Liability insurance Builder when joint construction: features when applied

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2018-03-27 06:45:19

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The Developer is obliged to insure the responsibility before the conclusion of the first transaction with the buyer. Otherwise, he will not be able to register it with the Federal registration service. These and other additions were made in 2014, Federal law No. 294 “On changes in some legislative acts.

The bottom line

In 2014, the construction company is obliged to confirm fulfillment of obligations by issuing a guarantee or insurance of a civil liability of the developer in the joint construction. This will allow the buyer upon the occurrence of unforeseen situations to reclaim their funds.

liability insurance of the developer in the joint construction

Adopted the draft law establishes the responsibility of the developer over:

  • Evasion of obligations;
  • Delivery of unfinished object;
  • Bankruptcy until transfer of the property.

Experts fear that innovations will lead to higher real estate prices. The government has assured that these factors are not interrelated. The insurance costs even large companies make up 1% of the transaction volume. Developers will have to allocate funds for these costs from its budget.

Facility

Insurance of liability of the developer in the joint construction implies the protection of property interests of clients. This transaction primarily benefits buyers. The company may insure the entire house or apartment individually.

Customers

The Agreement is for the benefit of shareholders. Upon the occurrence of certain circumstances they will receive payment. The developer undertakes to deliver reliable high-quality object. The insurer is obliged to notify the customer about changes in the transaction and to pay compensation. If in the process of building real estate investors will change, it is necessary to specify in the contract, as with the following participant, a separate document.

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Insurers

Not all SK are committed to issue such contracts. It is believed that this type of transaction generates losses. Moreover, the company must meet certain requirements:

  • To operate on the market more than 5 years;
  • To conform to the requirements of panosteitis;
  • Have a positive Outlook for the future periods;
  • Have a minimum turnover of 400 million rubles, as well as the authorized capital in the amount of 120 million rubles.

Strahovanie responsibility of the developer in the joint construction company

Rates

Insurance of the developer in the joint construction is expensive. The average rate in 2015 was 0.5-0.8 percent. For long-term contracts, the rates may be reduced by 10–30%. Insurance company (IC) itself sets the rate, and also calculates the coefficients for the annual rate, as there is always a chance that the developer will completely shirk obligations.

Depends on what the bet is:

  • Part of the developer in the holding company.
  • Positive experience with previous transactions: the deadline, the number of objects in different regions, the absence of claims.
  • Financial stability.
  • Legal provision: all documents and permits.
  • Construction.
  • Deadline.
  • The Number of shareholders.

The contract

To register the POS, the developer shall provide the contract in accordance with Federal. To do this you must collect the following documents:

  • The Declaration for the project;
  • Permission to perform construction works;
  • Certificate of state registration;
  • The contract of shared construction;
  • A copy of the Charter documents;
  • Feasibility study;
  • A copy of the financial reports;
  • Information about the lenders;
  • Certificate of absence of arrears on loans from banks.

insurance contract equity participation in construction

What's covered

Insurance of liability of the developer in the joint construction involves the payment of compensation, if the developer does not fulfill commitments, as evidenced by court decision or bankruptcy of the company. The amount is not paid in the case of freezing of the construction period or extend the period of delivery of the object. The amount depends on the contract price. It may not be less than:

  • Value object;
  • The average market rate for 1 square meter of housing in the region.

insurance of responsibility of the developer in the joint construction

The Law also limits the maximum amount of premiums.

Insurance is recognised to the following circumstances:

  • Termination of construction;
  • The bankruptcy of the developer;
  • Failure to obtain housing;
  • Refuse the return of material resources, etc.

Changes to legislation

In 2014, Federal law No. 294 was amended according to which insurance of the liability of developer equity participation in the construction is now mandatory. The contracts involved the developers themselves. They choose with whom to sign the contract: with the company, the Bank, by a specialized company.

All members of the society of compulsory insurance are jointly and severally liable. If the transaction is made with the Bank, a lot of time spent picking securities. Definitely paid a 30% Deposit of the value of the object that serves as a guarantee to the financial institution. In addition, the Central Bank sets its own requirements to banks:

- the minimum period of work – 5 years;

- the authorized capital 200 million;

-the value of the property - RUR 1 billion.

Developers is more profitable to get a loan than to issue the guarantee. Financial institutions also do not carry the insurance contract equity participation in the construction of the best products.

insurance of civil liability of the developer in the joint construction

It is Better to enter into a contract with the company. In the face of strong competition, insurers try to attract customers with low fares and prices. Rate on such transactions remains fixed throughout the term of the contract. Liability insurance Builder when the joint construction is paid after execution of works. Another advantage-speed of registration of the documents. Insured by the contractor, the beneficiary - shareholder. A method of providing selectable for each dwelling separately.

