Collection of a penalty for late payment under the DDU from the developer: step-by-step instructions

Collection of a penalty for late payment under the DDU from the developer: step-by-step instructions

Step-by-step instructions “How to collect a penalty from a developer in case of delay in construction under an agreement for participation in shared construction?”

If the developer violates the deadlines for the transfer of a shared construction project, the shareholder has the right to recover a penalty for the delay in transferring the shared construction project.

Step 1. Submitting a claim to the developer

If there is a delay in the transfer of the object, the shareholder first of all sends a pre-trial claim to the developer with a requirement to pay the shareholder a voluntary penalty for the delay in transfer, calculated according to the rules of Part 2 of Art. 6 Federal Law 214-FZ.

The delay begins to run from the date following the last day of the transfer period established by the contract (or an additional agreement to it) and is calculated from the date of actual transfer of the DDU object according to the acceptance certificate (inclusive).

If the developer signs a unilateral acceptance certificate, the period of delay is determined by the day the developer draws up the unilateral certificate. However, if the developer drew up a unilateral deed illegally, the shareholder can challenge it in court. To do this, you need to provide all possible evidence that the shareholder did not shy away from accepting the shared construction project (sent letters to the developer about his readiness to accept the project, showed up for acceptance, drew up inspection reports, sent complaints about the quality of construction, etc.).

The penalty is calculated based on the original price of the DDU; the cost of the assigned rights under the agreement for the assignment of rights of claim is not taken into account in the calculation.

More information about calculating penalties for DDU can be found in the article: Penalty for DDU: how to calculate correctly? In this article you will also find an online penalty calculator for DDU

, which will help you correctly determine the start and end dates of the delay, the number of days of delay and the amount of the penalty that the developer must pay you.

The claim must be sent to the developer’s current address (in accordance with the Unified State Register of Legal Entities) by a valuable letter with an inventory of the attachment (in the inventory, indicate “pre-trial claim under the agreement for participation in shared construction No. ___ dated _____”). Save the receipt and inventory of the attachment. On the Russian Post website you can track the delivery status of your letter.

In the claim, indicate a reasonable period for satisfying the shareholder's demands. In practice, 10 days from the date of receipt of the claim is sufficient.

If the developer does not satisfy the requirements of the claim, the shareholder files a claim for a penalty, a fine in the amount of 50% of the amount awarded by the court in favor of the plaintiff (in accordance with the Law on the Protection of Consumer Rights), compensation for moral damages and legal expenses. Sending a pre-trial claim to the developer will allow the shareholder to avoid the court’s refusal to collect a fine.

Step 2: Trial

To go to court, determine the jurisdiction for a claim to collect a penalty from the developer and select the court with the best practice for this category of disputes.

Lawyer

Despite the clarifications of the Supreme Court of the Russian Federation about the possibility of reducing the penalty only in exceptional cases, in practice, the courts in 99% of cases reduce the penalty for delays under the DDU if there is a corresponding application from the developer. Arbitration courts, which previously did not reduce the penalty in these cases, are now also reducing it in most cases. The percentage of reduction of the penalty under the DDU depends on the specific court and the judge hearing the case, since each judge has his own understanding of the proportionality of the penalty to the violation committed by the developer. On average, the penalty is reduced by 50%. Among equity construction lawyers, it is customary to divide courts into “loyal to the shareholder” (if the penalty is reduced by less than 50%) and “disloyal to the shareholder” (with a more significant reduction in the penalty). Therefore, when filing a claim in court against a developer, it is necessary to analyze the court practice in this category of cases and choose the best court based on possible jurisdiction options.

Shareholder and developer: how to resolve their disputes about defects in new buildings

Over the past seven years, the Russian shared construction market has grown 3.5 times, Minister of Construction and Housing and Communal Services Mikhail Men said at the end of last year. With the help of DDU, about 80% of housing in the country is purchased on the primary market. According to the law “On participation in shared construction”, the developer is obliged to transfer to the shareholder an apartment, the quality of which complies with the terms of the agreement, technical and urban planning regulations, meets project documentation and other mandatory requirements, states Mikhail Varyushin, senior lawyer at Aronov and Partners Law Firm.

