For the sake of obtaining benefits, many real estate investors sell apartments at the final stage of construction, when the cost of housing has increased (and more than once) from the start of the project, and there are no apartments left from the builder. Such a deal can only be made by transferring ownership of the apartment in the new building, what this means and what nuances should be aware of in order to protect yourself from the most likely risks - read this article.
Content:
What is a transfer of ownership
Before you find out how safe it is to buy a property in this way, you need to understand what is the assignment of an apartment in a new building, to clarify the legally relevant aspects associated with this type of transaction.
Assignment of property rights is the only way for an investor to sell an apartment in an unfinished house before it is commissioned. Therefore, we are talking about assignment only when the seller is not the developer, but a physical person (an interest holder who bought housing from the developer) or a legal entity (contractor company, investor organization). This method of transferring rights to an apartment is provided for by the federal law “On participation in shared construction.” And it is possible from the moment of state registration of the agreement on participation in construction (DDU) until the moment the house is commissioned.
Assignment of an apartment means a transaction, the result of which is the transfer of property rights to a dwelling. But, since we are talking about an apartment in a house under construction, along with the rights to it, the obligations of the shareholder are transferred. In fact, the object of the sale is not the housing itself, but a contract under which the buyer can become the owner in the future (DDU). Up to this point, the apartment is not actually an existing object, but only conditional, with conditional data and numbering (the mailing address, exact area and apartment number become known only after the house is put into operation). The actual transfer of the apartment to the new owner is carried out according to the deed of transfer and only after obtaining permission to put into operation.
Instead of the word "assignment" in official documents, the legal term is often meant - cession. The agreement on the transfer of rights and obligations under the DDU is subject to state registration.
Important! Failure to comply with any of the legally significant conditions may lead to invalidation of the transaction.
Types of assignment
Assignment transactions are divided into two types, depending on who the seller is - an individual or organization (legal entity).
1. In the first case, most often we are talking about obtaining benefits due to the difference between prices at the stage of excavation and at the final stage of construction (a couple of months before the delivery of the house). Also, the seller is driven by the desire to avoid paying tax. Until the shareholder has become an owner, he is obliged to pay income tax on the sale of an apartment (PIT), but at the same time save a substantial part (the tax will not be calculated on the basis of the cadastral value, which means without an increase by a factor of 0.7). But having registered the property as a property, the owner is obliged to pay 13% tax on the value of the sale (if he has owned the apartment for less than five years). What risks may arise when transferring rights from an equity holder to another individual?
Upon execution of the assignment agreement, the shareholder changes in the current DDU. At the same time, the new shareholder has to agree to those conditions of the developer that were agreed with the previous participant in shared construction. It is no longer possible to make changes to the DDU.But this has its own plus. All obligations of the builder remain the same - the new shareholder will receive the indicated apartment at the agreed price and on the agreed date.
2. In the second case - if the legal entity transfers the rights and obligations under the DDU, the transaction processing procedure does not differ too much from the previous version. The only requirement for the organization is that the settlement with the developer must be made in non-cash form and only after the state registration of the DDU.
Attitude of developers to assignment and coordination
According to the current legislation of the Russian Federation (namely, federal law No. 214), there is no need to agree on a deal if the price of the assignment agreement is fully paid. If the payment is made only partially, then the consent of the developer is a prerequisite for the transaction on the transfer of rights to the apartment. This is a general rule from which there are exceptions. If the builder in the DDU prescribed a direct requirement: “assignment of rights without agreement with the builder is impossible”, then the shareholder is obliged to comply with the terms of the contract under which he put his signature.
Not all developers welcome assignment deals. Some simply prescribe in the DDU the need to agree on a transfer transaction. Others prefer to receive benefits: they charge a fee for the possibility of transferring claims to another person in the amount of 1-15% of the price of the apartment. Who exactly should bear these expenses is not clearly stated in the legislation, it all depends on the agreement between the parties. Most often, these expenses are covered by the first shareholder who agreed to the terms of the developer. However, in practice, the seller often overstates the price of the apartment to make up the difference.
