant in shared construction are transferred to the buyer to the same extent on the same conditions on which they were established with the first participant in shared construction (unless otherwise provided in the contract).

The new basis documents for the newly minted investor are an agreement on the assignment of rights of claim and an agreement for participation in shared construction, concluded by the first investor.

How to become a partner in a construction company

The widespread and constantly growing construction business seems attractive to many professional managers and investors. But what is needed to start this activity, and how to become a contractor or subcontractor in the construction or repair of newly created or modernized facilities? To understand the aspects of this type of employment and earnings, you need to more systematically understand how the construction process works, how the distribution and further production of construction contract work is carried out in the construction services market. To begin construction work, it is most logical to become a partner of a construction organization that already has sufficient volumes of work and established experience in relations with key customers.