Road map for shareholders. Where does the new “Road Map” lead to the defrauded shareholders of Dagestan? For information about Ekhtibar LLC
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How many shareholders have already suffered
In total, as of February 2018, in Russia there were almost 40 thousand defrauded shareholders who invested in 836 problem properties in 69 regions of the country, as follows from materials on the website of the Ministry of Construction. But the head of the United Russia working group on protecting the rights of shareholders in the State Duma, Alexander Sidyakin, said in November 2017 that about 130 thousand people suffered from unscrupulous developers, that is, more than three times more than official statistics say.
The Ministry of Construction could not estimate how much the official number of defrauded shareholders would change after the innovations. “The procedure for adding to the register depends on the desire of the shareholder himself,” explained a representative of the ministry. “We will be able to obtain such information after the new version of the order comes into force.”
All these innovations are reasonable and inspire some hope, notes Elena Godlevskaya, a member of the initiative group of shareholders of the Tsaritsyno residential complex, the largest problematic property in Moscow. In her opinion, more reliable information about the number of victims could influence important decisions. The law “On participation in shared construction of apartment buildings...” caused many problems because it was positioned as a panacea for all troubles, but due to shortcomings it left loopholes for unscrupulous developers, Godlevskaya states.
Residential complex "Tsaritsyno" (Photo: Oleg Yakovlev / RBC)
How is shared construction regulated now?
If the house has not yet been put into operation, an equity participation agreement (DPA) will be concluded with the buyer. It specifies the area of the apartment being purchased, the floor on which it is located, the number of residential and non-residential square meters, as well as the deadline for handing over the keys.
Law No. 214 “On participation in shared construction of apartment buildings...” provides that the interests of the shareholder can be protected in several ways . In particular, the developer must insure all equity participation agreements. The reason for the insurance payment is, for example, the declaring of the developer bankrupt and the introduction of bankruptcy proceedings against him. However, in fact, the insurance mechanism does not work: bankruptcy cases can last for years, and buyers remain without apartments. The developer can also open an escrow account, but almost no one uses it, since this provides for receiving funds from equity holders only after the facility is put into operation and the apartments are transferred to buyers. Finally, a bank guarantee from the developer allows additional control over the project: the bank opens a line of credit for the project, but issues financing in tranches according to the implementation plan and monitors the process. However, not all developers attract bank financing for the entire construction period.
What is changing in the laws on shared construction
The legislation on shared construction has changed throughout its existence. Moreover, the changes have always been in the direction of tightening the requirements for developers. The most serious of them were those introduced by Law No. 218 “On a public law company for the protection of the rights of citizens - participants in shared construction in the event of the insolvency (bankruptcy) of developers...” dated July 29, 2017.
The law made it possible to implement the initiative of the Ministry of Construction - to create a Fund for the protection of the rights of citizens participating in shared construction (compensation fund). Since October 2017, all developers have transferred 1.2% of the cost of each equity participation agreement (EPA) to it. This rule applies only to properties whose owners received a building permit after October 27, 2017. Now the fund, according to its representative, has already received 180 million rubles.
The fund does not finance the activities of every developer and does not allocate funds for all existing problematic construction projects, notes Tekta Group CEO Roman Sychev; it is intended to eliminate specific long-term construction projects and help specific shareholders who appeared after October 2017. For this method of dealing with the problem of defrauded shareholders, the amount is quite acceptable, Sychev believes.
New challenges for developers
Along with the creation of the compensation fund, legislators sharply tightened the requirements for the developers themselves. From July 1, 2018, it will be impossible to carry out projects for the integrated development of the territory, since the law provides that one legal entity can build only one object. This means that if now the developer distributes all the funds raised for construction for the entire project (directly at home and, for example, social infrastructure facilities), then after the change he can spend this money only on residential buildings, the remaining objects can only be financed independently. “Having only one building permit makes it impossible to build schools, kindergartens, and utility networks,” notes Fedor Sapronov, vice president for legal issues of the Ingrad group.
A developer who intends to obtain a construction permit after July 1, 2018 will also need to have at least 10% of the cost of construction of the project in his account.
Administrative and management costs are also limited - no more than 10% of the project cost. This may complicate the developer’s activities, says Level Group CEO Kirill Ignakhin. “Today, only advertising and marketing costs, which are classified as this type of expense, can exceed 10%,” the developer points out. — It’s not cheap to maintain sales offices, pay employees, etc. This requirement, in my opinion, should be adjusted and made more flexible.”
