Of course, there are risks in shared construction, but this does not mean that you should neglect this opportunity to purchase your own square meters. Moreover, due to the fact that today there is such a difficult situation in the country, this will be a good way to preserve your savings. After all, real estate is one of the safest and most profitable types of investment. Moreover, shared construction has not only disadvantages, but also a very attractive advantage!
Shared construction is...
The fact that today many Russians decide to purchase real estate using a shared construction program is not at all surprising. After all, the economic situation in the country leaves much to be desired, and the risk of default is getting closer. In simple terms, shared construction is a type of construction in which the developer, in order to implement his project, attracts funds from individuals who subsequently become full owners of their own apartments in this building. It is worth noting that construction work is being carried out with these funds. The benefit of this is quite clear. The developer does not use a loan to implement the project, and the participant in shared construction acquires his legal square meters at a fairly low cost and has the opportunity to pay the cost until the end of construction. Unfortunately, cases of fraud are very common in our country, so many do not risk getting involved with such programs. But for those citizens who do not have large sums of money to purchase housing, this method is the most profitable. In principle, it can be quite safe if the participant in shared construction follows some precautions. For example: check the availability of the necessary documentation from the developer, construction permit, license, etc.
How to buy an apartment in an apartment building
In the context of constantly rising real estate prices in our country, shared construction is a very profitable way to purchase housing. After all, after the project is fully implemented, the apartments in it increase significantly in price. In order to purchase real estate using such an investment instrument, it is necessary to conclude a special agreement between the developer and the client. As mentioned above, before starting cooperation with a certain developer, it is necessary to check all the necessary documents that confirm the legality of his work. Do not forget that we are talking about large sums of money and that the risk in their transfer is very high. It is worth paying attention to how many houses this developer has already built, as well as whether there were problems during the implementation of previous projects.
Many companies often use a new legal entity to build a new home. It is very important to check who exactly its founders are. And don’t forget that you should like the property. Participants in shared construction are often left disappointed after they move into the purchased square meters. Most often, this is due precisely to the fact that the owners did not pay due attention to such trifles as infrastructure. It is important to pay attention to its availability nearby: a kindergarten, a store, a bank branch, a clinic, a parking lot, and more.
Information about the developer
Before taking specific actions, you should definitely find out all the information about the person with whom you will sign the contract. Here you cannot act thoughtlessly, relying on your partner for everything. Of course, you need to trust, but it is important to remain confident that you are taking the right step and will not regret your actions later.
The share participation agreement for the purchase of an apartment must be executed in the name of the developer. It is important to ensure that all required signatures are present on the document. If any discrepancy in the papers turns out during the trial, it will be difficult to prove anything.
Features of obtaining a mortgage
Just a few years ago, obtaining a mortgage for the purchase of real estate using equity participation was impossible. But today almost every bank offers such a service. The procedure for obtaining a mortgage loan for shared construction differs significantly from the execution of the same agreement for finished housing. First of all, you need to conclude an agreement with the developer. All the intricacies of this operation have been discussed above. But it is still necessary to pay attention to information about the object, the value of the property, the term and procedure for payment, guarantees for the construction project, the layout and area of the premises, the period for transfer of real estate. The bank will necessarily require notarized documents on the consent of the spouse (if there is one) and the guardianship authorities (when conducting a transaction involving the property of minors). The agreement goes through a mandatory procedure with the State Registration authorities. This usually takes no more than a month for one participant. Once the document is completely prepared, you need to contact the bank with it. Further paperwork may vary significantly, depending on the chosen credit institution. The interest rate, package of documents, collateral requirements, etc. - all this can vary significantly. The only thing that absolutely every bank requires is comprehensive mortgage insurance.
Assignment of the right of claim
Quite often there is a need to resell housing under construction. This procedure is called “assignment of shared construction” or “assignment of the right of claim.” This scheme can be implemented even before the constructed building enters into operation and the title documents for the living space are received. The owner who has entered into an agreement with the developer can at any time resell his right to receive the property to another individual after construction is completed. It is important to note that any such transaction will be subject to tax. Its payment is legally assigned to the first investor. Although during the bidding process this responsibility can be transferred to the shoulders of the new shareholder. But it is worth considering that the amount of tax is calculated on the entire amount of the transaction, and not on the difference between the amount of investment and the amount of the concession. Purchasing real estate under assignment agreements is always relevant, as it is incredibly profitable for most investors.
Registration of the agreement
The equity participation agreement is drawn up in writing and is also subject to state registration, after which it can be considered valid. The specifics of its registration are stipulated in the law “On state registration of rights to real estate and transactions with it.” To register the agreement, the developer needs to submit a package of documents consisting of:
- Agreement signed with the first participant.
- Declaration of the relevant project.
- Permission to construct a building.
- The layout of a real estate property, which describes in detail the placement of residential and non-residential premises, their number.
