Agreement on participation in shared construction sample form

In the past, the purchaser of a property under construction relied on the integrity of the contractor, which meant that he had virtually no legal protection.

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Since 2004, the relationship between the developer and the client has received a legislative basis; thanks to this regulation, the number of frauds has decreased, and the buyer has more chances and guarantees for the integrity of the transaction.

Share participation agreement - what is it?

DDU is an abbreviation for a construction participation agreement, which means investing money in the construction of a house; it is concluded in writing between the developer and the investor.

Important: the agreement must be registered by the state, only after which it is considered concluded.

He is the guarantor of the investor’s participation in shared construction, as well as the protection of his rights. In general, the essence of the agreement is the construction of a building at the expense of investors, who, after its delivery, have the right to living space.

When signing this agreement, all legal norms are observed, since it is drawn up in accordance with the legislative framework.

The investment process itself occurs only after signing the document and registering with government agencies.

The legislative framework

The equity participation agreement is regulated by several regulations:

• Federal Law 214 plays a key role among such legislative documents;
• You can also highlight Federal Laws 215, 122, 2300-1 and the Town Planning Code of the Russian Federation;
• In addition, the developer must have a document for construction permission from municipal authorities.

Important: the developer is obliged to publish project documentation in official publications.

The developer is also required to maintain constant reports on the expenditure of funds and the status of receivables and payables.

In addition, the developer insures all funds received from investors before use in accordance with the requirements of Federal Law 214.

Advantages and disadvantages of DDU

Among the advantages it is possible to highlight:

• Strict wording of the contract - a clear description of the obligations of the parties, detailed information about the object, etc.;
• Mandatory state registration, blocking the possibility of double sales;
• Financial responsibility specified in the contract;
• Quality guarantee in accordance with Federal Law-214;
• The benefit of purchasing housing at the construction stage, which provides savings of 30 - 40%;
• The right to choose the contribution of funds in parts or the full amount, the size of the area and its layout.

Despite the fact that this scheme is the most reliable, it also has disadvantages:

• The document does not protect the investor from the consequences in case of bankruptcy of the developer during shared construction;
• The developer has the right to unilaterally regulate project documentation;
• In this case, it is realistic to receive a tax deduction 3 years after the complete transfer of the apartment to the shareholder.

Pitfalls and risks

When investing in construction, even if there is a guarantee in the form of a contract, the investor takes a fair amount of risk, as the following may happen:

• Freezing of construction, and according to Federal Law 214, investor, third-priority creditor;
• Encumbrance of housing as a result of the developer’s failure to fulfill obligations to the bank;
• Double sale that occurred before registration of the DDU;
• Increase in price based on the results of construction and commissioning of housing;
• Postponement of the delivery date for valid reasons, which relieves the developer from paying compensation.

Essential terms of the agreement

From the first lines of the contract it should be clear between whom it was concluded. Therefore, it is necessary to describe in as much detail as possible who acts as the “developer”.

The following information is indicated:

• full official name of the developer company;
• date and place of its registration;
• registration certificate;
• certificate of inclusion of the company in the Unified State Register of Legal Entities.

An agreement is concluded only with the company whose name appears in the documents permitting construction, the title document for the land and the project declaration.

When concluding an agreement on shared participation in construction with an intermediary, a document must be attached confirming the legality of the right to sell the object.

According to the charter, the general director acts on behalf of the organization , which means that the contract must be signed by him.

If a document is endorsed by another representative of the company, this means that he is acting under a power of attorney. This option may create certain difficulties in the event of possible litigation.

The legitimacy of the DDU is ensured by the exact characteristics of the property, including the cadastral number of the plot, the construction address of the property and the number of the apartment being purchased.

a clause on financial guarantees has been introduced as mandatory , through which the fulfillment of obligations by the developer is ensured.

A shared construction agreement always contains information about the area of ​​the apartment . However, many developers add a clause to the DDU, according to which, if there is a surplus of square meters, the shareholder is obliged to pay an additional amount, or the developer will pay part of the money for the missing area.

Although the law does not prohibit making additions to the contract, both of the above options violate the rights of a participant in shared construction.

As the Federal Law “On the Protection of Consumer Rights” provides, if the buyer receives an apartment of a smaller area, the developer is obliged to reconsider the price and return the excess.

If the area of ​​the apartment turns out to be larger, then the shareholder is not obliged to pay anything extra, since it is the developer’s fault.

Often, the developer tries to include in the contract a clause according to which he has the right to change the design documentation of the house, including the number of floors and layout of the apartment, without agreement with the shareholder.

