How to check the developer: methods and recommendations

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

When purchasing housing at the construction stage, you need to be convinced a thousand times of the reliability of the developer. How to check the company and understand if it can be trusted? After all, the cost of real estate today is so high that most citizens have to take multimillion-dollar mortgage loans and repay them for more than one year, so it is important to eliminate even the smallest risk. You will learn how to check the developer, what information and documents you need to pay close attention to in the article.

Why you can't rely on luck

There are several ways to check the reliability of the developer when buying an apartment at the stage of excavation or construction. Trust your money should only be a construction company with an impeccable reputation. Conscientiousness and experience in construction are important, but not the only indicators of the company's reliability. In addition to them, financial stability matters, that is, the availability of various sources of financing and administrative capabilities. The risks of the buyer, the probability of "freezing" directly depend on these criteriaconstruction or delay in the commissioning of the finished facility.

The activities of the developer as a legal entity or individual entrepreneur are affected by various economic factors, changes in legislation, trends in the real estate market, exchange rates and other conditions that do not depend on the construction company itself, its reputation and good faith. Difficulties and unforeseen circumstances may arise in the work of a company with many years of experience and a solid image. However, such a company, unlike a lesser-known and unverified developer, will be able to find a way out of difficult situations without causing damage to the end consumer. That is why it is extremely important to know how to check the developer. This will allow you to understand whether you can trust him with your hard-earned money.

Information on the website

The first and easiest way to get to know a construction company is to visit its official website. Usually, basic information about the developer is contained in the "About us" or "About the company" section. It contains information about the period of existence on the market, the history of development, achievements, awards. In the same place, some firms publish information about the managerial level and the composition of the board of directors.

Informational and analytical articles on independent specialized resources ("Indicators of the real estate market", "RBC Real Estate", etc.) will be useful. You can get information about the developer through any search engine. But unquestioningly trust what is written on the site in the section "Media about us" or "Reviews",definitely not worth it.

Don't miss the "Projects" page. In this section, the company places already implemented projects, if any. By the way, their absence may indicate that the developer is a novice in his business. It would be wrong to objectively judge the company's experience by those objects that are at the implementation or planning stage, because the so-called "paper projects" only testify to the developer's ambitions, nothing more.

If there are handed over real estate objects presented for review on the official website, you should pay attention to the region in which they were built. This fact will help to check the developer. As a rule, the presence of several successfully completed projects indicates that the developer has good relations with the authorities of the municipality, which means that any problems associated with obtaining permits, agreeing on technical conditions, and energy supply are unlikely.

Cooperation with partners

Assessing the reliability of the developer, you should pay attention to its key partners. If these include large banks with state participation, and leading construction companies act as general contractors, there is no doubt in the correctness of your choice.

There is another method to check the builder. It consists in studying the investment policy of the company. In addition, if the main investor of the firm is a giant financial corporation, then there is certainly no need to worry. Before investing heavily in a business, large investorsthoroughly study development projects, carry out numerous inspections of the developer's activities, and only if they have no questions do they sign a contract. In turn, the developer, pointing to a partnership with a leading corporation, demonstrates to the entire market the integrity of its reputation.

Information on funding sources is contained in the project declaration. This document can also be found on the developer's website. In addition to it, the name of the bank or other organization that finances the construction is indicated. This point is of particular importance, since cooperation with a small or unknown company may actually be affiliated. Other sources are end-customer funds transferred under DDU agreements.

To check the reliability of the developer in shared construction, as a rule, they pay attention to the presence of currency risks. They appear if the developer makes all payments in dollars or euros. The slightest fluctuations in the exchange rate will lead to serious losses for investors. If all operations related to the project are carried out in rubles, this eliminates the risks of investors.

Financial opportunities of the developer company

The hallmarks of a firm's investment strength include an independent sales strategy. It implies the implementation of the project by the developer at the expense of investing his own or credit funds, without the participation of buyers. Usually such objects are sold at the end of the construction process,when they are almost ready for commissioning. If the developer has started selling apartments, but even a foundation pit has not yet been prepared, it is necessary to study the project declaration, which indicates the sources of financing. If they are predominantly equity holders, it's best to carefully re-evaluate your buying decision.

The adequacy of the pricing policy is another argument in favor of the developer. How to check when buying an inexpensive apartment, what is the catch? The obvious cheapness of the proposal does not always indicate its benefits. Most often, apartments that are sold at a price much lower than the market price indicate a lack of company resources. However, a moderate decrease in prices during seasonal promotions is quite normal in the real estate market.

The financial well-being of a company is often expressed by its publicity. The placement of own shares in the public domain on the domestic or foreign stock market confirms the fact that the developer has undergone numerous verification procedures and received high expert assessments. This fact indicates that stock investors trust the company and support its model of corporate governance and financial policy.

