Buying an apartment is a very responsible undertaking. At the same time, dangers can await not only in the secondary market, but also in new buildings. After the innovations of July 1, 2021, buying apartments in buildings under construction has become a little safer, but you should not let your guard down. Any mistake when buying real estate can cost millions of rubles and years of wasted time. In this article we will tell you how to choose a developer when buying an apartment and what parameters to check.
Subcontracting Exchange - database of potential large customers
One of the options for finding a good order is to contact large companies that have won a tender for a large-scale project and need help from subcontractors. The only problem is that not all companies know who exactly to contact, which company may potentially need help.
The Vse Pryad online service simplifies the task of searching for a subcontract by combining information about the winners of major competitions and tenders on the resource. Now construction companies do not have to collect disparate information from different sources; it has already been collected, prepared and published on the stock exchange.
Essentially, the service offers a constantly updated database of potential clients for small and medium-sized construction organizations willing to act as a subcontractor. For example, a company that has won a tender for the construction of a city stadium may need work on installing windows, arranging floors, landscaping the external area, etc., so it can offer its services.
The advantages of the subcontracting exchange are obvious:
- access to up-to-date information about companies working on major projects;
- offering services directly to the contractor;
- search for information by region (with regional reference);
- possibility of posting advertisements about services, etc.
A new section with advertisements has appeared on the site; information from construction companies and stores is published here, allowing you to find a contractor for certain works, or a supplier of goods.
Requirements for the developer according to 214-FZ
To sell apartments in housing under construction, the developer must obtain a special permit from the Ministry of Construction and Housing and Communal Services. The Ministry of Construction checks:
What is the legal form of the development company?
Permission is issued only to business companies: limited liability companies (LLC) or joint stock companies (JSC). The Ministry will refuse to apply to non-profit organizations or individual entrepreneurs.
Who holds leadership positions in the company
The managers of the developer and the chief accountant cannot be persons who:
- have an outstanding or unexpunged conviction for economic crimes or crimes against government,
- solely owned a company that went bankrupt less than five years ago,
- owned at least 5% of the shares of a company that went bankrupt less than three years ago,
- have been disqualified and have no right to engage in such activities.
Is there a project declaration
To confirm that there are no violations in the project, the developer must attach a special expert opinion to the declaration.
How much money does the developer have?
The company must have its own funds in an amount greater than 10% of the project cost of construction. Such funds include not only money in accounts, but also real estate, land plots or accounts receivable.
Also, before obtaining permission, the developer must open an account with an authorized bank. He must deposit 10% of the project cost of construction into the account. If he doesn't have that kind of money, he can take out a loan. The loan amount must be more than 40% of the project cost.
The Ministry of Construction will not issue a permit if the company:
- has not yet paid for previously taken credits, advances or borrowings,
- issues any securities other than shares,
- pledged her property to secure obligations,
- participates in bankruptcy proceedings,
- suspended activities by court decision,
- did not fulfill the contract or agreement after winning the procurement and ended up in the Register of Unfair Suppliers (RNP),
- failed to pay taxes, fees or other government payments on time.
What experience does the developer have?
The developer must participate in the construction of apartment buildings for at least three years. During this time, he must build at least 5,000 m2 of housing. The Ministry takes into account facilities built by related organizations, as well as projects in which the developer was the technical customer or general contractor.
Who owns the development land?
The developer must own the building site or lease or sublease it.
Checklist for checking the reliability of the developer
There are hundreds of construction companies operating in the shared construction market, which advertise their projects in every way.
Advertising is just an opportunity to attract new investors, but it does not guarantee that this is a reliable developer. Citizens should primarily focus not on the advertising promises of developers, but on the reputation, experience and financial stability of the developer. These factors largely determine whether the shareholder will receive his housing on time and in accordance with the quality characteristics specified in the contract. In 2021, changes to Federal Law 214 came into force, affecting, in particular, the disclosure of information by the developer. Today, a construction company is required to publish detailed information about its company and each project under construction on its website. Therefore, checking the reliability of the developer should begin with studying the official website of the developer.
You need to look at the “About” section, from which you can get information about already implemented projects and the company’s achievements, find out how many years it has been operating in the construction market. Firms that have nothing to hide also publish the composition of the organization’s board of directors. It is worth studying the list of key partners of the developer, if among them there are large investors (banks, investment funds) - this is a definite plus in favor of the developer, since these organizations do not cooperate with unreliable companies. Another positive point is the developer’s participation in investment projects organized by local or federal authorities. In this case, the risk of construction delays is significantly reduced.
Checking developer documents for a project under construction
Project declaration. This is an extremely important document that contains all the necessary information about the developer and the object being built. From it you can find out information about the founders and about the projects completed by the construction company over the past three years (an empty list indicates the inexperience of the company). Here you can also find information about whose funds were raised to finance the project, and find out which company is the general contractor. An important part of the declaration is information about the object itself: the technologies used and the cost of construction, the planned time frame for putting the house into operation, a detailed description of the new building.
Permission to construct the facility. This document is issued by the government agency responsible for construction in a particular region. In the absence of permission, the developer has no right to use citizens' funds to finance construction. It is necessary to pay attention to the validity period of the document and compare them with the periods specified in the declaration and the DDU.
Legal documents. The developer can own the land freely or lease the site. In the first case, he must have a certificate of ownership, in the second - a lease agreement that has passed state registration. It is necessary to check the fact of registration of the contract and compare its validity period with the period of the construction permit. All the necessary information about the site can be gleaned from the Unified State Register of Real Estate.
