Equity Construction Compensation Fund. The Fund for the Protection of the Rights of Citizens - Participants in Shared Construction: what is it and why is it needed?

07.12.2021

In addition, the public law company "Foundation for the Protection of the Rights of Citizens of Participants shared construction» has other important advantages:

The mechanism of payments to equity holders has been significantly simplified in comparison with the previously existing liability insurance.
Manages collected financial means state structure, which in itself increases the reliability of the compensation fund.
The funds of the compensation fund are accounted for in certain accounts, which guarantees the transparency of the mechanism for distributing money.

Main tasks and functions The main task of the created structure is to protect the rights of participants in shared construction. In case of bankruptcy, losses are compensated by contributions previously transferred by the developer.

A fund for the protection of the rights of citizens - participants in shared construction has been created

Essentially, this single fund developers will work by analogy with the Deposit Insurance Agency (DIA), which guarantees the return of funds to people who have placed their money on bank deposits. In general, we can say that equity holders who entered into a DDU after January 2017 have a new mechanism for protecting their investments.

True, there is one nuance here, which we will discuss a little below. The procedure for the return of personal income tax when buying an apartment. 2 ways.
List of documents. The shared construction compensation fund was created on the basis of amendments to the federal law FZ-214, which provide for additional protection of the rights and interests of participants in shared construction (Article 23.2 of the FZ-214 law).

The fund for the protection of equity holders began its work

The funds accumulated in this fund will be used exclusively to pay compensation to deceived shareholders in the event of the Developer's bankruptcy, or to finance the completion of construction. In the latter case, this may be financial assistance or a loan to a new Developer, which will assume obligations to complete the construction of the problematic object.
It is prohibited to use the funds of the fund for other purposes. For new equity holders, this means a significant reduction in the risk of investing in the purchase of apartments in new buildings.
Firstly, there is a real chance to complete the house, even when the Builder went bankrupt. Secondly, the very mechanism of compensation payments to equity holders has become much simpler and clearer (compared to liability insurance).
Thirdly, these funds will not be managed by private Insurance companies, but the state structure.

Fund for the Protection of the Rights of Citizens - Participants in Shared Construction

Info

In order for the shareholder to have the opportunity to protect himself in the event of bankruptcy of the developer or the occurrence of other unforeseen circumstances, the legislation on participation in shared construction provides for the mandatory registration of a DDU with a state body. Requirements for developers Very serious conditions in relation to developers are enshrined in Federal Law No. 218.

Because of this approach, only those developers who have been tested by time will be able to work on the market. The requirements reflected in the law will come into force from July 2018.

The official name of the developer must contain the name - "specialized developer". Any commercial activity for specialized construction organizations engaged in the construction of residential and non-residential real estate under the DDU is prohibited.

Compensation Fund for the Protection of Shareholders' Rights

On July 21, 2017, the State Duma adopted a law on the state fund for the protection of the rights of equity holders. Construction companies are subject to stringent requirements.

But will it help the families of equity holders to become owners of new apartments. In Russia, the construction of residential facilities with the help of public investment has been legally regulated since 2004. Conclusion of an equity participation agreement (DDU) gives families a chance to get cheaper housing market value. However, they risk losing hope for housing and being left without savings if the builders fail to fulfill their obligations. In 2014, for the first time, the state intervened in the business of shared construction in order to protect the interests of citizens - investors housing construction. Prior to registering a DDU with Rosreestr, a construction company was obliged to insure liability from an insurer or take a surety from a bank.

Fund for the Protection of the Rights of Citizens of Shared Construction Participants

This item caused a friendly misunderstanding of both builders and experts, since any construction begins with these costs.

All funds of the equity construction company must lie in one bank, which checks for each financial cost.
Persons managing a construction company should not have:

conviction for economic crimes;
be bankrupt;
be subject to disqualification.

Compensation for losses Losses to equity holders in the event of bankruptcy of a construction company are reimbursed from the compensation fund for shared construction in a certain order.

At first arbitration court bankruptcy is established.
Then the board of the compensation fund decides which option is more profitable: payment of losses to equity holders or the completion of a residential facility.

Equity Construction Compensation Fund

Attention

Content

1 Essence
2 Main tasks and functions
3 How to protect your rights
4 Some nuances
5 Requirements for developers

Issues of support for deceived equity holders are very often raised at the highest levels. To support this category of citizens, in 2017, a compensation fund was officially created to protect the rights of citizens participating in shared construction.

Unfortunately, the regulatory part was not developed in parallel. As a result, the fund for the protection of the rights of equity holders could not fully function. After the adoption of Federal Law No. 218 in July last year, the mechanism was finally formed, according to which the public legal company "Fund for the Protection of the Rights of Citizens of Participants in Shared Construction", reporting directly to the President of the Russian Federation, should work.