Real estate portals, which publish ratings of Russian construction companies, are a place where you can check the developer by his quantitative indicators. In the top, as a rule, are firms with a significant amount of residential space put into operation and profit earned for the calendar year.

Paceproject implementation

How to check the reliability of the developer when buying an apartment, if the house is under construction or excavation? In this case, you can rely on the pace of each stage of construction work. Already implemented projects of the developer are taken as a basis. Often, developers specifically publish photo and video reports, thereby trying to justify the trust of investors. Thanks to web cameras installed on the territory of the facility, future residents have the opportunity to monitor the work process online, evaluate the dynamics and coherence of the process.

But how to check the reliability of the developer in shared construction and how to understand that the construction of high-rise buildings is too slow? In a normal workflow, an apartment building under construction should increase by 2-3 floors every month. Panel buildings, unlike brick and monolithic ones, are built faster: on average, a concrete box grows by 4-5 floors per month. However, these calculations are theoretical, and even leading construction companies often deviate from the norm.

Before buying a housing under construction from a developer, it is advisable to spend a few hours of your personal time and visit a couple of finished objects. Inspection of courtyards, facades of buildings, entrance to the residential complex will make it possible to draw a preliminary conclusion about the quality of houses. You also need to take into account the year of construction and feedback from residents. Even those buildings that are visually free of defects can subsequently present new owners with nothe most pleasant surprises in the form of freezing walls, high audibility, low-quality interior finishes, etc.

What documents to ask about

Federal Law No. 214, which regulates participation in shared construction, fixes the obligation of the developer to provide several documents for review by any interested person. These include:

• charter of the construction company in the latest edition and other constituent documents;
• certificate of state registration of the developer as an individual entrepreneur or legal entity;
• certificate of tax registration;
• accounting documents for three calendar years;
• auditor's report on the company's activities.

These are general documents that you need to check with the builder of the new building first. The Company is obliged upon request to provide their originals or notarized copies. But on the other hand, familiarization with these documents cannot be called a 100% option that will allow you to check the reliability of the developer when buying a new building. As a rule, this information is of a formal nature and is available to each developer, so the average buyer will not be given any special information. The only value for potential investors is the audit report, according to which specialists will be able to draw conclusions about the financial condition of the company.

Where more important is to get acquainted with the project documentation. In addition to the main package of papers, the availability of:

• land ownership contracts;
• conclusions of state experts;
• permits from regional authorities for construction;
• extracts from the Unified State Register of Legal Entities.

When asking how to check the developer when buying a new building, one should not forget about the documents that need to be required immediately at the time of the conclusion of the contract. Before you put your signature in the agreement on equity participation, you need to make sure that the company operates within the law. So, what developer documents do you need to check? Be sure to make sure that the person who represents the interests of the company has the authority to complete the transaction. If the contract is signed by an employee of the company, he must have a corresponding power of attorney from the general director. In cases where a party to the agreement is a person who does not have these powers, the agreement is invalidated, and all obligations under it are canceled, despite the fact of the transfer of money. You need to pay attention to the name of the person who issued the document, the validity period of the power of attorney and the right to perform what operations it gives.

What else can indicate the reliability of the company

Most users collect information about the developer they are interested in on various forums that are devoted to discussing projects, the cost of a new building, the advantages and disadvantages of apartments, etc. Here you will not be able to check the documents of the developer, but you can find out about the complaints of equity holders, understand what there may be inconsistencies and underwaterstones in the process of real estate registration. If there are more complaints than positive reviews, you should re-evaluate the purchase decision. In the event that dozens of equity holders accuse the developer of frankly fraudulent actions, constant violations of the deadlines for the completion of objects, or, for example, refusal to provide documents on the legality of construction on a particular land plot, it is better to find another company.

Many are interested in what documents to check with the developer so that you can find out about his ongoing lawsuits. But even if information confirming the existence of certain disputes between the construction company and co-investors, contractors or equity holders was in the public domain, it would mean nothing. Litigation is a common practice in the real estate market, especially for large firms that annually commission hundreds of thousands of square meters of living space. Dispute resolution is handled by a staff of lawyers, so these issues have nothing to do with the course of the construction process and the accompanying technical issues.

How to check a developer for bankruptcy

In 2014, the Federal Law was adopted, which obliged all construction companies to insure their liability to equity holders through a bank guarantee, an insurance policy or an agreement with the Mutual Insurance Society. And in 2017, new amendments were again made to the said Federal Law, according to which developers must now allocate funds to the unified compensation fund for shared construction. The purpose of this state organization is to direct the budget to finance long-term construction and to pay off debts to equity holders in the event of bankruptcy of the developer.

