Buying an apartment in a new building: main risks

Features of purchasing housing in a new building

A contractor is a company working under a contract . This company carries out the customer’s instructions during the construction of the house, and as payment for its services receives apartments in the house under construction from the developer. The parties enter into an agreement for shared participation in construction, or certain apartments without an agreement are reserved for the contractor.

The resulting apartments are most often sold in advance in order to be able to pay workers, purchase materials, etc. If there is no such need, the sale of real estate is carried out already at the stage of handing over the house.

In terms of its legal status , the contractor differs from the developer, therefore he cannot re-register a shared construction agreement for the buyer ; the assignment of property rights (Article 388 of the Civil Code of the Russian Federation) or the execution of a purchase and sale agreement (Articles 549-558 of the Civil Code of the Russian Federation) are within his competence.

The assignment of rights to claim an apartment is a procedure regulated by law.

Main risks and pitfalls

Despite the favorable cost of the transaction, purchasing an apartment from a contractor always involves certain risks. Namely:

1. When purchasing an apartment in a building under construction, a citizen does not receive ownership rights. Ownership rights can only be registered for an apartment that has already been put into operation. In the case of a building under construction, this turns out to be simply impossible. So, in fact, you will only acquire from the contractor the right to receive an apartment after putting the house into operation . But whether you will get the apartment itself is a big question. Contractors will never be able to give you such a guarantee.
2. The contractor may not fulfill his obligations or fulfill them incompletely. As a result, neither the contractor himself nor the subsequent purchaser will receive the apartment. In this case, only the co-investment agreement poses a danger, because A purchase and sale agreement and an equity participation agreement are usually concluded “after the fact.”
3. The buyer may purchase an apartment from an unreliable Developer. This risk is relevant for any method of acquisition - both under an agreement on the assignment of rights, and under a purchase and sale agreement, and under a co-investment agreement. The contractor may turn out to be an honest organization and sell you an apartment on absolutely legal grounds. However, later you find out that the curator of the entire process, i.e. The main developer does not have a responsible approach to his projects. In the case of a house under construction, this may be slow or, conversely, too hasty construction, violation of building codes, etc. In an already built house, you can also find technical disadvantages.

This is important to know: Transferring money when buying an apartment through a notary or bank

What are the benefits for the buyer?

The advantages of buying an apartment through a contractor are not many, but they are quite significant. Since the contractor is a company engaged in construction work, it sets a minimum price for the sale of apartments . Typically, you can save 5-10 percent.

If the contractor’s financial situation is difficult, and the developer pays for the work exclusively in apartments, the savings on the purchase will be even greater, since the contractor needs to sell the property as quickly as possible.

Risks when buying an apartment from a contractor

If the contractor has already received apartments as payment for work performed in accordance with Federal Law 214 and sells them under an assignment agreement, the buyer’s risks are no greater than when purchasing an apartment from a developer.

Difficulties may arise in a situation when the developer and the contractor company enter into an investment agreement, which provides for payment for services not yet performed in apartments. The sale of such real estate is carried out at a price significantly lower than the market price , however, the obligations to the developer have not yet been fulfilled.

In most cases, the transaction takes place at the stage of building a house, therefore, the buyer does not acquire the apartment itself, but the right to receive it after the house is put into operation.

The main risks in this type of transaction include:

1. Failure by the contractor to fulfill his obligations leads to termination of the agreement with the developer. Consequently, the contractor will not receive the property, even though he has already sold it. In this case, even in court, the buyer will not be able to obtain the purchased property or return his money.
2. The contractor may perform less work or use less materials during construction and some apartments will not be transferred to him, since the debt to him will be less. There is a high probability of purchasing an apartment that does not exist.

You can avoid risks if:

• study the seller’s DDU;
• conclude a tripartite agreement;
• involve lawyers and specialists in concluding a transaction who will help take into account all the nuances and assess the risks;
• study the developer’s documentation;
• it is better to choose contractors who have been on the market for a long time and have a stable financial position (for this you will need to carefully study the documentation and the construction market).

Careful control is necessary before making a transaction and at the time of its execution.

We talked in detail about what other risks a buyer may face when purchasing an apartment in a new building here.

Advantages of an apartment from a contractor

Let's immediately define the difference between a developer and a contractor: a developer is an organization that has development rights on a certain plot of land. The developer may engage several contractors to carry out construction work and sell the property.

Sometimes the contractor receives living space as compensation for work performed. For the buyer, it does not matter what status the legal entity has when selling an apartment, the main thing is that all title documents are in order.

Every year the share of housing purchased in new buildings increases; there are real prerequisites for this: dilapidation of old houses, lack of major repairs, worn-out infrastructure, dubious history of old apartments, fraud at the stage of paperwork and transfer of money.

