Assignment of ownership rights to an apartment is a type of transaction in which all rights and obligations from one person who has entered into an agreement with the developer are transferred to another. “Such a transaction is possible when the apartment is resold before the house is put into operation. The risk of assignment is that the buyer transfers funds to the seller, but the seller is not the title owner of the property. That is, he sells only the right of claim to the object, and not the right of ownership. This is the main difference and danger,” says lawyer Tatyana Prasolova .
What is assignment of rights to an apartment?
Assignment of rights to an apartment is the transfer of rights to real estate until the registration of ownership
This is a transfer of rights to an object that is under construction, for which the seller does not yet have formalized ownership rights. This action is possible if there is a DDU agreement with the developer. Moreover, if the latter wishes to control all actions regarding the object he is constructing, the DDU contains a clause on his personal participation in such transactions. That is, most often, assignment is possible only with his consent. In addition, third parties can influence the conclusion of the transaction, for example, banks if loans were used for the initial purchase, or relatives of the participants in the transaction if they have the appropriate rights.
The transaction is regulated by legislation (FZ-214 on shared construction and the Civil Code of the Russian Federation) and is completely legal. It is concluded between individuals/legal entities (shareholder and buyer), the developer does not act as a seller under such an agreement. The agreement is registered in the state register.
What a buyer needs to know before purchasing an apartment in a new building by assignment of rights, how the deal is concluded and what pitfalls exist with this scheme
You can buy an apartment in a new building not only from the developer. At the same time as the developer who builds the house, housing in the same building can be sold by private investors, legal entities and mutual funds. Buying an apartment in a building that has not yet been built is called assignment of claims (assignment agreement).
First of all, it is necessary to make a reservation that until the apartment building is put into operation, there is no apartment, even if it is actually built. The essence of this phenomenon is that the seller and buyer agree to transfer ownership of a non-existent object. The buyer assumes all the rights and obligations of the equity holder who was originally the seller, and the seller receives money in return.
Realtors and lawyers told RBC Real Estate about the pitfalls when purchasing apartments through the assignment of rights and how best to prepare for such a transaction.
Why use assignment
Assignment of rights is not the most obvious way to purchase an apartment in a new building. The vast majority of home buyers on the primary market prefer to deal directly with the developer: in Moscow, the share of such transactions is about 90%, reports the Best-Novostroy real estate agency, citing data from Rosreestr.
Based on the results of the first ten months of 2021, the share of concessions on DDU amounted to 10.9% of all transactions with new buildings - these are agreements signed by individual buyers both with other individuals and with companies selling apartments, notes Chairman of the Board of Directors Irina Dobrokhotova. Despite the fact that with the introduction of escrow, the scheme for registering assignments has changed somewhat, this, according to her, does not prevent the conclusion of such agreements, but the speed of transactions largely depends on how well the bank and the developer have worked out these mechanisms. It is also important that the old scheme for selling apartments (without escrow) still prevails in Moscow projects, the expert notes.
Most of the transactions are carried out on the assignment of rights from legal entities (2,762 transactions, 6.7%) from January to October, the fewer are assignments from individuals (1,766 transactions, 4.2%), indicated in Best-Novostroy.
Transactions with new buildings in Moscow for the period January - October 2020
All DDUs with individuals, including wholesale 41,224
Transfer from a legal entity to an individual 2762 (6.7%)
Transfer from individual to individual 1766 (4.2%)
The total number of assignment agreements with individuals is 4528 (10.9%)
In the current volume of supply of new buildings in Old Moscow (841 buildings of all classes in residential complexes with apartments and apartments) exclusively under assignment agreements, according to Best-Novostroy, sales are carried out only in 12 buildings. In another eight buildings, developers offer both DDU and assignment of DDU with the old form of payment without escrow. The lion's share of buildings (530 units) are sold under DDU - with and without escrow, which does not exclude the further resale of such apartments under agreements of assignment of rights by the original shareholders. The share of cases with escrow now accounts for almost 32% of the total number of cases on sale. In almost 34% of buildings, apartments are sold under other forms of contracts - reservation, purchase and sale, or preliminary agreement. In the apartment segment, there is also a contract for the purchase of future real estate.