Photo: Grigory Sokolov / RIA Novosti
On January 24, 2018, the State Duma adopted in the first reading the next amendments to the laws regulating the process of shared-equity construction. The authors of the document, including State Duma Speaker Vyacheslav Volodin, intend to give the government the right to establish requirements for state control of shared-equity construction.
The bill proposes to create a unified information system for housing construction. Information about all developers and projects will be organized and collected in one place. The law on the compensation fund will include articles that will allow this fund to control the financial and economic condition of the developer working under the DDU scheme . In particular, it is proposed to give the fund the right to suspend the registration of equity participation agreements, that is, to actually block the activities of the developer. However, it has not yet been determined what criteria for the condition of companies the fund will monitor.
According to the new law, the owners and top management of the development company will be jointly and severally liable with their personal property for the debts of their company to shareholders. The document also imposes more stringent requirements for the publication of information about the founders of the development company. Currently, the developer is only required to disclose information about its own founders. In the new version of the law, it will be required to publish on its website the complete chain of ownership, down to the final beneficiaries who directly or indirectly own the developer by 5% or more.
The developer will have the right to change the authorized bank for opening an escrow account. According to the authors of the bill, all restrictions on the developer’s account are lifted at the moment the building is put into operation and ownership of at least one apartment is registered. Obtaining the right for a developer to change the authorized bank is certainly a plus for developers, says Fyodor Sapronov, vice-president for legal issues of the Ingrad group. “However, the question arises of how this will happen in practice: the legislator sets a limit on advertising costs of 10% of the project cost; Let’s say the developer chose this 10% and then decided to change the authorized bank - it is not clear how the interaction between the old and new bank will be carried out in this part, the expert argues. “Coupled with the requirement that the general contractor and technical customer must also have an account in the same bank as the developer, it is obvious that changing the authorized bank will not be so easy.”
Project financing instead of shared construction
Russian President Vladimir Putin spoke about the need to transition from shared construction to a project financing scheme within three years in October 2017. By December 15 last year, the Ministry of Construction, AHML and the Central Bank agreed on the corresponding road map.
The Road Map does not imply a complete ban on the purchase of apartments by citizens during the construction phase. However, their funds will not be collected by the developer himself, but by a bank authorized to open escrow accounts. This money will go directly to the developer’s account only after the house is put into operation. Until then, construction will be financed through a bank loan.
Many issues related to the cost of project financing, as well as when the developer will have to pay interest on the loan, have not yet been resolved. In any case, the price of housing in new buildings will increase by no more than 5-7% due to the transition to project financing, Deputy Head of the Ministry of Construction Nikita Stasishin promised at the end of November 2017.
The adoption of the law threatens that the cost of housing and the price of a “square” will increase significantly, says General Director of Metrium Group Maria Litinetskaya. To prevent this from happening, a reduction in loan rates is required, she is sure. “Money for the implementation of the project should be inexpensive and provided for a long period,” emphasizes Litinetskaya. — I believe that in order to reduce loan rates for developers, the authorities will need to launch a program to subsidize rates. Alternatively, a state-owned construction bank could be established that would specialize in financing housing projects.”
One of the tools for monitoring the situation around unfinished shared-equity construction projects is the so-called “road map” for solving the problems of shareholders who suffered as a result of unlawful actions of developers. The document was adopted by order of the Russian Government back in May 2017, and the other day Russian Prime Minister Dmitry Medvedev ordered the executive authorities to supplement it with information about the time frame for resolving issues on each long-term construction project.
The “road map” represents a work schedule for each registered problem object. Information in it is accumulated in a unified form approved by the Government of the Russian Federation. Documents for each region are prepared by local executive authorities and sent to the Ministry of Construction of the Russian Federation. Once a quarter, the ministry updates the consolidated plans. It also analyzes the received data and monitors the implementation of already approved plans and schedules. A report on the results for each quarter goes to the Government of the Russian Federation.
In accordance with the new order, schedules will be supplemented with a special column. It contains information about the expected time frame for restoring the legal rights and interests of the affected shareholders. In addition, the Ministry of Construction of Russia on its official website on the Internet will also be required to post information about the planned time frame for solving the problems of shareholders for each problem object. Changing the previously specified dates will require serious justification on the part of the leaders of the Russian regions that have committed delays.
Let us remind you that in addition to the “road map”, shareholders already have two important tools in their arsenal that allow citizens to monitor the situation around new buildings with the involvement of citizens’ funds. Investors of problematic properties are given the opportunity to be included in the “register of defrauded shareholders” and have access to a nationwide list of problematic shared-equity construction projects. It is available on the website of the Ministry of Construction of the Russian Federation http://www.minstroyrf.ru/problem-objects and contains data on 834 unfinished construction projects.