Fund for the Protection of the Rights of Citizens - Participants in Equity Construction official website

The area of housing for which money is returned from the compensation fund of equity holders should not exceed 120 m2. State Fund - for those who give their last savings to buy an apartment. Buyers large apartments and luxury housing, according to legislators, can stand up for themselves.
The amount of compensation depends on the cost of housing, which is determined by the Ministry of Construction - it corresponds to the minimum market value, which differs by 30-40% from the actual one. Having received compensation at such rates, equity holders lose part of their funds.

Fund for the Protection of the Rights of Citizens of Shared Construction Participants official website

Did you know that… Since January 2017, a state compensation fund for shared construction has been created in Russia. The people also call it the developer compensation fund or the fund for protecting the rights of equity holders.

What it is? Who should be happy about this? Legislators argue that this should please equity holders - i.e. participants in shared housing construction in apartment buildings. After all, the main task of the construction compensation fund is to pay compensation to equity holders under Equity Participation Agreements (DDU), in the event of the Developer's bankruptcy.

What about the builder's insurance? Do you mean the developer's civil liability insurance, which has been in effect so far? This insurance (for more details about it, see the link above), was launched in 2014, and for several years has shown its inconsistency. More precisely - inconvenience and complexity in implementation.
The Fund for the Protection of the Rights of Citizens - Participants in Shared Construction is registered in the form of a public company and begins its work, AHML said. The registration of the fund in the form of a public company was completed on 20 October. At the expense of the fund, compensation will be paid to participants in shared construction or construction of unfinished real estate will be financed. The fund will be financed by contributions from developers in the amount of 1.2 percent of each share agreement after the date of state registration of the fund.

Non-payment by the developer of the contribution to the fund of equity holders is the basis for the suspension of state registration of the agreement for participation in shared construction. detailed information about the procedure and features of making contributions by developers and registration of DDU is posted on the website of the fund.

Fund for the Protection of the Rights of Citizens of Shared Construction Participants official

The Office of Rosreestr for the Kursk Region informs about the creation of the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction. On October 20, 2017, the Fund for the Protection of the Rights of Citizens - Participants in Equity Construction began its work. The creation and functioning of this Fund is regulated by Federal Law No. 218-FZ of July 29, 2017 “On a public law company for protecting the rights of citizens participating in shared construction in the event of insolvency (bankruptcy) of developers and on amending certain legislative acts Russian Federation". In pursuance of the provisions of the Law, the Government of the Russian Federation issued a number of resolutions on the work of the Fund.

The topic of deceived equity holders is still one of the most relevant in our country. The state is trying to take some steps to protect citizens who have suffered from unscrupulous developers. One of the real steps in this direction was the creation at the end of 2017 of the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction. The main idea of creating the fund is to accumulate funds at the expense of mandatory deductions from developers, and in case of bankruptcy of the developer - to compensate citizens - participants in shared construction for their financial losses.

What is the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction

The Fund was established by the Government of the Russian Federation in accordance with Article 23.2 of the Federal Law "On Participation in Equity Construction apartment buildings and other real estate” N 214-FZ.

Registration of the Fund for the Protection of the Rights of Citizens - Participants in Equity Construction took place on October 20, 2017 in the form of a public company. The specified date is the day of the beginning of the Fund's activity.

What is the purpose of the Foundation? It was created to protect the rights and interests of citizens who have become equity holders in the event that the developer becomes bankrupt.

How are the funds of the Fund formed? This is done through mandatory contributions from those developers who, for the construction of apartment buildings, attract funds from citizens who are participants in shared construction.

What contributions to the Fund should developers make? Each developer must pay mandatory deductions (contributions) to the Fund in the amount of 1.2 percent of the price of each share agreement agreed with the shareholder. However, the amount of the above contribution may vary based on federal law but not more than once a year.

What are the functions of the Foundation? The main functions are:

formation of a compensation fund at the expense of mandatory deductions from developers;
control over the receipt of contributions from developers to the compensation fund;
implementation of compensation payments to citizens - participants in shared construction under agreements for participation in shared construction in case of bankruptcy of the developer;
financing activities to complete the construction of unfinished facilities;
accreditation of arbitration managers.

Reasons for the creation of the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction

The fund was not created in a vacuum. In 2016-17, the situation with defrauded equity holders escalated greatly. Popular unrest associated with the problems of new buildings and equity participation in housing construction has taken on serious proportions. It came to shares in the Administration of the President of the Russian Federation.

