How to check and choose a developer? What should you pay attention to?

The current situation is such that 10-20% of developers who are constructing houses - direct participants in the Russian construction complex - are involved in various stages of operational work, development, and other operational and investigative actions.

Not all of these checks will lead to irreversible problems for developers, but if the authorities are checking, then they have certain reasons for doing so. It is no coincidence that statistics show that more than 55% of bankrupt companies in the construction industry drew the attention of law enforcement agencies during the six months preceding bankruptcy.

Later in the material we will describe in detail, point by point, how to actually effectively check a developer. Simple, effective verification algorithms are used by both real estate agencies and professional firms. By adhering to a certain “checklist”, there is a chance that you will be able to check the developer yourself. Let's share the professional secrets of the process - learn the subtleties, choose the most convenient method for the situation. The main thing is to exclude the possibility of your own participation in risk groups of careless shareholders!

Initially, you need to decide on the basic parameters for checking the reliability of the developer. Understand the main issues regarding the economic activities of the developer. It is easy for lawyers and practicing economists to compile a list of significant criteria. For the rest, we suggest using a practical list of the most important points. The list is not exhaustive, however, the answers to its questions create a clear picture of the legality and integrity of the developer’s work.

Affiliation. Interdependencies. Company manuals
Trials. Number of legal proceedings and nature of claims filed
Failure of the developer to comply with the Federal Law
Failure to meet deadlines and obligations
Financial characteristics of the developer's activities
Prerequisites for bankruptcy, early risk assessment.
Insurance, ensuring the risks of building a house, residential complex
“Weaknesses” of the project - possible negative prospects for the construction of a house or residential complex
Relevance control, real customer reviews
Reliability, safety, specificity, features of the construction location
Dynamics of work, assessment and comparison of the speed and volume of construction of a residential complex

The final general list of the most important questions on the “check list” during the reliability check turned out to be rather large. We will look for answers to them together with you. For an uninitiated person, the task is not easy.

Many developers make certain efforts to hide data, complicating their search on the Internet, limiting, making it difficult and closing access to information.

Why is it not easy to check the developer yourself?

There is an answer. Of course, many people can now “surf” and know how to use search engines quite well. The problem is that a lot of information is closed. It is stored in the public domain without indexing by search engines. That is, the search robot does not display these pages at the user’s request. It turns out that if you do not know the exact addresses of such pages and resources, it is almost impossible to find the necessary information and material.

Specialized paid search and storage systems could make the work easier. Such resources include: “My Business”, “Bureau”, Kontur, “Focus”, Tax “Dossier” and a number of others. But paying for expensive access to such resources for a one-time use, and even learning to use them, is not a very advisable idea.

Checking the management of the developer company - stage 1

This is a check not only of its connections, but also to obtain more information about the managers, founders, and owners representing the company. Sometimes, only information about managers, their connections, financial and economic activities, and the history of work performed become the determining factor when deciding to purchase an apartment from a given company.

The general methodology for finding this information will be similar to checking any legal entity, and the buyer will have to face about the same difficulties in obtaining basic information.

Risks when buying an apartment

Purchasing an apartment involves certain risks. Even if they seem minimal, you still have to check them carefully. It is worth paying special attention to such a parameter as the degree of readiness of the house.

It often happens that a company with a good image has all the documentation for the home you are going to purchase, but the house is not actually completed. In such cases, it is extremely necessary to find out all the nuances of building a house by contacting the developer.

It happens that for one reason or another he still will not give you the necessary information, then in this case it is worth coming directly to the site and talking with the workers.

It is important to register on the forum (in most cases, forums are dedicated to new buildings). A variety of issues will be discussed there, and perhaps one that interests you

Communication on the forum with shareholders gives you the opportunity to find out those eventual problems that are very often associated with new buildings.

When purchasing housing, you need to focus on the presence of such a parameter as accreditation of a new building with a bank. There are situations when the project is not credited at all. In this case, the client must understand that the developer has certain problems. The best option is when the project receives a loan not from one bank, but the property itself is financed by several banks.