And still others prescribe in the DDU a direct ban on this transaction. Which, incidentally, is not entirely legal and can be challenged in court (if earlier practice showed the meaninglessness of such appeals by shareholders, now there is a positive trend - judges are increasingly taking the side of the participant in shared construction).
Important! Even if there is no clause on the prohibition or obligatory approval in the DDU, the parties are obliged to notify the developer of the change in the shareholder.
Risks of assignment
To understand whether there are “pitfalls” in a transaction, you need to know the motives that drive the seller. In case of assignment of rights to an apartment in a house under construction, everything is extremely clear and explainable. The seller wants to benefit and avoid taxes. And it doesn’t matter who the equity holder is - a private trader or an organization.
Moreover, the probability of encountering scammers is not excluded. To avoid risks (loss of money and housing), it is worth checking:
- The object under construction itself (how the project is being implemented, were there any delays, are the construction norms being observed);
- Developer (its history, degree of reliability, reviews about the company on forums and in community co-investors);
- Project permit documentation (it contains all official data about the project and the developer);
- Is the procedure for state registration of DDU carried out;
- Whether the seller paid the developer in full (as with a regular sale, the seller passes the payment receipts along with other documents, in our case, this is the DDU).
The first three points are associated with the risk of unfinished: the seller may be driven by a desire to get rid of such an object without losing money. A clear sign of “frozen” construction, when 70% - 80% of the apartments sold, in a certain house, are offered under an assignment agreement, and construction work at the facility is only 20-40% completed.
The last two are associated with the risk of loss of all investments, or with the risk of unforeseen expenses. If the previous shareholder is not in full or did not pay the apartment at all, the obligation to pay will be assigned to the new participant in shared construction (even though he has already paid the seller in full).
As practice shows, there are also frequent cases when sellers try to cheat, offering to transfer rights under preliminary DDU.Such an agreement has no legal force, because it is not even registered in the regpalate. Such fraudulent actions are often accompanied by double sales and always end for the deceived buyer with the loss of money and housing.
Mortgage: Procedure
A simple, though not understandable at first glance, assignment transaction is complicated when payment is made at the expense of mortgage funds. Consider three different situations and the order of actions in each of them.
1. The seller bought the apartment at the expense of mortgage funds. The main question is how to transfer property rights if the bank has been encumbered?
If the seller has purchased an apartment on a mortgage, a transfer transaction will be possible only after full repayment of the debt. You can repay the loan at the expense of the buyer in a few steps (but only on condition that the buyer has cash):
- the seller and the buyer should draw up a loan agreement or receipt (not subject to registration, but made in writing in duplicate, stored for a long time, in case of claims) and only after that transfer money to repay the loan and remove the “burden”;
- execution of a transaction under an assignment agreement.
2. The buyer buys an apartment in a mortgage - how to conduct a transaction and reduce costs?
A loan for an object that is ready to be handed over and realized through the assignment of rights is not provided at all banks and at a rather large percentage (not that at the initial stage of construction, instead of 9.5% per annum - 11-13%). In connection with this circumstance, the buyer has the right to demand a substantial discount from the seller. If there are not so many people who want to buy an apartment under an assignment agreement, the other side will be forced to meet them.
To obtain a loan, the bank opens a special account for the client, on which the borrower is required to put down payment. Credit funds are being received there. The procedure ends with the transfer of the entire amount to the seller’s account, which is carried out only after the state registration of the assignment agreement (in the regal chamber).
3. Both parties make a purchase using mortgage funds.
If the parties to the transaction are two “mortgages”, it is still possible to transfer the rights if the first shareholder receives consent from their lending bank.
Of course, the deal on the transfer of rights to housing is complex and requires compliance with a number of legal nuances, as well as maximum care and attention, both on the part of the seller and the buyer. But now you know how to avoid the most likely risks and draw up a contract. Do not forget about the standard risks associated with any transaction with real estate (claims of third parties, relatives, sale by an incompetent seller, a trustee who does not have the right to sell the property, etc.).