On January 1, 2018, the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction of the Year launched the “Unified Information System for Housing Construction” (UISHS) on the Internet - https://nash.dom.rf. The resource gives citizens the opportunity to make an informed decision on participation in shared construction, providing information that is subject to mandatory disclosure under Federal Law No. 218-FZ. The UISHS also reports on the number of developers who have made contributions to the Compensation Fund. At the end of March 2018, 647 developers had already contributed 1.2% of the cost of the DDUs they signed to the fund, having registered more than 10,000 agreements.
11:14 — REGNUM The creation of a housing construction cooperative (HBC) by shareholders may be an alternative to resolving the issue of bankruptcy of the developer, but there are also pitfalls, says lawyer, managing partner of the Unified City Service “Assistance to Shareholders” Zhanna Malis.
Anna Ryzhkova © IA Krasnaya Vesna
Earlier, the Vedomosti newspaper reported that the first meetings of shareholders of the bankrupt developer Urban Group will be held in early December, at which they will be able to choose a mechanism for completing housing construction. The agenda of the meeting will include the issue of creating a housing construction cooperative (HBC) by construction participants. If the decision is positive, the shareholders will complete construction and maintain the facility with their own money.
If shareholders do not vote for this option or in the absence of a quorum, the bankruptcy trustee will be able to attract a new developer to complete construction in accordance with the road map adopted by the Russian government. Then construction will be completed using funds from the federal and regional budgets.
“The creation of housing construction cooperatives (HBCs) may be an alternative to resolving this issue. However, there are some nuances here that you should be aware of.
Thus, in a housing cooperative, not contractual relations arise between a citizen and a housing cooperative, but corporate ones. This means that a citizen will not have the right to demand compensation for moral damage or penalties for failure to meet deadlines for delivery of an object, since the Law on the Protection of Consumer Rights does not apply to intra-corporate relations (that is, membership relations). These relations will be regulated by the charter and decisions of the general meeting of the cooperative.
In addition, the members of the housing cooperative will certainly bear additional financial costs in terms of completing the construction of the facility and its maintenance. Moreover, these costs will directly depend on at what stage of construction the developer went bankrupt. If at the initial stage of construction, then this alternative will not be the best option.
As for the Action Plan, or “road map,” of the Russian government, such a Plan is aimed at gradually replacing, over three years, citizens’ funds raised for the creation of apartment buildings and other real estate objects with bank lending and other forms of financing that minimize the risk for citizens. The emphasis in this case is on the transition from shared construction to escrow accounts.
As for the completion of the construction of the facility using funds from the federal and regional budgets, at present there is no legal basis for this, in addition, in the federal budget expenditure items there is no position “compensation for participants in shared construction.” Therefore, at this stage, such an alternative to solving the problem of bankruptcy of the developer is rather vague, since there is no clear indication of the possibility and limits of allocating funds to complete the construction of the facility from the federal or regional budget.
In general, shareholders are currently aware of all the possible risks associated with the bankruptcy of the developer. In addition, this situation becomes more complicated when the shared construction project has not yet been completed and requires completion. In this case, it is possible to submit a demand for the transfer of residential premises (apartment, room) and inclusion of the requirement in the register of claims for the transfer of residential premises, which is part of the register of creditors' claims.
In addition, there is a possible option for a monetary claim against the developer in connection with the opening of bankruptcy proceedings against him and failure to comply with the DDU. But this mechanism will not be able to fully ensure the interests of shareholders in the event that the bankrupt’s funds are insufficient to satisfy the demands of shareholders-creditors.
That is why it is necessary to expand the scope of those actions that can ensure the protection of the interests of shareholders in the event of bankruptcy of the developer.”
The problems of shared-equity construction in the Moscow region will be solved by 2020
The problems of shared-equity construction in the Moscow region will be resolved by 2020. This was said at a meeting of State Duma deputies with “deceived shareholders” of the Moscow region.
There is no panacea
On July 13, members of the State Duma Committee on Natural Resources, Property and Land Relations held an extended meeting to resolve the problem of participants in shared housing construction in the Moscow region. The meeting was attended by deputies of the Moscow Regional Duma, representatives of the government of the Moscow region, the Ministry of Construction of the Russian Federation, the Central Bank, the Prosecutor's Office, the Agency for Housing Mortgage Lending, “deceived shareholders,” as well as developers who failed to fulfill their obligations.
The Minister of Construction and Housing and Communal Services of the Russian Federation, Mikhail Men, said, addressing shareholders, that there is no universal “out-of-the-box” solution to their problem for the whole country, because each case is individual.