The reputation of the developer is also very important. Before dealing with a particular developer, you should make sure that there is more than one house built by him.

Checking the condition and financial stability of the company – stage 2

This is the most difficult part of checking the reliability of the developer. The developer publishes a certain amount of data for analysis and drawing up an idea of financial stability directly in the project declaration for the construction of the facility.

But, due to the fact that the information in the declarations is incomplete and generalized, it is extremely difficult to draw any intelligible conclusion based on them.

As a rule, additional sources and databases with limited access, which are described above, provide more information. About a specific residential complex or, conversely, about the financial performance of the developer company. But when analyzing this data, it is necessary to take into account whether the developer has other types of economic activities besides the construction of this facility. Depending on the attitude of management and the strategy for its development, then it is already possible to make at least some assumptions and conclusions.

How to check the reliability of the developer

Even a large developer can have problems with debts to the budget, the status of land and construction deadlines. These troubles only delay the delivery time of the object, but do not indicate the presence of serious problems with reliability. In extreme cases, you will receive your home in a few years, after changing the investor company. By law, a new developer who has bought your site is obliged to distribute apartments on the old terms.

A truly serious signal indicating obvious problems with the reliability of the counterparty is the refusal to provide the client with the following set of documents:

company registration certificate - no legal businessman can operate without it;
a set of constituent documents, on the basis of which you can check the legal form of the company and assess the degree of responsibility of its founders to clients;
tax registration certificate - in the absence of a document, there is no further need to check the development company, these are outright scammers;
an extract from Rosreestr about the ownership of the construction site - a reliable contractor has everything in order with the land, so he has nothing to hide;
accounting reports for 3 years and the conclusion of an auditor checking last year’s balance sheet - these papers will be useful to professionals who can be hired to check the property from all sides.

The developer cannot refuse the buyer to receive these documents; Article 214-FZ insists on this. If he starts fussing, talking about the delayed submission of documents to Rosreestr, the confidentiality of constituent and accounting documents, problems with obtaining a OGRN certificate - look for a new counterparty. A construction company, whose reliability there is no doubt, will have not only the entire set of documents, but also notarized extracts from Rosreestr and other databases.

Check the developer for bankruptcy - stage 3

An equally important factor, the presence of which must be present when checking the reliability of the developer, is the presence of prerequisites (even hypothetical at some stage) for the bankruptcy of the company.

Unfortunately, neither the developer nor any authorized organization has any obligation to collect or provide such data under the legislation of the Russian Federation.

From a legal point of view, given the presumption of innocence, this is quite justified. After all, the fact that any of the business entities, counterparties, or the same shareholder filed a claim to declare the developer bankrupt before the court’s verdict, in fact, is not a basis for premature assumptions and speculation.

However, some buyers or investors may find this information somewhat alarming and can be quite useful.

However, even if you have access to paid resources, you will have to work hard to find such data. Not all resources update them in a timely manner.

In each of these systems, it is allowed to select only individual indicators that are well represented in it.

And it is far from a fact that this data is available at all. A large number of developers in this regard, thank God, are positive. But there are also exceptions.

How not to check the developer when buying a new building

In addition to the documentary part, there are a number of subjective indicators of a developer’s success that should absolutely not be relied upon. It could be:

