The state Duma toughens requirements for housing developers for the protection of investors

The state Duma toughens requirements for housing developers for the protection of investors

MOSCOW, February 19. The state Duma adopted in the first reading a government bill aimed at improving the legal protection of participants of shared construction and to prevent the emergence of “cheated investors”.

Developers on the Internet

As explained at the meeting of the house Secretary of state- Deputy head of the Ministry Natalia Antipina, it imposes an obligation for developers to carry on your own Internet site as well as post on the portal the information needed by shareholders to monitor compliance by the developer of the construction period, as well as the legality of operations of the company. The bill also requires to describe in detail in the project Declaration of the characteristics of an apartment building and the common property, to exclude the introduction of real estate investors in misleading advertising.

In escrow

At the same time stricter requirements to the developers, including the minimum amount of their own capital.

Introduces the mechanisms of Bank project of financing the construction of apartment buildings and other real estate listings with opening escrow accounts (special contingent account, which takes into account the property, documents or funds until the occurrence of certain circumstances or performance of certain obligations) for the funds investors. You can still use the Bank guarantee or insurance of civil liability of developers (instead of the new mechanism). Include measures for the protection of shareholders, posted on the escrow accounts, in particular, establishes that the indemnity agreement escrow account opened for settlement of participation in equity construction payable in the amount of 100% of the sum allocated on the account at the time of occurrence of the insured event but not exceeding 15 million rubles.

Limiting the use of shareholders and the register

In addition, restrictions on the use of funds of interest-holders. As explained first Deputy head of the faction “United Russia”, first Deputy Chairman of state Duma Committee on land relations and construction Martin Shakkum, their money “can only be used for the construction of apartment houses located within the boundaries of one block in accordance with the approved urban planning documentation”. It is also proposed to authorize the use of funds of interest-holders for reimbursement of expenses for creation of objects of social infrastructure within the framework of projects for the construction of housing under condition of gratuitous transfer of such facilities in the state and municipal property.

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The bill also expands the powers of Supervisory authorities in terms of control over the targeted use of developer funds from the shareholders and observance by the developer of the construction schedule.

The document provides for the establishment and maintenance from 1 July 2016 the Ministry of construction of Russia unified registry of developers raising funds from co-investors. The information contained in this registry will be open public and will be posted on the official website of an authorized Federal Executive body.

Committees of the state Duma financial market and land relations made a number of remarks to the text, but supported its adoption in the first reading. “In preparing the bill for the second reading we will continue working on the text and will try to accommodate all comments,” said Shakkum. “It is obvious that the resulting text needs to the fullest extent possible to consider both the interests of citizens and the interests of business representatives”, he concluded.