At the same time, many buyers and realtors note the significant advantages of concluding purchase and sale transactions with developers of apartment buildings (MKD).

• New buildings often have their own sales department; there is no need to overpay realtors and lawyers.
• All documents are ready in a timely manner, there are agreements with banks that provide mortgages on preferential terms.
• There are no unexpected heirs or relatives claiming the apartment who missed privatization or were undergoing treatment.
• Convenient layout, modern materials for construction and finishing that comply with technical conditions and sanitary standards.
• Extensive balconies and loggias, spacious freight and passenger elevators, multi-level above-ground and underground parking.
• High-quality equipment for engineering communications and electrical wiring that will last for more than 20 years without repair.
• Effective insulation and insulation technologies to prevent heat loss and ensure soundproofing of housing.
• Comprehensive landscaping of the territory - roads, lawns, playgrounds and sports grounds are rented in proper condition.

The overall impression of the new buildings significantly exceeds the level of the old housing stock: freshly finished facades, spacious entrances and lobbies, identical door and window structures.

The project immediately includes areas for commercial purposes: shops, offices, beauty salons, fitness rooms, which are organically integrated into the living space.

The buyer can choose an apartment with a fine finish or do the repairs themselves. In this case, you do not have to dismantle old coverings or open walls to replace wiring.

When inspecting an apartment, the future buyer has the right to point out construction defects or other shortcomings and demand their elimination within a specific time frame. Therefore, before signing the transfer deed, it is better to check the property with an independent expert.

Document verification rules

As mentioned above, the main secret of a successful deal is an agreement with a successful contractor . You should carefully check all possible information about it: reviews, complaints, facts of litigation, financial reports.

1. Request copies of documents that confirm that the contractor is officially registered. In addition, the DDU must be noted in Rosreestr.
2. Request copies of the contract if construction work has not yet been completed. In this document you can see what amount of work has already been done and what remains to be done by the contractor. This way the buyer can assess the risks.
3. Take a document confirming full payment of the cost of housing (if payment has already been made) and a document confirming payment for the contractor’s work with an apartment. An honest contractor has nothing to hide and will be able to provide documents.
4. Make sure that the agreement concluded with the contractor contains a clause regarding the developer’s consent to the transfer of real estate.

Our experts have prepared a lot of useful materials about the nuances of buying and selling apartments in the secondary and primary real estate markets. We invite you to learn about the rules for buying and selling secondary goods and how to protect yourself from risks in such transactions?

Purchasing methods

Some features when completing a transaction with a contractor are due to the fact that the buyer, purchasing real estate during the construction stage, does not receive the housing itself, but the right to claim it from the developer.

Ways to purchase apartments:

1. The assignment agreement (Article 388 of the Civil Code of the Russian Federation) must be drawn up in writing and contain an indication of the concluded transaction with the developer and a list of conditions that were determined under it.
   This agreement is signed until the house is put into operation and is valid unless prohibited by the main agreement.
2. An assignment of rights agreement can be concluded if, during the construction process, large contractors involved subcontractors with whom settlement is carried out under an assignment agreement. Subcontractors can sell an apartment by concluding an assignment of rights agreement. The disadvantage of such a transaction is the inability to control and track the “chain” of assignments and fulfillment of obligations.
3. The co-investment agreement is governed by Art. 4 Federal Law No. 39. According to this agreement, the contractor can simultaneously act as an investor who provides its services to the developer as an investment, and in return receives the right to an apartment. In such a situation, a co-investment agreement will be concluded with the future buyer, under which the rights to the apartment will be transferred to him to the extent that they belonged to the contractor.
4. A purchase and sale agreement is the safest way to complete a transaction and is concluded after the house is put into operation. In this case, the contractor has already registered ownership of the property, which will significantly increase its price, but the risks of this type of transaction are minimal.

Step by step procedure

Buying an apartment from a contractor involves a standard procedure that is typical for all transactions of this type. After the initial inspection of the Developer and the contractor, the Buyer will need:

1. Conclude a purchase and sale agreement, assignment of rights agreement or co-investment agreement with the contractor. If the original agreement between the Developer and the contractor was certified by a notary, then the new agreement between the contractor and the Buyer will also require notarization.
2. Register the transfer of ownership in Rosreestr. If a purchase and sale agreement is registered in Rosreestr, the Buyer pays a state duty in the amount of 2,000 rubles. And if an agreement on the assignment of rights is registered in Rosreestr, then the Buyer (individual) pays a state duty in the amount of 350 rubles (clause 30, clause 1, article 333.33 of the Tax Code of the Russian Federation).
3. Give the contractor money for the apartment. Draw up mutual acts of acceptance and transfer. The buyer records that the contractor handed over the necessary documents to him and re-registered the title to him. The Contractor records that the Buyer has transferred to him the entire required amount. These documents will help the parties avoid potential claims against each other.
4. Wait until construction is completed if the house has not yet been put into operation. After the house is put into operation, the Buyer must sign the property acceptance certificate. This document is signed by the title holder only if he is satisfied with the quality of the living space. If the title holder discovers any shortcomings in the apartment, he can demand that the Developer eliminate them. After signing the transfer and acceptance certificate, the title holder gets the opportunity to move into the apartment. The citizen becomes the full owner of the property.