The Law “On the Protection of Consumer Rights” and the provisions of Federal Law No. 214 consider such an addition illegal , since the buyer must have the most detailed information about the product being purchased.

Basis and clauses of the share participation agreement

This document must contain the following points:

• An object that is being built at the expense of shareholders and is given into their possession after construction, and there must be an accurate description indicating all the parameters, including the presence or absence of finishing work;
• The construction period with a mandatory indication of the time frame - the exact end date;
• The cost of the contract is a specific amount that the shareholder is obliged to pay within the agreed time frame and in a certain way for the housing under construction;
• The warranty period, which according to law, must be at least 5 years.

Important: if at least one clause is excluded from the DDU, you should not sign it.

Parties and Participants

To sign the agreement and further registration there must be two parties:

1. Developer is a construction company that has assumed obligations for the construction of a facility, and at the same time it must have:

• Permits for construction;
• Evidence of ownership of the land used for construction.

1. Shareholder - who undertakes to make timely payments and subsequently use the received housing exclusively for living.

Sample of filling out the DDU.

Rights and obligations of the parties

The developer undertakes:

• Transfer the apartment to the investor in accordance with all the terms of the agreement and provide him with the opportunity to register ownership of the property;
• It is the developer who acts as a guarantor of the object’s compliance with all the requirements of the shareholder and provides a guarantee of no less than for a period of 5 years.

The shareholder is obliged:

• Timely finance construction within the limits of your share, fully pay for property registration and sealing of metering devices;
• Be present at all required events at the required time;
• If a defect is discovered within 3 years, report it to the developer;
• Within a week, sign the act if there are no complaints;
• When redeveloping an apartment, the shareholder must agree with the developer.

Important: all of the rights and obligations of the shareholder, he has the right to transfer, assign, etc.

Responsibility

• The parties are responsible to each other for failure to comply with their rights and obligations in connection with which they must pay for the damage caused;
• If the failure of the agreement occurred due to the fault of a third party, liability is removed;
• The parties may, by mutual consent, terminate the contract at any time and be equal in costs;
• Both parties have the right to terminate the contract for failure to agree on payment, delivery of work and failure to sign the acceptance certificate on an unreasonable basis.

What innovations have occurred in the implementation of shared construction you can see here:

Limits of liability of the parties to the contract

When concluding an agreement for shared participation in construction, it is important to clearly know the limits of liability of the parties:

1. Sometimes the developer, taking advantage of the shareholder’s ignorance, inserts a clause into the contract according to which his responsibility for failure to meet the specified deadlines occurs only if he is at fault. This is a direct violation of Federal Law No. 214.
2. Expansion of the list of force majeure circumstances . According to the law, these include natural disasters, wars, and terrorist acts. The developer can add to the list the adoption of new laws by the government, low winter temperatures, etc.
3. The developer may try to minimize his own liability when commissioning the facility due to the condition that permission to put the facility into operation means its compliance with the contract. That is, the very possibility of claims from the shareholder is excluded. You should know that these are completely different concepts and any defects in the apartment must be eliminated by the developer on the basis of Federal Law No. 214, or the shareholder must receive monetary compensation.
4. A very significant point in the contract is the period when the shareholder’s obligations to the developer are considered fulfilled . A construction organization most often defines this period as the moment the money arrives in its account. However, the obligations of the participant in shared construction are considered fulfilled from the moment the money is deposited in the bank, and he is not responsible for further actions of banking organizations.

Preparation of contract

Important: the contract form is standard for all participants, and it is almost impossible to make individual changes.

In the body of the contract, in addition to the main points, which include:

• Detailed description of the object;
• Contract price;
• Term of transfer of the object;
• Guarantees from the developer.

Sample agreement for shared participation in construction.

The following items should also be present:

• Information on ways to ensure the fulfillment of obligations by the developer;
• The procedure for adjusting the price, it is better that it remains unchanged, but if the area increases, it is worth specifying the procedure for contributing additional funds;
• Indicate the maximum allowable quantity of delivery of the object to the state commission;
• Deadlines for eliminating deficiencies specified by the equity holder;
• Data on the form of management of the future home;
• Information regarding the period, price and procedure for registering property ownership.

In addition, in the document:

• A reference to the legislative acts that guided the drafters must be indicated;
• All data and details of the developer and shareholder;
• Signatures of the parties and date of conclusion of the agreement;
• Registration with government agencies.

