The key facts

  • Advertising of housing under construction is allowed only after the project declaration is posted in the unified information system
  • Shareholders' funds will be held in escrow accounts in banks and transferred to the developer after the project is completed
  • If the law is violated, the shareholder may demand a refund with interest

Law Passed and Sent to the Senate

On November 10, the Legislative Chamber passed the law 'On the Construction of Apartment Buildings and Other Real Estate Objects Based on Shared Participation' and sent it to the Senate. The document is aimed at protecting the rights of shareholders and introduces a number of new requirements for developers.

Advertising — Only After Declaration Registration

According to Article 73 of the law, the procedure for advertising shared construction is defined as follows: advertising a residential complex under construction and the apartments in it is allowed only after the project declaration of the object has been posted in the unified information system. If the declaration has not been registered in the established manner, the developer and other persons are prohibited from advertising both the object itself and the apartments in it. Thus, a buyer who sees an advertisement for housing can expect that the project has been officially declared.

Escrow Accounts and Developer Liability

The law establishes that funds contributed by shareholders are not at the developer's disposal but are held in escrow accounts in banks. The money is transferred to the developer after construction has been completed in accordance with the established requirements and the object has been commissioned. The developer may raise funds from the public only if a number of conditions are met: compliance with the requirements of the law, registration in the unified information system, conclusion of an agreement with an authorized bank, and publication of the project declaration. A shared construction participation agreement and agreements on amendments to it are subject to notarization and state registration.

Guarantees for Shareholders

If a developer has raised funds from citizens in violation of the law, the shareholder has the right to demand their return along with interest for the use of the funds. The law also provides mechanisms for replacing the authorized bank or the developer and for ensuring continuous financing of construction. In the opinion of deputies, these measures are aimed at preventing construction stoppages and reliably protecting the interests of shareholders.