With such a wholesale sale, the developer can provide the legal entity with a discount. Such a mechanism is beneficial for the developer, since the developer can immediately get rid of dozens of apartments. The buying company also finds a benefit: usually such companies hold the purchased lots in order to later sell them to individuals at a higher cost.
The assignment may be in demand if the buyer wants an apartment with not the most common characteristics and the developer has already run out of such lots. For example, in a residential complex there may be only two or three offers of four-room standard-class apartments. Such apartments can be purchased in advance by investors and then resold to ordinary buyers at a higher price.
Usually, upon assignment, the price will be higher, since the construction readiness of the property increases - especially if the apartment was bought at the initial stage of readiness, and upon assignment it is sold closer to the time of commissioning of the house. The price of the assignment may also include a commission from the developer (if it is implied for registration of the assignment) - especially if the assignment offers an object with special characteristics that the developer does not have left for sale.
Who sells apartments on assignment
Sellers who offer housing in a new building by assignment can be divided into three groups, said Dmitry Panteleimonov, managing partner of the real estate agency National Real Estate. “The first group is investors. These include individuals who purchase an average of one to ten apartments, legal entities whose investment volumes are measured in hundreds of millions of rubles, and closed-end mutual funds (that is, closed-end mutual investment funds) specializing in real estate,” Panteleimonov listed.
“The second group is contractors,” the expert continued. — These are legal entities that provided various services, from construction to marketing. The most common among them are construction contractors, with whom the developer partially or fully pays by square meters. The third group is individuals who bought real estate for themselves, for their family members or for rent, but for various reasons decided or were forced to sell it.”
Apartment assignment agreement: how to complete the deal
The assignment of rights to an apartment should occur as follows. You need to make sure that the rights really belong to the person from whom you plan to purchase the rights to an apartment in a building under construction, notes Zhanna Kolesnikova, head of the commercial practice of the law firm Pleshakov, Ushkalov and Partners.
Currently, the rights to apartments in houses under construction are mostly formalized by an agreement of participation in shared construction (DDU). Such an agreement is concluded with the developer - a legal entity or individual entrepreneur who has been allocated a plot of land for construction and who has permission to build a residential building. The DDU must be registered in the Unified State Register and is considered concluded from the moment of registration - this can be verified by a stamp containing the words “state registration of the agreement has been made” on the original contract and/or by ordering an extract from the Unified State Register for the land plot on which the house is being built. If the state registration of the DDU has not been carried out, then it is not worth acquiring rights to an apartment under such an agreement. As a rule, this indicates violations on the part of the developer.
“It is also worth making sure that there is no pledge of rights under the DDU - in the case of a pledge, a stamp is placed on the DDU itself containing the words “state registration of the pledge of rights under the DDU has been carried out” or “state registration of the mortgage has been made.” The extract from the Unified State Register of Real Estate in the section about the corresponding shared construction object (apartment) will contain the words “a pledge of the right of claim of a participant in shared construction under an agreement for participation in shared construction,” says Kolesnikova.
The lawyer also recommends that you familiarize yourself with the building permit and project declaration to make sure that your apartment will actually be built. “If the land plot is provided to the developer on a lease (sublease) basis, additionally check the relevant agreement - the lease period should not end earlier than the planned date for putting the house into operation. Otherwise, if the developer has problems with extending the land lease, there is a high risk that the house will not be built on time,” says Kolesnikova. The developer is obliged to provide all these documents to each applicant or publish them on his website.
Zhanna Kolesnikova, head of commercial practice at the law firm Pleshakov, Ushkalov and Partners:
— It is necessary to check that the sellers have paid the price of the apartment in full. The fact is that the assignment of rights to an apartment can be made after the shareholder has paid the entire price of the apartment under the DDU. In this case, the developer's consent to the assignment is not required. If the price of the apartment is not paid in full, the obligation to repay the remaining debt will pass to you along with the rights to receive the apartment. And in this case, the developer’s consent to conclude an assignment agreement is necessary.
To verify payment of the apartment price under the DDU, it is best to ask for a certificate from the developer, in which he confirms that the funds under the DDU have been paid in full.
In addition to signing the agreement for the assignment of rights under the DDU, the former shareholder is obliged to give you the original DDU. The only exception is in a situation where one DDU is concluded in relation to several objects (apartments or non-residential premises), and under an assignment agreement the rights to one or more of them are transferred to you, but not to all. In such a situation, ask to be given a copy of the DDU, certified by the previous shareholder and the developer.