Settlements by agreement

According to the rules, the deposit of funds occurs before the registration of the DDU; a lot of time can pass between the deposit of money and registration, up to several months, since the developer submits to the government authorities an already prepared package of several hundred contracts.

Important: it is at this moment that one of the risk points for the shareholder can occur - a double sale of property, in this case the applicant for housing remains the shareholder with whom the agreement was originally signed, and the second, through the court, can return his funds and interest for the use of funds .

How to sell an apartment in shared ownership - read the instructions here.

Meanwhile, according to the law, the developer does not have the right to demand money in advance before registering the DDU; for such fundraising, he can be fined up to 1 million rubles for each agreement separately.

In order to get money in advance, developers also resort to such schemes as bill settlement, PDDU, loan agreements, etc. You can read how the penalty for DDU is calculated in this article.

DDU insurance

To reduce the number of fraud and deception on the part of the developer, the Government has introduced new rules since 2014.

Important: now all shareholders’ agreements must be insured.

According to the new rules, this procedure can be done:

• In an insurance organization, which must be large-scale with a large staff, have a license for at least 5 years and working capital of 400 million rubles;
• In a bank, which must have a license to issue guarantees, an authorized capital of 200 million rubles, at least 5 years of activity in this sector, working capital of 1 billion rubles.

In this case, only contracts with insurance are subject to registration.

The insurance document is issued for 2 years, which is significantly longer than the period for transferring ownership of the property to the shareholder.

The cost of such a service is fixed and amounts to 1% of the transaction amount.

However, not all risks are insured, for example: insurance does not cover:

• Obtaining a construction permit illegally;
• Additional deadlines for delivery of the object beyond the insurance period;
• Disputes in court with third parties regarding property rights;
• Violations of the terms of the contract and the legislative framework leading to the invalidity of the document;
• Decision of government agencies to terminate or suspend construction.

When banks undertake obligations under insurance guarantees, in addition to interest, they also take the developer’s valuable property as collateral as payment.

Their guarantees last for another 2 years after the transfer of housing.

Shared construction scheme. Photo: sat-dev.ru

Construction and delivery dates

The terms specified in the agreement on shared participation in the construction of an apartment building require special attention:

1. Duration of the DDU - its validity should end only after both parties have fulfilled their obligations.
2. The specific date of receipt by the shareholder of the property under the deed - quite often the developer indicates the annual quarter when the shareholder should receive the key to the apartment. This is completely legal, but extremely inconvenient for a participant in shared construction.

If the company does not fulfill its obligations, then the shareholder, on the basis of Federal Law No. 214, can terminate the contract and file a lawsuit after two months from the end of the appointed period.

This can be done after two months have passed after the end of the quarter in which the house was supposed to be rented out according to the terms of the contract.

Warranty period - according to the law, the developer is responsible for the apartment for five years , and for engineering and technological equipment - three years . Any reduction in these periods is illegal.

Termination of the agreement

Termination of the contract is available either at the request of one of the parties or by mutual agreement.

Moreover, if the developer is the initiator due to the difficult situation of the company, he is obliged to return all funds to the shareholders along with moral compensation.

He also has the right to terminate the contract if the clauses of the DDU are violated, for example, lack of timely payment.

In this case, termination of the agreement can occur only after a written application to the shareholder and 20 days after the expiration of this application.

The shareholder also has the right to terminate the contract under difficult financial circumstances or due to the developer’s failure to comply with the clauses of the contract, for example, failure to deliver the project on time.

In this case, the shareholder is obliged to contact the developer in writing and wait for a response within 10 days; if the opposite side refuses to satisfy the requirements, you can file a lawsuit with reasonable explanations for your decision.

Thus, the contract can be terminated:

• By mutual agreement;
• Unilaterally;
• By court decision.

Grounds and procedure for termination of the contract

Termination of the agreement is possible if one of the parties fails to fulfill the obligations. Filing a claim in court is possible after two months after the period specified in the contract.

In this case, you should pay attention to the amount of the penalty paid by the shareholder if the termination of the share participation agreement occurred on his initiative.

Its value can vary from 1 to 15% of the total cost of the object . The law does not provide for other punishments for the shareholder.

If the DDU is terminated due to the fault of the developer (delay in fulfilling obligations, construction of low-quality housing, etc.), then no penalties can be applied to the shareholder.

If the shared construction agreement lacks at least one of the clauses required by law, it is not considered concluded. The same applies to the lack of registration of preschool educational institutions in Rosreestr.

Document registration

Important; all contracts, without exception, starting from 2014 must be subject to mandatory state registration with Rosreestr.