“We are looking into all the cases in different regions together with the governors, and we see that these issues can only be resolved point-by-point and through manual control. Each case has to be examined separately,” Men said.
Indeed, the stories that participants in shared-equity construction told the deputies differ significantly both in the statute of limitations and in the reasons for the protracted construction - not to mention the methods of solving them. For example, shareholders from the Belaya Dacha microdistrict near Moscow cannot move into new houses, because the developer has been experiencing financial difficulties since 2014, having invested in new construction projects and thus receiving a noticeable gap in the budget. Now the company's management together with the regional government are looking for additional financing opportunities. If it is not possible to reach an agreement with the banks, the properties will be transferred to another developer, the head of the regional Ministry of Construction, Sergei Pakhomov, told concerned shareholders.
A housing company from the city of Mytishchi promised to deliver the house in 2015, but is forced to constantly postpone the deadline due to problems with documentation: the developer did not manage to submit the necessary documents to government agencies on time, which is why construction has stalled. During consultations with officials, the deputies managed to agree that the documents will be ready in the near future and construction will resume.
Another shareholders have been waiting for the delivery of their property for 15 years - since 2002. Residents of fictitious apartments survived the bankruptcy procedure of the construction company, self-organized into a housing construction cooperative and are now hoping for help from regional authorities in finding an investor for them. According to the head of the regional Ministry of Construction, this problem can be solved: banks will invest in housing cooperatives of “defrauded shareholders” at the expense of land plots allocated by regional authorities.
“We have the opportunity to help not only with regulatory regulation, but also with land resources,” explained the head of the Russian Ministry of Construction, adding that in regions such as the Moscow region this is literally worth a lot.
“We are ready to respond to proposals from the leadership of the Moscow region and look at where land in federal ownership and the property of state unitary enterprises is not used in accordance with the statutory objectives, and we are ready to allocate it so that this resource is used,” Mikhail Men assured the audience .
Power came to the “deceived shareholders”
According to the head of the Ministry of Construction of the Moscow Region, Sergei Pakhomov, construction will resume this year on all sites near Moscow abandoned by developers. Since many constructions are abandoned at the stage of digging pits, and the construction of multi-storey buildings takes up to two years, the completion of construction on all existing facilities will last until 2019 inclusive. Accordingly, the last defrauded shareholder in the Moscow region should receive housing by 2020.
“The problem that we are solving is a difficult legacy - construction that began 7-8 years ago, and which cannot be completed. Today's shareholders are mostly people who invested their money a long time ago. But nevertheless, we understand the mechanisms of solutions, we have the resources, so an appropriate solution will be found everywhere,” the minister promised.
The officials also reported on what has already been done by the federal authorities together with their colleagues from parliament. The most important decision is regarding the bankruptcy procedure: thanks to changes in legislation, today participants in shared construction have priority over other creditors during the bankruptcy of a particular developer. In addition, an algorithm defined by a government decree has been in operation for about a year now, allowing constituent entities of the Russian Federation to change the developer in order to attract new investors to a problematic property. To date, this algorithm has been used for 12 applications from constituent entities of the Russian Federation - one of them is in the Moscow region, and it has already been satisfied.
At the meeting they also touched upon upcoming legislative decisions. We are talking about a bill to create a state compensation fund to protect the interests of participants in shared housing construction. It was adopted by the lower house in the first reading on June 14. After making more than 30 amendments from deputies, the document went through extensive public hearings and today was signed by Deputy Prime Minister Sergei Prikhodko, after which it entered parliament, where it will now prepare for the second reading.
“We will not abandon you, we will help you,” the head of the Russian Ministry of Construction promised the shareholders. “From August 1, all regional authorities must provide us with road maps on how the issue with each facility will be resolved.”
The official promised that citizens will see the process of passing road maps online, because the authorities “really need feedback.”
“We previously met with your colleagues from Moscow,” Vladimir Vasiliev, Deputy Chairman of the State Duma, who led the meeting, reminded the audience. - Now this is why we are doing all this - so that not you go somewhere, but so that power comes to you. Here we may not solve your problems immediately. But we will fix them now and put them to work.”
There are still 34 problematic objects in Moscow
Over the past six years, 36 problematic properties have been completed in Moscow, in which 11,374 defrauded shareholders received apartments. Currently, 34 addresses remain under the control of the mayor’s office. City authorities promise that all citizens who have suffered from the actions of unscrupulous developers will receive housing, but this will require a lot of time and effort.