Liability Insurance Builder when the joint construction

The Company must provide collateral. Most often it is the land on which the facility is located. In addition, the document describes a method of securing obligations. The papers are signed before the state registration of the first share agreement and will remain in effect until delivery of the object. The termination of the transaction does not exempt the company from the obligation to pay compensation for events that occurred in the period.

You can Insure the whole house or each apartment separately. The first option is disadvantageous. The developer must immediately make a large sum, to be sure that all apartments will be sold out. The second problem is that in such contracts it is difficult to determine who is the beneficiary.

insurance of the developer in the joint construction

The Document comes into force from the moment of crediting of the first installment. Insurance the developer in the equity construction of the contract does not include a deductible. Other terms of the transaction comply with the standard:

- the insurer undertakes to inform shareholders about the amount of the paid indemnity;

company can handle demanding nature of regression to the developer;

- the insurer is obliged to notify all owners of the termination of the contract;

- period of validity of the agreement depends on the duration of construction.

The Amount of compensation depends on prices and rates. It must exceed the valuation of the total area of the dwelling. The company itself decides how the money will be payment: lump sum or in installments.

Problems liability insurance of the developer in the joint construction

This deal is very specific. In fact, we are talking about the protection of the financial risks of the developer. Businesses have a choice – to issue the policy or surety. More preferred is the second option, since credit institutions already have well-established mechanism, a scoring system, experts, assessing risks, and structures that organize the completion of the WIP. SK such advantages can not boast. But they offer low tariffs. People got used to the fact that banking services are expensive. This is true, because the risk in the transaction is high. Although, after the amendment of the law, the companies rates also climbed.

Insurance of liability of the developer in the joint construction provides for the cumulative effect of the losses. In a crisis situation (reducing demand for housing and increasing mortgage interest rates) loss will suffer from all developers, not just one market participant.

liability insurance Builder equity participation in construction

Another problem - the inability to reinsure risks even in the foreign market. In international practice in such transactions are used bonds (surety). But their functioning is not fixed by the Russian legislation. The main difference of this product is that the insurer may take in pledge the object under construction.

The Central Bank raised requirements for the UK, who can provide services to developers – increased the minimum amount of capital. This greatly narrows the range of possible insurers - to 19 organizations. From the new list of departed companies, which accounted for 80 % of the contracts with developers. Now what will happen to them is unknown. Most likely, you will have to sign a new contract with “white” list. In the case of revocation of the license SC is responsible for the previously completed transactions for 6 months. Then she either stops the action of the documents, or refer the portfolio and liabilities to another market participant. Unlike insurance or liability insurance of owners of hazardous production facilities, in this service no other types of protection, such as compensation funds, which would be involved in the payments to citizens after the bankruptcy of the insurer. The market for shared housing is great. But established ways of regulating the activities of developers yet.


Article in other languages:

AR: https://tostpost.com/ar/finance/12115-liability-insurance-builder-when-joint-construction-features-when-appl.html

BE: https://tostpost.com/be/f-nansy/21711-strahavanne-adkaznasc-zabudo-shchyka-pry-dolevym-buda-n-ctve-asabl-vas.html

DE: https://tostpost.com/de/finanzen/21722-haftpflichtversicherung-des-bauherrn-bei-der-teilbau-eigenschaften-wen.html

ES: https://tostpost.com/es/finanzas/21743-seguro-de-responsabilidad-civil-del-constructor-de-la-construccin-cara.html

HI: https://tostpost.com/hi/finance/12129-liability-insurance-builder-when-joint-construction-features-when-appl.html

JA: https://tostpost.com/ja/finance/12131-liability-insurance-builder-when-joint-construction-features-when-appl.html

KK: https://tostpost.com/kk/arzhy/21701-zhauapkersh-l-kt-sa-tandyru-kez-nde-rylys-salushyny-lest-k-rylys-ereks.html

PL: https://tostpost.com/pl/finanse/21665-ubezpieczenie-odpowiedzialno-ci-dewelopera-za-wsp-lne-budowie-cechy-gd.html

PT: https://tostpost.com/pt/finan-as/21667-seguro-de-responsabilidade-civil-do-construtor-acion-ria-constru-o-civ.html

TR: https://tostpost.com/tr/maliye/21708-sorumluluk-sigortas-olu-turucu-bir-ortak-in-aat-zellikleri-ne-zaman-uy.html

UK: https://tostpost.com/uk/f-nansi/21691-strahuvannya-v-dpov-dal-nost-zabudovnika-pri-payovomu-bud-vnictv-osobl.html

ZH: https://tostpost.com/zh/finance/12892-liability-insurance-builder-when-joint-construction-features-when-appl.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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