Attempts by the Ministry of Construction of the Russian Federation to solve the problems on their own did not lead to anything.

As a result, legislators added article 23.2 “Protection of the rights of citizens participating in shared construction” to Law N 214-FZ. This article provides for the creation of a compensation fund in order to protect the interests of equity holders. The principle of operation of the fund is approximately the same as the work of the Agency for insurance of deposits of citizens in banks. If everything works as planned, deceived equity holders will be able to receive payments from the fund in case of problems with the developer.

Thus, the main reason for the creation of the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction was an attempt by the state to somehow insure citizens who are trying to build their own housing with their own money.

Who is the Fund to protect?

Recall that the Fund was registered on October 20, 2017. Therefore, all developers who, after the specified date, transfer to state registration the first share agreement concluded by them, immediately automatically become participants new program. They are obliged to transfer contributions to the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction in the amount of 1.2 percent of the price of each share agreement.

It should be noted that developers in the case of transferring contributions to the Fund are not required to insure their liability in insurance companies and / or receive a guarantee from banks.

We draw attention to one important circumstance. If the developer of the house submitted the first equity participation agreement for state registration before October 20, 2017, inclusive (that is, before the day of registration of the Fund), then in order to register such an agreement and all subsequent agreements in relation to this house, the developer must submit to the registration authority liability insurance contracts or bank guarantees for non-fulfillment of obligations to transfer residential premises under an equity participation agreement. Equity participation agreements will not be registered without the submission of these documents.

Thus, two situations are possible today:

situation 1: the developer does not pay contributions to the Fund, because submitted the first equity participation agreement for registration before 10/20/2017;
situation 2: the developer pays contributions to the Fund, because the first equity participation agreement (and, accordingly, all subsequent ones) was registered after 10/20/2017.

Let's consider these situations in more detail.

Situation 1- the developer does not pay contributions to the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction.

If the developer has insured its liability to equity holders and / or its obligations to them are secured by a bank guarantee, then in the event of bankruptcy of the developer or similar problems, equity holders can count on adequate compensation from the insurance company or bank.

If the developer has not insured his liability and does not have a guarantee from the bank, then equity holders can count on compensation payments only as part of bankruptcy measures. Whether some money will reach equity holders, and in what amounts, is a question.

Situation 2— the developer pays contributions to the Fund.

In this situation, the interests of equity holders are already more reliably insured, because. in case of bankruptcy of the developer, the Fund for the Protection of Citizens' Rights will make payments to participants in shared construction.

What payments are made to participants in shared construction from the Fund for the Protection of Citizens' Rights

So, the Fund accumulates funds transferred by the developer. If the developer completes the construction of the house, equity holders receive apartments, then everything is fine. The funds transferred by the developer remain in the Fund.

If the developer is declared bankrupt before the completion of construction, then each shareholder will be able to count on receiving compensation in the amount of the cost of up to 120 square meters of housing. That is, if the shareholder paid for the construction of an apartment with an area of more than 120 square meters, then he will be compensated for a smaller amount, but equivalent to the specified area.

In the rules for payments from the Fund, the analogy with insurance is clearly visible. bank deposits. Indeed, in the event of a bank failure, a depositor can receive from the Deposit Insurance Agency the amount of his deposit, but not more than 1.4 million rubles.

Recall that payments from the Fund are possible to equity holders only of the developer who began to register equity participation agreements after October 20, 2017 and, accordingly, began to deduct contributions to the Fund for the Protection of the Rights of Shared Construction Participants.

Separately, we note that the Fund, in pursuance of the function of protecting the rights of citizens who are participants in shared construction, will make payments only if the developer is declared bankrupt by the arbitration court, bankruptcy proceedings are opened in relation to it and there is evidence of payment by the developer assessed contributions to the Foundation.

The same equity holders who are not subject to the program with the Fund (their developer began registering equity participation agreements before October 20, 2017), in the event of bankruptcy of the developer, will be able to apply for insurance payments(if the developer has insured his liability), or payments from the guarantor (if any).

Amounts and procedure for payments to equity holders from the Fund

The procedure for payments from the Fund is established by Decree of the Government of the Russian Federation of October 7, 2017 No. 1233.

In order to receive payments, participants in shared construction at their meeting must decide on receiving compensation from the Fund. After that, the Foundation, within 14 days from the date of the decision by the meeting, posts on its official website a message about the start date for accepting citizens' applications for compensation, as well as about the place, time, form and procedure for accepting applications.

An important detail. Citizens no longer have to wait for the completion of the bankruptcy proceedings of the developer. They have the right to apply for reimbursement before this completion (which can drag on for years).