And almost any identified defect in a new home gives the buyer the opportunity to file a claim with the construction company. To do this, the participant in shared construction must first ask the developer to draw up a report listing the detected defects. Sergei Shumilov, head of the “Land. Real Estate. Construction” practice at Infralex Law Firm, emphasizes that until all his requirements are met, a participant in shared construction has the right not to sign documents on acceptance of the apartment. This behavior of the buyer will encourage the seller to quickly satisfy all claims, otherwise the company will also have to pay a penalty for late delivery of housing. In addition, all expenses for maintaining the apartment (utility payments) until the signing of the property acceptance certificate are borne by the developer, adds Shumilov.

Protection options

According to the law, several methods of protection are available to participants in shared construction, but among them there is no right to demand the replacement of a low-quality apartment with another, notes Alexey Altukhov, project manager at Pavlova and Partners. At the same time, the shareholder can register such an opportunity in the DDU, the expert emphasizes.

In any case, as practice shows, developers most often respond positively to requests to eliminate shortcomings, says Elita Zakiyan, leading lawyer of the Commonwealth of Land Lawyers. Dmitry Nekrestyanov, partner, head of the real estate and investment practice at Kachkin and Partners, explains that it is more convenient for the seller to eliminate defects on their own rather than pay compensation: “This is more economically justified, since the company has workers and materials, but no money or you don’t want to give them away.”

When the shortcomings are obvious or a large number of shareholders have filed claims, the chances of pre-trial settlement of the dispute increase significantly, explains Ekaterina Kalinina, senior lawyer at Noerr. According to her, if residents of one house are faced with shortcomings common to all residents, then it is worth filing a collective claim with the construction company.

If the shareholder discovers that the defects in the apartment are significant, then he can refuse to fulfill the share participation agreement unilaterally and demand that the construction company return the money for the property. In addition to the funds already spent, the buyer will also receive additional compensation, says Kalinina. Its size is calculated by the formula: 1/300 (1/150 if the shareholder is an individual) of the Central Bank key rate (7.75%) multiplied by the deposited amount and the number of days from the date of the first payment until the termination of the agreement. However, this opportunity also has “the other side of the coin,” notes Nekrestyanov: “As a rule, the return of money, even with interest, is not profitable for the shareholder, because the cost of housing has already increased over a couple of years of construction, and the price of an apartment at the foundation pit stage is lower than that of a finished one "

What to do in court

At the same time, only a small proportion of conflicts between participants in shared construction and developers are successfully resolved out of court, states Dmitry Petrov from Yukov and Partners. If the seller does not correct the identified defects at all or does not eliminate them completely, then you must go to court. Zakiyan advises, within the framework of such processes, to present maximum evidence that will confirm the apartment’s significant shortcomings: inspection reports, photographs, technical reports with a defect list, expert opinions, etc.

Court decisions on the most common legal disputes between equity holders and developers

– The shareholder may unilaterally refuse to fulfill the DDU and demand a refund from the developer if the apartment has significant defects or the identified defects are not eliminated within a reasonable time (case No. 33-30716/2016).

– The shareholder demanded to recover a penalty from the developer for late delivery of the apartment, which occurred due to the fact that the company was eliminating shortcomings in the housing. In court, the company assured that the participant should have accepted the apartment on time: after all, the identified defects are considered insignificant and easily removable. But the courts upheld the claim, rejecting these arguments of the defendant, says lawyer in the dispute resolution and bankruptcy practice, Kirill Korshunov, who represented the interests of the applicant in this dispute (case No. 4-КГ17-25).

– When concluding an agreement with a participant in shared construction, the developer is obliged to provide the client with complete information about the characteristics of the property and accurately describe its location. The Supreme Court emphasized that the seller is obliged to promptly provide the consumer with information about the product that will allow him to make the right choice. At the same time, the agreement concluded with the developer does not provide for the replacement of the apartment, but gives the plaintiff the right to receive compensation (case No. 5-КГ16-47).

