Investing in construction is one of the most common ways to buy a home. Attractive pictures of comfortable residential complexes, the prospect of having a new home, which does not have the aura of the previous owners, and a sharp renovation "from scratch" easily attract buyers.
However, to minimize the risks in the case of agreements with developers, the investor must pay attention to many details. We will tell about the main nuances in this article.
Reputation of the developer
First of all, you need to pay attention to the reputation of the developer: how many years on the market, how many projects implemented and commissioned houses, what are the customer reviews. You can use the media or forums to obtain such information. Deceived customers will not be silent, and negative experiences will always come to the surface. However, this information may not always be true, so it should be carefully checked.
What else do you need to check?
The next step will be to study the construction of a specific house or residential complex in which a person plans to invest money. What do we pay attention to first of all?
Earth. The developer should have the right to build on the land under the future house. To do this, he must have land owned, leased or on the basis of other agreements, such as a superficies agreement. Documents confirming the right to land must be required from the developer before signing the contract. It should be noted that the owner or user of the land. In this case, it is necessary to demand from the developer the documents concluded with the user or the owner of the land, which indicate the agreement on the further distribution of apartments between them.
For the construction of a house, the land plot must be given the correct purpose - usually for the construction and maintenance of an apartment building. The destination can be checked on the Public cadastral map. There you can check the owner and user of the land.
Construction documents. For construction of a house the developer is obliged to receive town-planning conditions and restrictions of building of the land plot. This is a document that contains planning and architectural requirements for design and construction.
In addition, in order to build a multi-storey building, the developer must obtain a construction permit, which can be checked on the website of the State Architectural and Construction Inspectorate of Ukraine. You should also pay attention to other documents, such as the general contractor's license.
The Unified State Register of Legal Entities, Individuals - Entrepreneurs and Public Associations should check the construction company, its activities, as well as whether it has been declared bankrupt. In addition, it should be checked whether enforcement proceedings have been opened against the developer for outstanding debts and whether there is a tax debt. Thus, if the developer has a tax debt, the state tax service has the right to a tax lien on the property of such a developer, which, of course, threatens the investor not to receive the object of investment.
An important stage of the inspection is the search in the Unified State Register of court decisions as lawsuits against the construction site and land, and litigation of the developer with buyers in connection with the breach of obligations.
What to pay attention to when you get the contract?
There are various schemes for raising funds for construction: through construction financing funds, real estate funds, through a contract of sale of property rights, a contract of participation in a housing cooperative, a preliminary contract of sale of an apartment, a contract of sale of a derivative, etc.
Each of the schemes has its nuances, which we will not dwell on. However, there are general issues that need to be addressed in the case of any type of contract.
Scope of the contract. The subject must be specified in detail in the contract. Yes, the amount of payment must be clearly indicated. Regarding housing, data on its location, size, technical characteristics are indicated. The following information should be registered as fully and accurately as possible: cadastral number of the land plot on which the house is located; construction address; storeys of the house and the floor on which the apartment is located, its number, number of rooms, total and living area.
Term of putting the house into operation. It is inadmissible if the contract does not specify the commissioning period at all.
Attention should be paid to how this provision is spelled out: as an obligation (“The Party is obliged to complete construction and commission no later than July 22, 2021”) or vaguely like: “Approximate commissioning date -…”. Declarative provisions are always a risky option.
However, even if the commissioning is prescribed as the responsibility of the developer, this provision may lose its meaning if the contract does not provide for liability, such as a fine, for violation of the terms of commissioning. In this case, the developer will be able to delay the completion of construction indefinitely without any negative consequences.
It is worth paying attention to how it is spelled out responsibility of the developer and investor in case of non-fulfillment or violation of the terms of the contract, in particular whether material liability is provided and in what amount.
It is also important to pay attention to how the moment of transfer of rights to the object of investment is prescribed.
Possibility to terminate the contract unilaterally. Is it provided at all and for whom exactly - for all parties or for one? The important thing here is the nuance of a refund if the buyer decides to terminate the contract early.
Deviation from the design area of the apartment. At the time of concluding the contract, there is no apartment yet, so the prospect that the actual area after construction will be smaller or larger than planned and agreed is quite real. It is necessary that the contract stipulates how the recalculation and additional payment or refund will take place in this case. You can also predict the maximum possible deviation from the design area.
Obligations of the developer. It does not matter which contract the developer signs with the investor, but it must include the obligation of the developer not to mortgage the property, not to contribute to the authorized capital of the company, not to sell property to others, etc., as well as fines for violations these obligations.
You need to pay attention to the procedure and term of acceptance of the apartment by the investor and elimination of shortcomings by the developer in case of their detection. In particular, it is possible that some defects, such as insufficient sound insulation, may appear over time, which should also be taken into account.
It is worth noting that no set of documents will give an absolute guarantee of completion of construction, because investing is inherently risky and depends on the financial activities of the developer and the market situation. However, careful study of these issues will still increase the chances of getting the desired apartment in the future.
Article by Natalia Samoilenko, Bargen's lawyer for LEAGUE: LAW.