Advertising - the status of a large developer with a large volume of sales does not provide any guarantee that these same sales are not at a loss. There are a huge number of examples on the market when developers, leading in terms of transaction volumes, actually ended up bankrupt.
The presence of completed projects - the crisis in the country provoked a decrease in investment in development. If earlier this market segment was actively developing, now stagnation has set in in most regions. It may well turn out that the chosen developer, having a good reputation in the past, is now working at a loss.
Authorized capital - the amount in the account of the developer when registering legal status does not mean absolutely anything and can be spent at any time.
Cleanliness of documents - the buyer has the right to request a certain list of documents, but in most cases cannot objectively interpret the information that is reflected in them. It is also necessary to take into account that developers are careful in giving access to papers. Most often, the buyer can find out from them that the company has the status of a legal entity, but nothing more.
Rating - the Russian housing market system does not imply the presence of any objective ratings. In fact, they are mythical in nature and do not carry objective information. Some of these ratings are compiled by SEO specialists based on the most popular Internet queries, and some are compiled by users themselves, who, however, do not have all the information about the company.
Reviews - the presence of a lot of positive reviews does not guarantee their veracity. In Internet marketing today, there is a whole trend where, with the help of fake accounts from non-existent accounts, a development company receives advantages on almost all well-known portals in the country. In addition, on the personal pages of many sites, pre-moderation of comments is enabled, and all the negativity simply does not get into wide view.

Check the developer’s documents for compliance with the Federal Law - stage 4

Also indicative is the fact of comprehensive, partial compliance of the company’s policies and actions with the requirements of Federal legislation regarding insurance, updating and publication of open data about the facility under construction. Some developers, for various reasons, do not always fully comply with even these seemingly fundamental and quite important postulates.

Such an irresponsible approach can also be a “bell” as loud as the company really respects the rights of the buyer of their apartments.

The list of such mandatory published data changes from time to time, in accordance with changes in the legislative acts of the Russian Federation, but any customer that respects its clients must comply with it.

We check compliance of construction with the declared pace - stage 5

Finally, the construction itself. According to Federal Law 214, raising funds from equity holders can begin at very early stages. How can the buyer figure out whether the pace of construction corresponds to the schedule and whether the construction will meet the stated deadlines or whether the construction will be delayed and, God forbid, even suspended?

A very ambiguous question, the answer to which can only be obtained by having a complete picture of what is happening with the financing of the facility and what is happening inside the company itself. Since such insight is practically impossible, it is necessary to analyze only the available

Here it is no longer possible to do without a specialist who thoroughly knows the specifics of production during the construction of housing.

During the construction of a facility, there is a complex coordination of the timing of construction of structures, installation of equipment, finishing, connection and distribution of utility networks and communications, landscaping, commissioning work, and each type of work “pulls” its own individual financial and time indicators, the combination of which is taken into account in the analysis and checking compliance with the pace of work directly on site.

What is checked by the developer

There are several ways to check the developer when buying an apartment in shared construction.

Reputation in the market

Any commercial organization has an established business reputation in its market segment. Conscientious businessmen consider it an important asset and strive to make honest money and maintain a positive image of their business.

In our time of information accessibility, you can check the reputation and information about the developer in several ways:

On specialized online forums, study reviews of equity holders about this developer

At the same time, attention should be paid not to the emotions in them, but to specific facts of violation of legislation and contractual obligations.

If this developer has completed houses, then ask its residents about any violations of the terms of their residential building permit. On the Internet, in the database of decisions of the Arbitration Court, check for open cases or decisions made with the participation of the developer as a defendant. Or bankruptcy proceedings have been initiated against him. On the official website of the Federal Bailiff Service, check the availability of enforcement proceedings against the construction organization as a debtor. Get an extract from the Unified State Register of Legal Entities on the official website of the tax office

This information is provided free of charge about all legal entities. From it you can find out about the date of registration of the legal entity, the status of liquidation, reorganization or exclusion from the register of legal entities.

Project documentation

Having studied the reputation of the construction organization, you can begin to analyze the project documentation. This will allow us to understand the competence of the company’s management, its solvency, and the possibility of completing construction.

All project documentation must be posted on the developer’s website and provided to interested parties upon request at his offices.

Permission

The developer is required to obtain a construction permit for this particular object, which is issued before the start of construction

In the permit you must pay attention to the following information:

expiration date of the permit;
presence of the date of issue, signature of an official and seal of the authorized local government body;
name of the legal entity to which the permit was issued. It must be the same as the name of the developer.