– The courts will refuse the plaintiff if the housing defects could have arisen through the applicant’s fault due to improper use of the property after its acceptance (Resolution of the Arbitration Court of the Volga District of September 13, 2021 No. F06-12576/2016 in case No. A57-18247/2015).

– If, despite changes in the design documentation, the apartment is suitable for use and meets the mandatory requirements, the courts refuse to satisfy the shareholder’s claims made in connection with the defects of the housing (case No. 33-15528/2016).

In addition, if the shareholder repaired all the damage on his own, then he will have to prove that he actually spent resources on this work, the lawyer explains: “Otherwise, you may completely lose the opportunity to reimburse the actual expenses incurred.” The expert emphasizes that it is necessary to distinguish between the significance of the identified defects: “The absence of handles in the windows or a peephole in the front door are not serious deficiencies due to which the housing cannot be used for its intended purpose.”

How to avoid a reduction in compensation

Even if the shareholder proved the significance of the shortcomings and won the case against the developer, the plaintiff is unlikely to be able to recover in full the interest due to him for using other people’s money, a consumer fine and compensation for moral damage, warns Varyushin. According to him, SOYU are still actively reducing interest rates and fines to 100,000–150,000 rubles. To avoid such decisions and get a larger amount, shareholders use their own tricks, the expert says. Citizens cede their rights of claim in such cases to commercial organizations and individual entrepreneurs, who recover money from developers in arbitration proceedings.

Varyushin confirms that arbitration courts do not reduce compensation and consumer fines, awarding them almost in full (see cases No. A40-162161/2016, No. A41-72694/2015 and No. A41-2072/2015). The expert explains that arbitrations rightly shift the burden of proving the disproportionate compensation and consumer fine to the developer. But this situation overloads the arbitration court system, the lawyer states. In addition, recently a new trend has emerged when shareholders themselves abuse their rights, says Nekrestyanov. At the slightest shortcomings, participants in shared construction refuse to accept the apartment in order to receive a penalty from the developer, the lawyer summarizes.

• Alexey Malakhovsky

• Supreme Court of the Russian Federation

Calculation of the limitation period for voidable transactions

Upon recognition of individual clauses of the DDU as invalid

The period is calculated from the date of signing the share participation agreement. As a rule, the time interval between the date of signing the contract and the date of transfer of the apartment is more than one year. It’s bad that when you need to challenge individual points of the DDU, the statute of limitations in this part will be missed. When you explain it to the shareholders, they say that they knew nothing about it.

At the stage of purchasing an apartment, it is almost impossible to change the conditions in the shared participation agreement template. There is only one answer to all comments: if you don’t like it, don’t buy it. However, having signed a DDU with enslaving conditions, many of its clauses can easily be declared invalid in court. It is enough not to miss the deadline of one year from the date of signing the DDU.

The Supreme Court reminded what fines are collected from a developer who untimely transferred housing to the owner

The Judicial Collegium for Civil Cases of the Supreme Court published Ruling No. 10-KG21-3-K6 dated June 1, 2021 on the dispute over the collection of penalties from the developer in favor of the owner of an apartment in the Moscow region for her untimely transfer to the latter, as well as losses incurred by her in connection with with renting a Moscow apartment.

In July 2021, Krasnogorskaya Poultry Farm CJSC entered into an agreement for participation in the shared construction of an apartment building with the developer Rozhdestveno LLC. Under the terms of the DDU, the developer undertook to transfer 412 apartments and 19 non-residential premises to the poultry farm no later than June 30, 2021. Subsequently, the parties postponed the delivery date to September 1 of the same year.

In December 2021, a poultry farm for 4 million rubles. ceded the rights of claim under the DDU to one of the apartments to Marina Rodina. The assignment agreement noted that at the time of its conclusion, the obligation to pay the developer the price of the agreement for participation in shared construction was fully fulfilled.

Only in August 2021 did the developer receive permission to put the facility into operation, of which he notified Marina Rodina. On August 24, the woman sent a claim to Rozhdestveno LLC demanding payment of the penalty, but the demand was not satisfied.