Expert opinion on the object. This document lists all the materials from which the house will be built. In it you can also find a layout of apartments, see floor plans of the entire building and find out how and where communications will be located.
When checking documents before purchasing an apartment, you need to compare information received from official sources, analyze and verify all data. For example, it is necessary to check the compliance of the information specified in the construction permit and declaration with the data posted on the developer’s website. You need to make sure that the same site appears everywhere, compare the dates and validity periods of the documents.
Checking the pace of construction
Compliance with the project construction deadlines is a guarantee that the shareholder will be able to receive an apartment in the new building on time. In accordance with building codes, under normal operating conditions, a house should grow by no less than two floors per month using monolithic technology, and no less than four floors when using panel construction.
Previously, it was possible to see the progress of construction only by directly visiting the site, although even today this will not be superfluous. In light of recent changes in the law, the developer is required to publish photographs of the current state of construction on its website. Some companies also practice video broadcasting of construction progress online.
Our cases
- Recovered: RUB 21,394,502.
How to get 21 million rubles. upon termination of a contract for an object worth 9 million. Read more - Recovered: RUB 14,500,000.
As a developer, Mayak paid 14.5 million rubles. for the war he started Read more
- Inclusion in the register of transfer of housing
How we overcame the bankruptcy trustee and joined the register Read more
- Recovered: RUB 2,260,000.
How we squeezed 2,260,000 rubles out of crooked window profiles from the developer LSR Object-M Read more
- Recovered: RUB 1,634,800.
We collected 1.6 million rubles (206%) for deficiencies in the decoration of the apartment according to the DDU from FSK Leader More details
- Investment is not recommended
How we saved the client RUB 14,665,500. investment Read more
- Recovered: RUB 898,735.
The developer "Lotan" paid the shareholder 274% of the market cost of eliminating the defects Read more
- Recovered: RUB 2,415,243.
How a shareholder received 2.4 million rubles. from “StartSK” on the agreement to terminate the DDU Read more
- Recovered: RUB 1,180,500.
The court recovered 537% of the cost of eliminating deficiencies from PIK-Region More details
- Recovered: RUB 2,200,000.
Collection of 2,200,000 rubles from BM-Stroy for poor quality repairs in an apartment Read more
- Investment is not recommended
How an analysis of a counterparty helped save RUB 3,385,679. More details
- Recovered: RUB 641,094.
We collected more than 215% of the cost of eliminating defects from the Lotan developer More details
All cases
Why do you need to check a construction company?
Why check the developer at all and look for information about him in the list of developers under Federal Law 214? The answer is simple - to reduce risks.
It is necessary to verify the construction company before concluding a share participation agreement.
For example, a developer is required to submit reports to Mosstroyinvest (the controlling body for developers operating in Moscow). Based on the reporting, information appears on the number of completed objects and the fulfillment of obligations by construction companies to the participants of the DDU.
The developer bears a number of obligations to the participants who have entered into a shared construction agreement with it. For example, the developer is obliged:
- Deliver the object within the period specified in the contract;
- Hand over the object in accordance with the characteristics specified in the DDU;
- Deliver the construction project without defects and deficiencies, or eliminate identified deficiencies or compensate for the costs associated with them.
A conscientious developer is interested in preventing violations, because they additionally entail significant costs. If the company cannot put the house into operation, the object does not comply with building codes and the commission simply does not accept it), most likely the developer will not deliver the apartments to the participants on time. If the deadlines are violated, the developer must pay a penalty. When the size of the claims exceeds the financial capabilities of the construction company, bankruptcy occurs.
This is why it is important to take your choice of construction company seriously. The developer must have not only a positive reputation, but also a sufficient supply of financial assets to cover its obligations.
How to determine the financial stability of a company
The fact that the developer is doing well in terms of financing is indicated by its sales strategy. If a company builds a property with its own funds without attracting private investors, and starts selling housing when the property is more than 50% completed, then it is financially independent of the shareholders’ money.
A financially stable company has an adequate pricing policy. Very low prices for apartments most likely indicate a lack of funds on the part of the developer. It’s a good sign if the developer’s shares are listed on the stock exchange, which means it has secured the trust of stock investors. It would also be a good idea to check the company’s ratings published on various real estate portals.
Does the ideal developer exist?
Every construction company tries to get as many clients as possible, because competition in the real estate market is very high. What can interest a potential real estate buyer?
Developers are trying to set competitive prices for each segment of real estate and select promising locations for construction. But, as practice shows, more than half of the DDU participants were guided by reviews about the company when choosing a developer.
Many of our clients, when coming for legal advice, ask the question: is it possible to work with this developer or not, and what are the guarantees that the developer will deliver the house on time.
There are no ideal developers. Almost everyone violates the terms of the agreement for participation in shared construction to a greater or lesser extent. Missed deadlines for handing over a house, defects in a delivered property are standard problems that every participant in the preschool building should potentially be prepared for.
But there are much more serious problems. For example, when a developer simultaneously builds several objects that are recognized as problematic. Or, based on the results of an audit of financial (accounting) statements, financial problems were identified for a construction company.
The worst thing is when a participant enters into an agreement with a company that is not at all on the list of developers working under Federal Law 214. These are obvious scammers who do not have the right to raise funds for the construction of a facility under the DDU.