How to buy - procedure

The transaction is carried out in several stages:

• search for current offers;
• checking the documents of the seller and the developer;
• viewing the facility and infrastructure nearby;
• execution of the contract;
• acceptance of the apartment using the transfer and acceptance certificate;
• registration of property rights in Rosreestr;
• moving and registration in the apartment.

The most important role in the purchase and sale procedure is played by a thorough check of documents.

We provided detailed instructions on purchasing housing in a new building using various methods in a separate article.

Required documents

For citizens who decide to purchase housing in this way, one passport will be enough. For purchases made with mortgage funds, a loan agreement will be required.

The Contractor provides notarized copies of:

• development plan;
• building permits;
• project declaration;
• documents for land, certificates;
• authorizing the sale and originals of constituent documents;
• service agreements;
• document giving the right to sell;
• assignment agreement.

Conclusion of an agreement and registration

The seller draws up a standard contract in advance, in triplicate, after which it is required to register it with Rosreestr. It is usually the buyer who contacts this organization.

To register, you need to write an application and pay a state fee . (For an individual - 2000 rubles, for a legal entity - 22,000 rubles). Registration is carried out within a period of no more than 1 month and after that the agreement comes into force.

How do the parties settle?

The conditions for transferring payment are specified in the contract and are determined by the parties individually. This can be payment in cash at the cash desk, installments, loan agreement, bank transfer, etc.

Will it be possible to get a tax refund?

When purchasing an apartment, in a situation where the contractor has not recorded the property as personal ownership, he is an intermediary and an agreement is concluded with the construction company. This scheme is a credit scheme, but its disadvantage is that it is impossible to return personal income tax. The construction company cannot issue a document confirming the buyer’s expenses for the Federal Tax Service , because these documents were drawn up with the contractor.

When purchasing an apartment under an agreement on the assignment of rights of claim, the right to receive a property deduction arises from the moment the apartment acceptance certificate is signed. In this case, a copy of the equity participation agreement on the basis of which the rights of claim were assigned is provided to the tax authority.

This article discussed ways to purchase housing from a contractor, the main nuances of this type of transaction, as well as information on minimizing risks in the purchase and sale process. Careful study of all the details of the transaction and documents will allow you to buy housing cheaper than market value and not fall into the hands of scammers.

Are there any risks?

There are risks in purchasing an apartment from a contractor.

To exclude them, it is necessary to consider the transfer of real estate:

• the construction company transfers the apartment in accordance with the DDU or investment agreement;
• The contractor sells residential space, for which he signs a sales or assignment agreement with the buyer.

This is important to know: Divorce when buying an apartment

Situations often occur when a construction company transfers already constructed objects, initially registering ownership rights to itself. Then a sales contract is concluded with the contractor.

As for buyers, this scheme is one of the most acceptable options for them, since it minimizes risks.

It is important to consider that the degree of risk directly depends on the category of the contract being concluded. For example, when establishing a DDU, the contractor acts as the person transferring ownership to the buyer.

In this case, the buyer’s risks will not exceed those that may arise when purchasing real estate from the construction company itself.

This cannot be said about the investment agreement concluded between construction companies and the contractor.

In accordance with its provisions, the contractor receives for his activities certain objects, the sale of which can begin even before he fulfills his obligations in full.

Consequently, construction work on the apartments has not yet been completed, but their alienation has already begun.

For the buyer this is a big risk:

1. Firstly, if the contractor does not fulfill all of his obligations included in the agreement, then he will not ultimately receive the property, even if it has already been sold.
2. Secondly, buyers will not be able to return the property even through legal proceedings.

In practice, judges act on the principle that the rights of shareholders are a continuation of the rights of the contractor. If the latter do not have them, then buyers have no reason to demand an apartment.

How to check documents?

If you decide to sign an assignment agreement, then it is important to take a copy of the DDU from the seller, certified by a notary.

It is necessary to familiarize yourself with the conditions under which the property will be received, since the paper may contain conditions the fulfillment of which is imposed illegally.

For example, after putting a new building into use, enter into an agreement on the provision of a number of services with the HOA.

When carrying out real estate transactions, you must remember that you can only trust trusted legal entities:

• study the developer’s statutory documentation;
• ask for a copy of the construction permit;
• look at reviews about the company with which you plan to cooperate.