In November, the apartment was transferred to the owner under a transfer and acceptance certificate, after which Marina Rodina filed a lawsuit against the developer. With reference to the violation of the deadline for the transfer of a shared construction project, she asked to recover a penalty in the amount of 897 thousand rubles, losses due to the rental of a Moscow apartment in the amount of 100 thousand rubles, 50 thousand rubles. compensation for moral damage, as well as postage and a fine of 50% of the amount awarded to her for refusal to voluntarily comply with the requirements.

The court granted the claim partially, collecting a penalty from the defendant in the amount of 122 thousand rubles, 29 thousand rubles. compensation for moral damage, a fine of 71 thousand rubles. and postage. The appeal and cassation supported this decision.

The courts agreed that the developer violated the deadline for transferring the shared construction project, and therefore the plaintiff has the right to demand payment of a penalty for the period from September 4, 2021 to November 21, 2021. When calculating the penalty for violating the deadline for transferring the apartment, the courts applied the price of the DDU, which was determined in as a result of dividing the contract price by the project area of ​​all shared construction projects. Cost of 1 sq. m of area with this calculation exceeded 18 thousand rubles, thus, the cost of the apartment was determined at about 637 thousand rubles. – the penalty was calculated from this amount.

Refusing to satisfy the claim for damages, the courts found that the evidence presented by the plaintiff was not sufficient to conclude that her expenses for renting housing were incurred solely as a result of the defendant’s failure to fulfill the developer’s obligation to transfer the apartment and were directly related to this circumstance.

In her cassation appeal to the Supreme Court, Marina Rodina noted that the penalty to be collected should be calculated from the amount of 4 million rubles determined by the assignment agreement. She also disagreed with the reasons for the courts’ refusal to satisfy her claim for damages in connection with the rental of housing.

The Judicial Collegium for Civil Cases of the Armed Forces of the Russian Federation recalled that in case of violation of the deadline stipulated by the contract for the transfer of a shared construction project to a participant in the shared construction project, the developer pays to such person a penalty (penalty) in the amount of 1/300 of the Central Bank refinancing rate in effect on the day of fulfillment of the obligation, from the contract price for each day delays (part 2 of article 6 of the Law on participation in shared construction). If the participant in shared construction is a citizen, the above-mentioned penalty (fine) is paid by the developer in double amount.

“According to Art. 431 of the Civil Code of the Russian Federation, when interpreting the terms of a contract, the court takes into account the literal meaning of the words and expressions contained in it. The literal meaning of a contract term, if it is unclear, is established by comparison with other terms and the meaning of the contract as a whole. Meanwhile, the price of assignment of the right of claim is not identical to the price of the contract for shared participation in construction, and, therefore, the court, when calculating the penalty to be recovered in favor of the plaintiff, did not have the grounds provided by law for calculating it from the amount of 4,075,012 rubles. 80 kopecks,” noted in the definition.

The Supreme Court added that the conclusion that the need for the plaintiff to bear the costs of renting housing in the capital was not proven was made by the court of first instance and supported by the appeal, therefore the cassation does not have the right to ignore such conclusions based on an assessment of the established circumstances. Thus, the Supreme Court upheld the judicial acts of the lower authorities.

Partner of the Law & Commerce Offer Law Firm Anton Alekseev explained that the provisions of the Law on Participation in Shared Construction establish the right of the shareholder to recover from the developer the losses incurred by the shareholder due to the latter’s violation of its obligations under the DDU: “This also applies to the recovery of the shareholder’s costs for forced rent residential premises during the period when the developer violates the deadlines for transferring the finished apartment to the shareholder.”

According to the expert, in order to recover such losses, it is necessary to prove the fact of their incurrence, the size and the cause-and-effect relationship between the occurrence of such expenses and the actions of the developer. “The fact of expenses incurred and their amount, as a rule, is not difficult to prove by presenting, for example, a rental agreement and a receipt for receipt of money. The greatest difficulty from the point of view of proof is precisely the last circumstance. It is possible to prove it in cases where, for example, the shareholder together with his relatives (parents, brothers, sisters) is the owner of a one-room housing where he lives with his own family, while the shareholder and his family members are of different sexes in relation to other residents relatives with them (Appeal ruling of the Nizhny Novgorod Regional Court dated July 17, 2021 in case No. 33-7459/2018). The courts believe that under such circumstances the shareholder needs to live separately and rent separate housing,” explained Anton Alekseev.

