Real Estate. Major Russian Legislation Changes For 2017

MAJOR REFORMS IN SHARED CONSTRUCTION

Federal Law No. 218-FZ on the Public Law Company for the Protection of Rights of Individuals Who are Shared Construction Participants in the Event of Insolvency (Bankruptcy) of Developers and on Amendments to Certain Legislative Acts of the Russian Federation of July 29, 2017

A number of serious changes occurred in 2017 in shared construction and ended with the adoption of a plan to change the very concept of financing the participation of individual investors in the construction of apartment houses.

The first and most noticeable change was the creation of a specialized compensation fund¹  whose aim is to pay funds to individual participants of shared construction if the developer goes bankrupt. The Law establishes that each developer is required to contribute an amount equal to 1.2 percent of the price of each shared construction agreement to the compensation fund no later than three business days before the date the