The agreement for the assignment of rights under the DDU is subject to state registration in the Unified State Register of Real Estate. To register it, the parties to the agreement (the former and the new shareholder) submit applications through the MFC to the body that carries out state registration of rights (Rosreestr), and the assignment agreement itself is attached to the applications - one for each party and one for the registering authority. In addition, when submitting applications, you must pay a state fee for registering an agreement in the amount of 350 rubles.
Is the developer's consent required?
The developer's consent when concluding an assignment agreement is not required if such a clause is not specified in the agreement.
Developers agree to sell wholesale lots of apartments to investors; on the other hand, entering the market of a large pool of apartments in their own buildings, but at lower prices, is not profitable for them. Therefore, sometimes they include a condition in the share participation agreement that the transaction for the assignment of rights must obtain his (the developer’s) permission. It also stipulates the amount of the commission that the construction company charges for the assignment. Its size can be indicated both in monetary terms (several tens of thousands of rubles) and in percentage terms (can reach up to 4% of the transaction amount).
Documents required for the assignment of an apartment:
— identity document (passport); — document confirming payment of state duty;
— registered childcare center;
— agreement on the assignment of the right of claim with all amendments and annexes;
— notarized consent of the other spouse to conclude an agreement (if the object is acquired as joint property);
— consent of the guardianship and trusteeship authority to the assignment of the right of claim under the contract, if the participant in shared construction is acting on behalf of a person under 14 years of age, or a person recognized by the court as incompetent;
— written consent of the developer to assign the right of claim under the contract (if required)
As a rule, the developer can provide the form of the agreement for the assignment of rights under the DDU. The most important thing that should be specified in such an agreement is:
— the rights to the apartment under the DDU are transferred to you in full;
— the apartment to which the rights under the DDU are transferred to you;
- the amount you pay for the transfer of rights to the apartment to you;
- which of the parties to such an assignment agreement - the previous or new shareholder - and within what time period must notify the developer about the assignment of rights.
What can be dangerous about assignment: risks
The main pitfall that needs to be paid attention to is the fact that not only rights are transferred, but also obligations under agreements for participation in shared construction. “If the previous participant (assignor) did not pay the entire amount under the agreement, then the new participant (assignee) will have to pay his debts. Therefore, it is necessary to request payment documents confirming the actual payment of the participation agreement price, as well as a certificate from the developer about the mutual settlements made and the absence of payment arrears,” recommended Natalia Kuznetsova, general director of the BON TON real estate agency.
If the assignment is concluded between individuals, then the law allows payment of the assignment price before the state registration of the agreement, Kuznetsova explained. This, according to her, creates the opportunity to sell the rights several times - therefore it is advisable to use a safe deposit box for mutual settlements.
The main risk factor when purchasing an apartment by assignment of rights can be called the reliability of the developer, according to National Real Estate. “You must be sure that the house will be delivered within the time period specified in the share participation agreement,” said Dmitry Panteleimonov. — You also need to check whether the seller/investor has fulfilled payment obligations to the developer or previous owner. As a rule, this is confirmed by an act of fulfillment of financial obligations, which is signed by the developer and the investor. If there are more links in the transaction chain, then for each of them it is necessary to check the fulfillment of payment obligations.”
“It is also worth paying attention to how the investor fulfilled his payment obligations: by paying in cash, by offset for work performed, by a bill of exchange, or in some other way,” Panteleimonov advised. — If you are purchasing an apartment from a legal entity, request documents confirming the authority of the signatory to complete this transaction. Sometimes, in the organization's charter, the general director does not have the authority to alienate property. In the case of closed-end mutual funds, such risks are minimal, since all transactions first require the consent of a special depository or investment committee.”
A separate factor is the issue of price. “By purchasing an apartment by assignment of the right of claim, you receive the right to claim for the amount specified in the first share participation agreement. It is usually significantly less than the price you pay the investor. That is, in the event of a delay in putting the house into operation and legal disputes arise with the developer, the base price for calculating all penalties and fines in your favor will be the price of the agreement between the developer and the first owner, and not the price that you paid to the investor,” they said in “ National Real Estate".