He added that if the apartment has several separate premises, then the shareholder most likely will not be able to prove the need to rent another apartment (Appeal ruling of the St. Petersburg City Court dated June 14, 2021 No. 33-10892/2018 in case No. 2- 3670/2017; Appeal ruling of the St. Petersburg City Court dated November 28, 2021 No. 33-24016/2017 in case No. 2-1305/2017). “Also, the courts can satisfy the shareholder’s demands for recovery of costs for renting residential premises if the shareholder is registered in one locality and works in another, located at a considerable distance (Determination of the Armed Forces of the Russian Federation of December 19, 2021 No. 18-KG17-239; Appeal ruling of the St. Petersburg City Court dated May 22, 2021 No. 33-9989/2018),” summarized Anton Alekseev.

Junior lawyer of the Commonwealth of Land Lawyers Tatyana Kustova noted that the current practice of collecting from a developer who has violated the deadline for transferring an apartment the costs of paying for a rented apartment of the shareholder has a negative bias. “The determination of the RF Armed Forces is no exception. The risk of refusal to compensate for losses is associated with the absence of a cause-and-effect relationship between missing the deadline for handing over an apartment and renting another; the situation can be aggravated by concluding a rental agreement before the developer’s delay or the guilt of the shareholders themselves in the expiration of the apartment’s delivery deadlines,” she explained.

According to the expert, in order for the court to side with the shareholder, it is necessary to demonstrate that the latter is registered in one city, but is forced, for good reason, to live in another, where he has already bought an apartment, i.e. acts in good faith. It is extremely important to provide the court with documents to substantiate the requirements: a rental agreement, receipts from the landlord for receipt of rent/reconciliation act, certificate of employment/copy of the work record book. “The problem also lies in the fact that there are no unambiguous criteria for determining the integrity of the shareholders themselves. Developers, in turn, are trying to take advantage of this by challenging the amount of rent presented for collection as disproportionate and inflated. It seems rational to compare the shareholder’s previously owned housing with the rented and average cost of renting apartments from private individuals. It is fair to consider that the cost of renting apartments varies significantly depending on the city. Thus, a shareholder who is forced to rent an apartment, for example, in Moscow (due to moving for work or other life circumstances), will suffer greater losses than one who moved to another city, but will be able to count on fair, in his opinion, compensation , only if it proves its proportionality and validity,” believes Tatyana Kustova.

She added that when resolving a dispute over compensation by the developer for the cost of forced hiring, the shareholder must distribute responsibility in proportion to the fault of both the shareholder and the developer.

If the developer violates his obligations under the agreement for participation in shared construction, he may be subject to penalties, losses, compensation for moral damage, legal expenses, etc.

When concluding an agreement for participation in shared construction, the parties must remember that the developer is responsible for failure to fulfill and (or) improper fulfillment of its obligations in accordance with current legislation and the terms of the contract. If the developer improperly fulfilled or failed to fulfill his obligations under the contract, then the participant in shared construction (shareholder) can protect his rights within the framework of pre-trial and judicial settlement of the dispute. Moreover, in the case under consideration, the pre-trial settlement procedure is not mandatory, but may be provided for by the contract. It is possible that a demand (claim) sent to the developer will help resolve the conflict without going to court. Please note! From 04/03/2020 to 01/01/2021, penalties (fines) are not charged for violation of the deadlines for making payments under the contract, the deadlines for the transfer of a shared construction project, interest payable in the event of a unilateral refusal of the construction participant to fulfill the contract, and losses are not taken into account caused during the specified period. In relation to the corresponding requirements presented to the developer earlier, a deferment is granted (clause 1 of the Decree of the Government of the Russian Federation of 04/02/2020 N 423). The shareholder may resort to the following civil measures against the developer who has violated the terms of the contract. Termination of the agreement for participation in shared construction with the developer. A participant in shared construction has the right to unilaterally refuse to fulfill the agreement, in particular, in the following cases:

• if the developer has exceeded the project delivery deadline by more than two months;
• the developer refused to eliminate the shortcomings of the shared construction project, or reimburse the shareholder’s expenses for their elimination, or proportionately reduce the contract price due to deterioration in quality and other shortcomings of the construction project;
• the requirements for the quality of the construction project were significantly violated.