How to check if the company has acquired the official status of insolvent before the conclusion of the equity agreement? Special registers will help in this matter. To use one of them, you need to go to the official website of the arbitration court. In the “Single file cabinet” section, through the search filter, set the parameters in the “Participant in the case” column, indicating “Respondent”, then enter the name of the developer and select the active “Bankrupt” button. All archival and pending insolvency cases of legal entities and individuals will be displayed on the screen.

Home commissioning: basic formalities

Finally, the deal is done and all the deadlines for handing over the object to the residents, who are looking forward to the day to celebrate the housewarming, have come up. But, as it turned out in practice, many do not know how to check an apartment from a developer.

The deadlines for completion of construction work are prescribed in the DDU. If the developer does not have time to hand over the object on time, then he is obliged to inform the buyers two months before the expiration of this period and propose to change the corresponding provision of the contract. Moreover, it is also important to separate the concepts of the commissioning period and the transfer of keys to owners. As a rule, new settlers will be able to move into new apartments not earlier than the next day after the acceptance of the object.state commission. Moreover, the moment of handing over the keys to the tenants should also be specified in the contract. It usually occurs 4-6 months after the commissioning permit has been received.

To all shareholders, developers are required to send a notice of readiness of the object by registered mail no later than one month before the date of handing over the keys. However, more often buyers are told good news by phone and invited to come to the office to verify documents. You need to come there with your passport and a copy of the deal agreement. If the purchased housing is registered with several owners, each of them must be present, and if this is not possible, you should issue a power of attorney to your representative.

one on one. The developer is obliged to carry out the delivery of the object according to a certain regulation, and the new owner has the right not to accept it if there is a marriage, shortcomings. Before signing the act of acceptance and transfer, it is necessary to check the implementation of every minor detail in the apartment provided for by the contract. In addition, you should make sure that the developer has received permission to put into operation, and the house has already been assigned an address.

If the developer has delayed the timely delivery of the object, the buyer has the right to receive compensation. At the same time, it must be understood that no developerwill show initiative and will not pay the pen alty of his own free will. The new owner has the right to file a claim with the main office of the company and wait for its consideration within 10 days. Many companies in such cases offer their clients pre-trial settlement of the dispute, indicating the amount of compensation and the payment period.

Inspection of the apartment

Before you go to the acceptance and transfer of the apartment, the owner must once again open his copy of the share agreement and carefully study the chapter that describes the characteristics of the object ready for occupancy. All types of work that the developer undertakes to perform are indicated here. During the inspection, it is advisable not to let DDU out of your hands in order to be able to immediately point out to the representative of the developer company the identified inconsistencies.

So, what to check when accepting an apartment from a developer? Let's list everything you need to pay attention to:

• Front door. It must be properly mounted and open freely, snugly against the opening. Pay attention to the functionality of the mortise lock.
• Walls. Even a minimal deviation from the vertical is not allowed, while local irregularities can be within 5 mm. You should also measure the area of the apartment and make sure that the placement of the walls corresponds to its schematic layout.
• Floors. There should be no air voids or bundles. You can find them by tapping a few fragments with a hammer.
• Ceilings. dropsand gaps at the joints, the discrepancy between the actual height of the ceilings and the declared one is a reason for refusing to accept the apartment. However, if the buyer plans to install stretch ceilings, you can turn a blind eye to minor defects.
• Windows. Structures of the brand indicated in the DDU by the developer must be installed. You need to check on your own the integrity of the double-glazed windows, the functionality of the fittings, the degree of closing the gaps, the presence of a visor on the loggia (if any).
• Electrical wiring. With the help of special testers, you can check the operation of all switches and sockets. If their presence is not provided for by the contract, make sure that there are all wires for further connection.
• Engineering communications. Heating, sewerage and ventilation systems, all shutoff valves, tees, drain pipes, sink, toilet bowl, heating radiators, etc. are subject to verification.
• Finish. It is necessary to pay attention to the quality of the materials used, their brand. There should be no cracks, chips or open seams.

Finally, you should also record the readings of the meters that are installed in the apartment and outside it. It is advisable to save the data of metering devices and compare them with those indicated in their passports. In addition, you can contact the developer with a request to show the basement or the upper technical floor. Shareholders have the right to access any part of the building to make sure that pipes or the roof are not leaking, and that there are no foreign odors.

Last step

If the owner has no claims to the finished apartment, the acceptance certificate is signed. Otherwise, if defects are found, a defective act is drawn up. It indicates the entire list of customer complaints, as well as the address, apartment number, details and information about the developer company.

The developer invites the shareholder to re-view after the elimination of defects. If the buyer has no serious claims, but for some reason he refuses to accept the apartment, the developer has the right to hand over the object unilaterally.