Tax on the sale of apartments by transfer in 2021
Tax on the transfer of rights to living space with shared participation is paid, since it is considered that the seller received a certain income from this transaction. The tax is calculated not on the entire amount received, but on the difference between the seller’s income and expenses. To use this opportunity, a citizen must prove his expenses for acquiring the rights to an apartment. The tax ranges from 13% of the profit received for residents of our country and 30% for non-residents.
That is, if you bought an apartment for 5 million rubles. from the developer at the excavation stage, and you sell it after some time for 6 million rubles, then you will have to pay tax on the difference in price - from 1 million rubles. The amount of contributions to the state budget in this case will be 130 thousand rubles.
When purchasing an apartment, a share in it and purchasing housing through assignment of rights (cession), you will not have to pay taxes. In this case, the buyer can take advantage of a tax deduction on the purchase of housing. Each person is given a tax deduction for an apartment once. There is a limit from which the tax deduction will be calculated: 2 million rubles. — for construction or purchase of housing, 3 million rubles. - when paying off mortgage interest. Thus, the amount of property tax deduction can be up to 650 thousand rubles: 260 thousand rubles. - for the purchase of an apartment and 390 thousand rubles. - interest paid on the mortgage.
If the cost of the apartment is less than 2 million rubles, then the deduction is calculated depending on the purchase amount, and the balance can be transferred to the purchase of other objects. The mortgage interest deduction is returned once and is valid for one property.
In what cases is assignment of rights used?
If you want to sell an unfinished apartment, an assignment of rights is used, if the house is put into operation - a purchase and sale agreement
According to the norms of Federal Law-214, the assignment can be carried out within the framework of a DDU or a housing cooperative at any stage of the construction of an apartment building.
Important: the transaction is a transfer only for housing for which ownership rights have not been registered.
If the assignor managed to sign the acceptance certificate for the object, in the future you can buy an apartment from him only under a sales contract.
Therefore, the case for the assignment of rights of claim to the buyer when purchasing an apartment may be the stage of construction of a house by a contractor or cooperative.
Advantages and disadvantages of the procedure for the buyer
The main advantage for the buyer is the opportunity to save a lot
This procedure is most often used to make money on price differences. It is known that investing in a foundation pit is significantly lower than purchasing an object already under construction. Therefore, the first and undeniable advantage of assignment is the receipt of significant income.
According to practice, the search for a assignee should begin almost before the end of construction, the main thing is to be in time before signing the act of transferring the apartment with the developer.
Important: if you follow all the rules and control the situation on the real estate market, you can earn up to 15 - 20% of your investment.
In this case, the buyer also receives his benefit. Even though there is an increase in the cost of an already almost completed property, he saves from 5 to 20% on reassignment.
However, there are also disadvantages for the buyer:
- it is necessary to agree on the assignment with the developer, which will cost the buyer a significant amount;
- the need to negotiate with all persons involved in the transaction, banks, families of the parties, guardianship authorities, etc.;
- cooperation with Rosreestr;
- collecting a large number of documents.
Important: carrying out a transaction without first checking the honesty of the developer and the legitimacy of the seller’s actions is fraught with loss of money.
Invalidation of a transaction
A comprehensive verification of the transaction ensures its legal purity and will not allow a third interested party to recognize it as invalid.
It may be invalid:
- if you sell an apartment in a multi-storey building under construction by assignment without the knowledge of the developer. Upon receipt of information about such an action, he recognizes the transaction as invalid;
- if the seller is in debt, creditors, if there is a court decision, can cancel the assignment transaction;
- if the shareholder uses maternity capital to purchase an object, the transaction will be declared illegal at the request of the guardianship authority if the rights and property interests of minors are violated.
It is to avoid such unpleasant consequences that you should check the purity of the transaction before signing the contract.
Where might pitfalls arise?
Firstly, there is a risk of buying problematic housing, the delivery date of which will be delayed for an unknown period, or it will not be completed at all. Perhaps the first shareholder (assignor) decided to assign the apartment because he found some technical problems and violations. Therefore, the main task of the buyer (assignee) is to find out the reasons for the assignment, thoroughly check the information about the developer and carefully study the share participation agreement itself. Also, a potential equity holder must be prepared for the following financial expenses:
- the seller can transfer “compensation” to the buyer - costs for re-issuing documents for the assignment (about 30-50 thousand rubles)
- if housing purchased with a mortgage is transferred, the bank may require payment of a commission for removing the encumbrance (1-2% of the amount of the outstanding debt).