In these cases, the contract is considered terminated from the day the notice of unilateral refusal to fulfill the contract is sent to the developer. The notification is sent by registered mail with a list of attachments. In addition, the shareholder may terminate the agreement in court in the following cases:

• termination or suspension of construction of an apartment building if it becomes obvious that the shared construction object will not be transferred to the shareholder within the period stipulated by the contract;
• a significant change in the design documentation, including exceeding the permissible change in the total area of ​​residential premises or the area of ​​​​non-residential premises established by the agreement for participation in shared construction within 5% of the specified area;
• changes in the purpose of common property and (or) non-residential premises included in the apartment building;
• the presence of other grounds established by law or agreement.

In all of the above cases, if a citizen - participant in shared construction unilaterally refuses to fulfill the contract and the contract is terminated in court, the developer is obliged to return to the participant the funds paid by him towards the price of the contract, and also pay interest on this amount in double amount based on 1/ 300 refinancing rates of the Bank of Russia. Reference: Key rate (refinancing rate) From 02/10/2020, the key rate (refinancing rate) of the Bank of Russia is 6%. If the rights of claim of a participant in shared construction are acquired in whole or in part using credit funds (funds from a targeted loan) and are pledged to the person who provided the credit (loan), then the funds are returned to the collateral account of the participant in shared construction. Collection of a penalty from the developer A penalty can be established by law (legal penalty), as well as by an agreement on participation in shared construction (contractual penalty). At the same time, the amount of the legal penalty cannot be reduced by agreement; a contractual penalty can only increase the legal penalty. If the developer violated the deadlines for transferring the construction project to the shareholder without agreeing to change the terms of the agreement on participation in shared construction in terms of the deadline for the delivery of the project, the amount of the penalty (penalty) is double 1/300 of the refinancing rate of the Bank of Russia on the day the obligation is fulfilled. The penalty is calculated from the contract price for each day of delay, starting from the day following the date specified in the contract for the developer to fulfill the obligation to transfer the property. In exceptional cases, at the request of the developer, the court may reduce the amount of the penalty for violating the deadline for the transfer of a shared construction project if the developer proves that the penalty payable is clearly disproportionate to the consequences of violating the obligation. If the developer violates the deadline agreed with the shareholder for eliminating deficiencies (defects) of the shared construction project discovered during the warranty period, the amount of the penalty (penalty) is 1% of:

• the cost of expenses to eliminate such a deficiency (defect) or
• the cost of a residential premises that is an object of shared construction, if the identified shortcomings (defects) may serve as a basis for declaring the residential premises unsuitable for habitation.

Collection of a fine from the developer If the court satisfies the demands of a participant in shared construction, which were not satisfied by the developer voluntarily, including in the event of termination of the contract due to the unilateral refusal of the participant in shared construction to fulfill it in the prescribed cases, the court collects a fine from the developer in favor of the shareholder in the amount of 50% of the amount awarded by the court to the shareholder. At the same time, the developer’s intention to partially satisfy the requirements of a participant in shared construction without actually transferring funds to him, according to the position of the Supreme Court of the Russian Federation, is not a basis for exempting the developer from paying a fine (Definition of the Supreme Court of the Russian Federation dated November 13, 2018 N 80-KG18-10).

For latecomers - rent

It is no secret that many families who decide to improve their living conditions sell their apartment and rent a house in the hope of a quick housewarming. Often a similar situation - living in a rented apartment - drags on for a very long time.