When applying for reimbursement, each shareholder must submit:

application for payment of compensation in the form approved by the Fund;
passport;
an extract from the register of creditors' claims on the amount, composition and order of satisfaction of claims.

Payment of compensation from the Fund is carried out within 10 working days from the date of submission of all necessary documents.

However, the scheme for paying money to equity holders is not the only one. The Fund can send money to complete the construction that has begun. But to make such a decision, the degree of readiness of the house, the size of the provided Money and the time required to complete the construction, the number of equity participation agreements concluded.

If the Fund takes this path, then it will have to provide funds for the completion of construction to the one chosen by the competition legal entity who intends to become the acquirer of an object of construction in progress, land plot, and fulfill the obligations of the developer to equity holders, that is, to complete the house.

What is the amount of compensation for each shareholder. The amount of compensation is calculated as the product of the total area of all residential premises to be transferred to a citizen participating in shared construction and an indicator of the average market value of 1 sq. m of total living space. At the same time, rates on the primary housing market in the relevant subject of the Russian Federation are taken into account, the value of which is determined in the period in which the contract was concluded.

But there is a significant limitation. The total area taken into account when determining the compensation payment cannot exceed 120 square meters. This means that if the shareholder intended to buy an apartment with an area of more than 120 square meters, and, accordingly, made full payment under the equity agreement, then he will not receive money for meters exceeding the specified limit.

What happens after July 1, 2018

It is assumed that from July 1, 2018, those equity holders who enter into equity participation agreements for new buildings, for the construction of which a permit will be issued from July 1, 2018, will either not fall into a situation where the developer delays construction or goes bankrupt, or (if there are serious problems) will receive a compensation payment from the Fund.

Thus, with the creation of the Fund for the Protection of the Rights of Citizens - Participants in Shared Construction and with the introduction of new requirements for developers, it is expected that their activities will become more transparent, the material base will become more stable, and control over the activities of each developer will increase. Therefore, future shareholders after the conclusion of an equity participation agreement will be protected more reliably.

There is information that in the future in Russia there may be a transition to new scheme acquisition of housing under construction. Instead of shared construction, there will be so-called project financing. At the end of 2017, the Government of the Russian Federation approved a plan for a phased transition from equity to project financing of housing construction.

Responsibility construction companies The provision of the new legislation on the compensation fund for shared construction defines strict requirements for the liability of developers. From July 2018, they will begin to operate:

now companies will be more limited in their activities, they will have to deal only with construction, and not related business;
investors can attract funds from developers who have more than 3 years of experience, who have erected about 10 square meters. m. residential facilities;
The firm must have significant authorized capital about 10% of the cost of the house;
developers will be allowed to build only one object;
the company's finances must be kept at single account in a banking institution that controls all financial costs.

The requirements also concern the moral side of officials.

The fund for the protection of equity holders began its work

The law assumes that from January 2017, when registering each new Equity Participation Agreement, Rosreestr will send a request to the fund on the payment or non-payment of mandatory contributions under this agreement. Thus, Developers will be encouraged to pay contributions to the compensation fund on time, and equity holders will be provided with real financial protection of their rights.

Attention

But there is one caveat. The Developer's obligation to transfer a contribution to the compensation fund arises only if the first Shared Participation Agreement (DDU) for the construction of a new house was registered after January 1, 2017 (see the link above on the website of the Government of the Russian Federation). We are talking about the first contract for a construction project.

That is, legislators allowed not to pay contributions to the fund to those Developers who, as of January 1, 2017, already had registered sales of apartments under DDU for any project.

Article 10

Moreover, guarantees are not given by a private bank or an insurer, but by the PPC - part of the state structure. Official website of the shared construction fund Information transparency is a necessary condition for the operation of the new compensation fund, prescribed by law. Information on shared construction will be posted on the official website of the Unified Institute for Development in the Housing Sector, along with the AHML resource.
It should reflect:

the state of all objects built with equity participation: their project documentation, all financial statements, the number of preschool institutions, photos of the stages of housing construction;
data on government officials who control the work of developers, the results of their inspections;
facts of violation of the law and prosecution of the perpetrators, etc.

Equity Construction Compensation Fund

This item caused a friendly misunderstanding of both builders and experts, since any construction begins with these costs.

All funds of the equity construction company must lie in one bank, which checks for each financial cost.
Persons managing a construction company should not have:

conviction for economic crimes;
be bankrupt;
be subject to disqualification.

Compensation for losses Losses to equity holders in the event of bankruptcy of a construction company are reimbursed from the compensation fund for shared construction in a certain order.

First, the arbitration court establishes the fact of bankruptcy.
Then the board of the compensation fund decides which option is more profitable: payment of losses to equity holders or the completion of a residential facility.