- A surety agreement is necessary in the event that the developer has chosen a surety as the fulfillment of his obligations.
Registration of the share participation document is completed within a month. The original with the seal is kept by the investor, one copy is given to the developer, and the other is kept by the registration authority.
It should be taken into account that at the time of submitting this agreement for registration, its text must be drawn up, taking into account the various conditions that the developer can offer to investors in the project. In most cases, the contract cannot be amended after this.
But if the investor declares that the agreement is illegal or very onerous, then the services of a lawyer will be needed to carry out a legal examination, based on the results of which a decision will be made whether to enter into a shared construction agreement or not.
Equal participation or joint ownership?
Most often, young families decide to purchase new real estate. For this reason, the object of shared construction is not only selected jointly with the spouse, a decision is also made jointly on what type of contract will need to be concluded. The concept of joint ownership means that during a divorce, the property will be divided equally, that is, in equal shares between its owners. This happens because the contract does not stipulate certain conditions. Instead of a spouse, a relative or any outsider who will be included in this agreement can act. If you conclude an equal-share agreement, then according to its rules, each owner of a certain part of the real estate can dispose of it at his own discretion. The only restriction is that the first right of purchase belongs to the second shareholder. And, for example, in the event of a divorce, real estate will no longer be divided, since it was previously divided between the owners.
What conditions must be taken into account in the DDU?
What to pay attention to when signing a contract? What do you need to know? Having decided to participate in a share agreement, you should carefully study the composition of the agreement and examine all its main sections.
The legislation does not provide for a uniform form of this document, but this feature does not exclude the existence of several important points, the absence of which will allow the contract to be considered invalid. These include:
- A very detailed description of the immovable shared construction project, which will subsequently be transferred to the participants of the shared construction project.
- The cost of the DDU agreement, the conditions, as well as the deadlines for making the payment amount must be indicated.
- Deadline for handing over the house.
- Information about the duration of the warranty period for housing.
- A list of methods for ensuring the fulfillment of the developer’s obligations under this document.
In addition to the main points, it is necessary that the contract also contain additional information:
- The conditions for making various changes to the contract price when the area of the object changes, however, it is better that it is not subject to adjustments.
- Indications of the maximum number of times the object must be handed over to the state commission.
- Time frames allocated for eliminating various identified deficiencies.
- Information about the form of management of this building.
- Cost and time of registration of housing ownership.
The share participation agreement is drawn up in the same form for all shareholders, so it is quite difficult to make individual changes to it.
Payment
As for payment for this service, there are quite a lot of options. The cost of the living space as a whole, as well as the conditions under which payments will be made, will depend on how much the down payment is. For example, if the full amount is paid within three working days, the client receives a discount from the developer for each square meter of real estate. Otherwise, the calculation of the contract is carried out within the agreed time frame, and the cost prescribed initially cannot change, even under the pressure of inflation or simply during the construction process. The advantages of paying the cost of an apartment in installments are that even with a small amount, the participant can solve his “housing problem.” In this case, housing can be selected according to all the client’s wishes, starting from the number of square meters and ending with the characteristics and timing of its receipt of ownership. In addition, thanks to small monthly payments, the shareholder can successfully control his budget.
Pros and cons of equity participation
The main advantage of purchasing real estate using equity participation is its low cost. By buying housing under construction, you can save a lot. For the current situation in the country, this is a significant plus. In addition, the transaction can be concluded directly in national currency. Speaking about the disadvantages, first of all I would like to say that when drawing up a share agreement, the client does not buy an apartment, but only the right to demand this living space from the developer. Unfortunately, the market is structured in such a way that the likelihood of getting your property on time is extremely low. And the number of scammers is quite large. Therefore, it is necessary to be very careful when choosing a developer and completing documents. Well, if you have questions that are difficult to answer on your own, then it is best to seek help from an experienced specialist. Shared construction of apartment buildings will always be popular in the real estate market.
Features of drawing up an equity participation agreement
Shared housing construction involves raising money from several people by a legal entity that undertakes to build an apartment building over a specified period of time. After the developer fulfills its obligations, the parties to the agreement receive ownership of the housing. The terms of participation are determined in accordance with the provisions of the agreement concluded between the shareholder and the developer. The developer must officially register as a legal entity.
In addition, he should rent a plot of land allocated for development if he does not own it.
The current legislation regulating shared participation in construction defines mandatory conditions that should be taken into account when drawing up the relevant document. According to the law, it is mandatory to register an agreement on shared participation in construction with a government agency. It is from this moment that he begins to act.
This measure makes it possible to exclude the sale of the same apartment to several shareholders at the same time. The shareholder receives ownership of the property after a document confirming permission to put the property into operation has been drawn up, as well as after the transfer deed has been signed. After this, the shareholder must pay for housing and all utilities.