So, the citizen entered into an agreement for participation in shared construction with the company. Under the agreement, the developer agreed to build a residential building in which his client would receive a one-room apartment. The lady paid the company in full. In legal language, this is called full fulfillment of one's obligations.

But the same cannot be said about the company. When the deadline for handing over the house approached, she sent the citizen an addition to the agreement, according to which the deadline for handing over the house was postponed by six months, and offered to sign this paper.

But the client turned out to be stubborn. Instead of silently putting her signature, the woman sent a second claim to the developer with a request to pay a penalty due to the postponement of the transfer of the apartment, as well as to compensate her for losses associated with paying for the rent of another home, and to compensate for moral damages.

The developer did not answer the lady. The woman repeatedly demanded compensation for losses to pay the rent of a rented apartment. But the developer refused to accommodate his client. As a result, the woman had to go to court. There, the plaintiff demanded to recover from the company a penalty for failure to deliver housing on time, a fine for unwillingness to do this voluntarily, pay her legal costs and... compensate her for losses: payment for rent, utility costs in rented housing. And at the end of the list of demands, the lady asked for compensation for moral damage.

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The district court agreed with the plaintiff’s demands. True, it partially reduced the amount of claims. The developer was issued an invoice that included a penalty and expenses for rent, compensation for moral damages, a fine and legal fees.

When calculating the amount of the plaintiff’s losses for renting an apartment, the court relied on the apartment rental agreement and evidence of bearing the burden of rental payments. The court was presented with receipts from the owner of the home that the citizen rented.

The Supreme Court considered that a negligent developer, through whose fault a citizen is forced to rent a house, must pay rent

This decision did not suit either side of the dispute. The plaintiff insisted that her stated demands be satisfied in full, and not in a truncated version. The developer company, on the contrary, demanded a reduction in the amount of the penalty, moral damages and expenses for paying for the services of a representative. But the company asked the lady to refuse the rest of her demands.

The appeal sided with the defendant and overturned the district court's decision to recover the costs of renting the apartment. At the same time, the second instance reduced the fine. The Court of Appeal generally came to the conclusion that the rental of residential premises is a personal expression of the will of the citizen and the costs of paying her rent cannot be considered losses. Moreover, the second instance stated that there was no cause-and-effect relationship between the timing of the delivery of the house and the losses incurred by the plaintiff. The costs of renting an apartment are not aimed at restoring any rights violated by the developer’s inaction, the court concluded.

Offended by such a decision, the citizen was forced to go to the Supreme Court of the Russian Federation. In her complaint, she wrote that she did not agree with such decisions and asked to cancel them.

The Judicial Collegium for Civil Cases of the Supreme Court studied both decisions and considered the woman’s claims to be justified.

The Supreme Court of the Russian Federation reminded its colleagues that losses are understood as expenses that a person whose right was violated made or should have made to restore the violated right. The court reminded that loss or damage to property is real damage; lost income that a citizen would have received under normal conditions of civil transactions if his right had not been violated is lost profit.

The party that has not fulfilled its obligations under the agreement on participation in shared construction or has performed them improperly is obliged to pay the other party the penalties (fines, penalties) provided for by law and the contract and compensate in full for the losses caused in excess of the penalty. This is stated in Article 10 of the law “On participation in shared construction of apartment buildings and other real estate and on amendments to certain legislative acts of the Russian Federation.”

The Supreme Court emphasized that the developer should have transferred the apartment to the plaintiff, but did so only six months later.

The court especially noted the following point: the plaintiff is visiting. She is registered in a locality located at a decent distance from her actual place of residence and work, and does not own housing in this city. According to the high court, the lady had the right to count on the timely transfer of the apartment, but due to the delay committed by the developer, she was forced to “incur the costs of renting a living space.”

Thus, the Supreme Court of the Russian Federation came to the conclusion that there is a cause-and-effect relationship between the delay in renting out an apartment, the citizen’s lack of ownership of residential premises, and the costs she incurred to be forced to rent another home. Therefore, the conclusion of the appeal is incorrect and the case must be reconsidered anew, but taking into account the clarifications of the Supreme Court.