This registration can be carried out by any party, but is usually carried out by the developer.

This procedure is carried out by the Rosreestr branch at the location of the property’s address, and the following documents must be submitted:

• Permission to build a house;
• Construction plan;
• Declaration;
• Constituent documents of the organization;
• Insurance contract;
• Application for registration.

At the time of submitting documents, an employee of the institution gives a receipt with a complete list of documents received and the date of receipt.

The registration process takes 10 working days. Any party to the contract with a receipt can come forward for registration.

Contents of the shared construction agreement

To participate in shared construction, there is no need to know about the terms and definitions of the shared construction agreement, the availability of a construction permit, the legality of the allocation of a land plot and other circumstances relevant to the conclusion of the contract. These circumstances are so significant that the fact of their existence is not questioned. Their absence is a reason for the application of completely different norms of current legislation.

The most important provisions of the DDU are:

• data of the parties;
• price and payment procedure;
• technical characteristics of the subject of the contract;
• rights and obligations of the parties;
• terms, stages, forms of participation;
• ways to resolve conflict situations;
• reasons and procedure for judicial clarification of relations.

Each developer, based on his own experience and established practice, formulates a variant of an acceptable DDU. What matters is the city, the region of construction, regional legislation, and the specifics of the regulatory documentation of competent organizations in the field of ecology, sanitation, technical and fire safety.

A special feature of a shared construction agreement is the requirement for its state registration. It is considered that the contract is concluded only from the moment of its state registration.

The agreement establishes the deadline for the delivery of the residential building and the timing of the transfer of residential premises to the shareholders. The procedure for transferring apartments is important. The act of acceptance and transfer of residential premises “transforms” the participation of the shareholder into the real right of ownership of real estate in the new building.

At its core, a DDU agreement is a method of long-term (extended over time) payment for the opportunity to obtain ownership of real estate.

At the same time, it is essential for the vast majority of shareholders:

• a citizen receives ownership of real estate;
• the obligation to pay remains for quite a long time;
• the property is encumbered by the obligation of the owner.

In some cases, this does not make any difference to the provisions of the shared construction agreement, but if there are delays in payment and violation of its obligations, the shareholder may risk being left with nothing.

For many reasons, the developer includes in the text of the agreement a provision on an advance payment, on payments after state registration of the agreement and separately separates the payments of the shareholder from the payments of credit institutions issuing a loan to the shareholder.

Law on shared construction

The process of shared construction is fully regulated by Federal Law FZ-214 “On participation in the construction of apartment buildings...”. From a legal point of view, shared construction is the construction of urban housing using the money of individuals and legal entities (and not the developer himself). Therefore, a citizen who buys an apartment during the construction stage does not actually buy square meters, but the right to claim the apartment upon completion of construction and commissioning of the house.

The equity participation agreement in Federal Law No. 214 is covered by a separate article No. 4, consisting of 11 points and regulating some issues relating to the legal relations between the developer and the shareholder. For example, paragraph 1 states that the developer is obliged to build an apartment building within a certain time frame and transfer the housing to the buyer after putting the house into operation. The shareholder must fulfill his obligations to pay money for the apartment on time and in the established amount, and then accept the apartment. Paragraph 3 of Article 4 highlights a very important point: DDU must be registered with the Rosreestr authorities.

And paragraph 4 states that the agreement must contain a description of the subject of the agreement, the timing of the transfer of housing to the shareholder, the cost of the DDU, as well as the warranty period for the constructed object.

Issues of regulating the process of shared construction and the operation of DDU are discussed in several more articles of this law:

1. Article 5 of Federal Law No. 214 regulates all issues related to the cost of the transaction. It states that the price of the concluded contract cannot change in the future, regardless of current circumstances. Another article regulates the cost, payment procedure and liability for violation of obligations.
2. Article No. 6 strictly obliges the construction company to indicate specific deadlines for the transfer of housing to the buyer and not violate these deadlines.
3. Article No. 8 describes the algorithm for transferring housing to the buyer.
4. Article No. 7 regulates issues related to the fulfillment of warranty obligations by the developer. If the quality of the construction does not meet state standards, the money will have to be returned to the shareholder. Even after the delivery of a shared construction project, the developer may still have responsibilities for maintaining the completed house until a certain period.
5. Article No. 9 discusses issues related to the termination of the DDU.
6. Article No. 11 addresses the issues of assignment of rights if you decide to sell an unfinished apartment (this often occurs when investing in projects in order to receive a share of the profit from the resale of apartments during the construction stage).