Project declaration

The declaration must be posted on the website of the construction organization before the conclusion of the first equity participation agreement. This is the most interesting document for the future shareholder. It contains all the information about the house under construction:

type of building, commercial name of the complex, by whom and when engineering surveys were carried out, various examinations;
permission to build an apartment building;
about the developer’s right to a plot of land under the house;
long-term plans for landscaping;
location of the construction site, characteristics of the building, total area, number of floors, material;
deadlines for completing construction and obtaining permission to put into operation;
on securing the obligations of the developer and on the bank for opening escrow accounts when participating in shared construction;
agreements under which investors’ funds are raised (except for DDU).

State examination

The developer is obliged to obtain an expert opinion on the compliance of the design documentation before starting construction. Such examinations are carried out by supervisory and control structures of state authorities in the field of construction. The results of the examination are also posted on the construction company’s website.

Size matters - nuance

In this case, it is necessary to take into account the construction volume - the size of the residential complex under construction. For example, if an object is rented out in queues, and the volume of one queue is not very large (for example, 1-2 entrances of a nine-story building are being built), then taking into account the dynamics may not be so significant.

But if a large residential complex is planned to be rented out entirely, and the volume is a 25-30 storey building with several entrances, each of which has 10-20 apartments per floor, then this is a much more serious story, requiring real dynamics and monitoring. Because it is often simply not realistic to “catch up” with people and equipment to perform such large volumes.

Is it possible to check the quality of construction?

As you understand, it is impossible to check the quality and reliably remotely. However, it is necessary to pay attention to such things as culture, cleanliness, and well-groomed construction production, which can be fully assessed from photographs of the construction progress. Sometimes careless sloppiness “speaks” of poor construction site management, disrespect for consumers and irresponsible business in general.

Also, the buyer of a new building should have an idea of the features and even problems that, unfortunately, are inherent in various types of design schemes and solutions used for construction.

Check yourself or with a company? – decide

As you can see, even before the purchase, although in principle it is quite likely that after it (assignment is now quite accessible), there are plenty of criteria for checking the reliability of the counterparty.

And, since even the most persistent and sophisticated apartment buyer will need at least 40-50 hours of full-time work time and knowledge of 20-30 data source resources to perform a quality check on their own, many prefer to order the work from specialists, or even get this service for free.

Large real estate agencies, which have their own special divisions of legal departments, analyze builders for their clients free of charge. However, as a rule, since this service is conditionally free (conditionally because the real estate agency will still receive a percentage of the sale of an apartment in a new building to this client), its quality is rather doubtful: they go through the roof without getting any real problems. After all, their goal is to sell M2 and get a percentage, and not to provide reliable information.

Among the companies that provide this service for a fee, you can find the following (in the table below). We haven't done a very deep analysis, we'll just provide a complete list for comparison. Although we tried to arrange them according to user convenience and price:

How does the process of buying a home from a developer work?

The construction of a multi-storey building is an economically expensive process, so developers most often resort to attracting additional investments with the help of investors’ finances or the money of future apartment owners. With this form of trilateral relations, all parties to the transaction benefit:

The developer receives money for construction and does not need to invest his own funds.
Investors finance the project, and then, when the property is sold, they have their share of the profit in the form of interest (the invested amount increases significantly and is returned).
The buyer has the opportunity to buy an apartment at a price below the market price, since to some extent he also acts as an investor, investing his money in construction.

The process of buying an apartment in a house under construction is as follows: the developer begins to build the house - the buyer buys the apartment and immediately pays the amount of its cost - after completion of construction the apartment is registered as the buyer's property.

It is at the third stage that problems often arise with developers: houses are not put into operation on time, construction is frozen indefinitely, people wait for years to move into an apartment, the buyer cannot register ownership of the property, the developer’s problems with the law are revealed.

Important! If you encounter scammers, it is unlikely that you will be able to get your money back for your apartment. If the developer really has problems, the process of returning money or moving into an apartment may drag on indefinitely.

In order not to incur such troubles, you must initially approach the choice of a construction company with all responsibility and know how to check its reliability.