This action is not quick, it can drag on for half a year. The adopted verdict will be posted on the website of the investor fund. It also indicates the address data where the documentation is accepted, the schedule for receiving employees.

Info

Investors will receive information about the resolution within 14 days after its approval. A package of documentation, a passport, an application is provided to the banking institution that accompanied the work of the construction company.

Having provided all the necessary papers, compensation payments are expected for 10 days. For some categories of citizens, the payment of funds may occur a little earlier.

Important

The Fund undertakes to pay losses to investors in accordance with established rules. Equity houses under construction, signed according to the old scheme, in case of ruin, are not protected by the compensation fund.

The new legislation does not provide for the payment of losses under previously concluded DDUs.

Compensation Fund for the Protection of Shareholders' Rights

The amount of contributions of 18-25 billion in the first years of the fund's existence is quite sufficient to cover the future problems of one or two regional contractors. The law does not prescribe where to get money from in case of a shortage of funds, it is possible that from the budget.

Compensation under the contracts of past years is not provided for by the new law. If an object under construction has at least one equity participation agreement signed according to the old scheme, it will not be included in the scope of the compensation fund. Requirements for the developer The central provision of the new law on the compensation fund of equity holders is the presentation of strict requirements for builders, which may leave very few developers on the equity construction market. The presentation of these requirements will begin at the conclusion of the DDU from 01.07.

2018.

Equity Construction Compensation Fund official website

In case of bankruptcy of a construction company, the cost insurance policy or interest for a guarantee in a bank could not cover the losses of all owners of shared construction contracts, all the more they were not enough to complete the construction of the problematic object. The number of unfinished objects and deceived equity holders continued to grow.

The new mechanism is convenient, first of all, for developers.
They do not need to insure each share construction contract, look for a suitable insurance company. It is enough to transfer a certain percentage of the transaction to the compensation fund of equity holders and obtain permission to register it.
The money received from developers is the reserve from which the losses of equity holders will be paid when their construction company is ruined.
The same reserve will finance the company that will complete the construction of the problematic facility.

Fund for the Protection of the Rights of Citizens - Participants in Equity Construction official website

It is prohibited to use the funds of the fund for other purposes. For new equity holders, this means a significant reduction in the risk of investing in the purchase of apartments in new buildings.

Firstly, there is a real chance to complete the house, even when the Builder went bankrupt. Secondly, the very mechanism of compensation payments to equity holders has become much simpler and clearer (compared to liability insurance).

Thirdly, these funds will be managed not by private insurance companies, but by the state structure.
Main Functions The Shared Construction Fund has two main tasks - to help equity holders in the event of bankruptcy of developers and to complete problematic construction. Its functions are connected with these tasks.

Maintain records and control of contributions received from developers.
Organize arbitration management in case of bankruptcy of construction companies that have made contributions to the fund.
Compensation for losses to shareholders.
Financing and lending to a company that has committed to complete a problematic facility.
Placement of free cash in assets and bank deposits, mortgage securities and government bonds.

Compensation fund operation mechanism The developer liability insurance mechanism, which has existed since 2014, was recognized as ineffective by both independent experts and government agencies.

Equity Construction Fund official website

The full name of the law: “On a public law company for the protection of the rights of citizens participating in shared construction in the event of insolvency (bankruptcy) of developers and on amendments to certain legislative acts of the Russian Federation.” Legal status Initially, the new shared construction fund was defined as a non-profit organization (NPO), included in the coverage area of the state "Agency for Housing Mortgage Insurance" (AHML). The founder was the Ministry of Construction, he owns a number of important amendments to change the status of the compensation fund for equity holders. The Duma approved the status of a public law company (PPC) for the "Fund for the Protection of the Rights of Citizens - Participants in Shared Construction" with functions and powers characteristic of state power. The company is accountable to the President of Russia, control over financial activities carried out by representatives of both chambers of parliament and the Accounts Chamber of the Russian Federation.

Shared construction fund official website of the vacancy

The decision of the issue may be delayed for 6 months.

The decision on payment is posted on the website of the compensation fund of equity holders. It also indicates the address at which documents will be accepted and the working hours of employees.
All information is received by equity holders within 2 weeks after the decision is made.
List of documents for compensation: application; passport. Most often they are provided to the bank that accompanied the activities of the developer.
Money to equity holders is paid within 10 days after the provision of the necessary papers.
Military servicemen, seriously ill people, people who are away are entitled to earlier payments.

The Fund undertakes to pay the losses of equity holders in full.

Nuances Payments to equity holders are determined by multiplying the cost of one square meter housing in its area.

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