The Ministry of Construction stated that the regions fulfilled their obligations to defrauded shareholders for 2017. Problems were resolved in 140 properties where 6 thousand Russians purchased housing. According to the head of the department, Mikhail Men, recently the number of defrauded shareholders has noticeably decreased, but still remains quite high - a total of 68 thousand people are on the lists. Compared to other regions in Moscow, the situation looks good: the register maintained by the city authorities, as of January 1, 2018, consists of 4,621 people who bought apartments in the Tsaritsyno residential complex, Maryino Grad residential complex, Sports Quarter residential complex, Residential complex "Sport Town" and other objects, including on the territory of new Moscow. “These are those who are recognized as victims in the process of shared construction in accordance with the criteria of the Ministry of Construction,” the city administration explains.
However, according to the head
Moskomstroyinvest Konstantin Timofeev, the real number of citizens affected by the actions of unscrupulous developers exceeds the number officially registered. “In total, there are approximately 11,800–12,000 defrauded shareholders in the city,” the official calculated. - However
many do not register
because they cannot find the necessary documents. Or they simply don’t want to declare themselves, knowing that the register is only of an accounting nature and does not carry an obligation to provide an apartment.” Moskomstroyinvest currently considers 34 projects problematic: most of them ended up in Moscow after the annexation of new territories, and a number are old addresses, construction work on which began before 2010. In order for citizens to receive apartments, they can act in two ways: either attract a stronger investor who can complete the construction at the expense of profits, or finance the construction of the house using budget funds. The third way involves cash payments: in this case, citizens will not receive housing, but at least they will be able to return the invested funds. According to Timofeev, of the 34 problematic construction projects that are under the control of the Moscow government, 24 continue according to road maps, which spell out the conditions and deadlines for completing the work. The authorities will solve the problems of affected shareholders at the remaining 10 sites through compensation measures. “We will not abandon people in trouble,” Sergei Sobyanin promises. “I am confident that all problems will be resolved, but this will require a lot of time and effort.”
One of the heaviest addresses is considered to be the Tsaritsyno residential complex, consisting of 14 buildings with a total area of almost 800 thousand square meters. meters. The developer did not fulfill obligations under 3264 DDU. The register of defrauded shareholders includes 1,219 people who invested in construction. In order to “resolve” the situation and give citizens the apartments they paid for, the city will have to use both mechanisms. Using budget funds, utility networks, a kindergarten, a school and the first phase of residential buildings will be completed. About 3.5 billion rubles have been allocated from the budget for these purposes. The second stage will require attracting a strong investor, but until bankruptcy proceedings have begun against the previous developer, this is difficult to do, although the city already has a technical customer - this is RK-Stroy, which is part of the structure of the Russian Capital JSCB. “The timing of solving the problem of defrauded shareholders of the Tsaritsyno residential complex depends on the bankruptcy procedure,” says Timofeev. According to him, the court hearing in this case is scheduled for March 2018, and if everything goes well, we can expect that the first stage of the residential complex will be completed in 2019. This will provide housing for 1.3 thousand shareholders.
At the moment, the situation with the former SU-155 facilities, numbering 1.6 thousand apartments, looks more clear. At six addresses, the Moscow government made decisions to complete construction. The same RK-Stroy is managing five sites. The property on Bochkova Street was awarded to the Capital Group company at the auction. In the first quarter of 2018, according to Timofeev, she will begin signing documents with 18 shareholders (DDU SU-155 were not concluded), who decided to wait for the completion of construction of this house. Another 22 shareholders have chosen apartments in the Tricolor residential complex already built by Capital Group, and they are given keys. Two buildings in the Mir Mitino residential complex will be completed in the first and third quarters of 2018. And to begin work in Chertanovo, it is necessary to issue a decree from the Russian government, since the site is in federal ownership. After this, the main construction and installation work, according to Moskomstroyinvest forecasts, will be completed within 12 months, commissioning is currently planned for the first quarter of 2019.
Despite solid powers, the metropolitan authorities, unfortunately, are unable to monitor the state of affairs at all city construction sites where shareholders' funds are used. About 70% of developers in Moscow are small businesses: according to the law, they can be routinely inspected no earlier than three years later, despite the fact that the bulk of the funds required for building a house are collected much faster, when the construction is still in the foundation pit stage . Therefore, the construction industry welcomes the gradual transition from shared construction to project financing, the need for which was stated by Vladimir Putin. The sale of finished housing, which underlies and is the main advantage of the new mechanism, will minimize the risks of future new residents and will finally rid the market of defrauded equity holders. But the transformation will not be quick: according to Moskomstroyinvest’s forecasts, shared construction will definitely not disappear anywhere within 3–5 years. This means that, despite new legislative initiatives that tighten requirements for developers, city authorities will remain vigilant.