- Notarial documents required for the transaction will cost approximately 3 thousand rubles.
Buying an apartment by transfer from a married person
If the seller is married, the consent of the spouse is required
According to the Family Code, all property acquired in a legal marriage and with family income is community property. Spouses can only manage it jointly. Therefore, when participating in the assignment of rights, the buyer must check all information about the seller. Make a request to the departments and housing and communal services - find out everything about his marital status and the specifics of purchasing an apartment.
In order to make money off the buyer, scammers often use a scheme involving a missing passport, supposedly it has been lost, and a new one has just begun to be produced. The buyer pays money for the assignment, and the seller then goes on vacation with his wife, who presumably does not exist. In the future, the wife will challenge the deal, pretending that she knew nothing about the machinations of her insidious husband.
Sale of an apartment by assignment with debts to the developer
The absence of debts to the developer is another important point. According to the norms, you can only buy an assignment of rights for an apartment with fully fulfilled financial obligations to the developer.
Important: if there are outstanding debts and the issue has not been agreed upon with the developer, the transaction is easily invalidated.
Therefore, it is important to study this issue and obtain a certificate from the developer confirming full payment by the seller.
If there are debts, and the shareholder finds himself in a force majeure situation and is unable to repay them in full, an agreement is concluded in which a separate clause transfers the amount of the debt to the buyer’s payments for repayment.
At the same time, the developer must completely agree with this turn of events, as a sign of which he puts his signature on the document.
It is recommended to make sure that the seller has paid the developer in full
Danger No. 2. “Understatement”
“Underpriced” pose a great danger to individuals .
“A citizen decided to invest money a year ago and bought an apartment, say, for 5 million, and now, when prices have risen, he sells it for 8 million rubles. In most such cases, the seller offers to underestimate the cost and indicate 5 million in the contract, and put 8 million in the cell. When the buyer agrees to such a payment system, then, if something happens, he will never be recognized as a bona fide purchaser. If the seller goes bankrupt, the apartment will be taken into bankruptcy estate, and the buyer will be left with nothing and will not return even the money that was specified in the contract. When the transaction goes through without any “lowering” and the parties have agreed, for example, to divide taxes in half, and strictly non-cash payments are used, then in case of troubles the buyer is recognized as being in good faith and everything ends well for him,” says Vadim Shabalin.
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In addition, recently the tax authorities have begun to monitor suspicious transactions more closely.
Sale of an apartment by assignment to several persons
Another aspect of purchasing a new building through the assignment of rights is fraught with risks when the buyer decides to conduct a transaction under a preliminary purchase and sale agreement.
Important: such an agreement is not registered in Rosreestr, which means that the assignment transaction under it also remains without registration.
Therefore, it is very difficult for the buyer to track the number of transactions carried out by the seller under this agreement. The lack of government control makes it possible for fraudsters to sell the same object several times, earning a lot of money by deceiving the buyer.
A preliminary purchase and sale agreement allows fraudsters to sell the rights to such an apartment several times; It’s better to consider the option with DDU
Risks of encumbrances, disputes, arrests
The risks of Encumbrances, Disputes, Arrests, theoretically, should be identified using an extract from the real estate register (USRN). However, at present, the state system does not guarantee the reliability of this information.
In addition, the very law “On State Registration of Real Estate” No. 218-FZ contains a mine - the minimum period for preparing an extract from the real estate register is 3 working days. Accordingly, when receiving an extract, the applicant has information that is 3 working days or more old.
Therefore, it is possible to reduce the risks of Encumbrances, Disputes, Arrests on an apartment under construction only through a legal check of the cleanliness of the apartment when preparing the transaction.
This equally applies to the purchase of a finished new building.
Conflict between contractor and developer
The seller of the assignment can be several persons:
- legal companies that bought dozens of apartments at the excavation stage for subsequent sale at the time the facility was put into operation;
- a contractor who cooperates with the developer to provide services and received payment in apartments as material objects, and not in money;
- a shareholder who personally entered into a PDU with the developer and is the owner of the property from the moment the foundation pit was created.
If everything is clear regarding legal companies and shareholders, then various situations may unfold regarding the contractor. For example, he did not fulfill the obligations assumed under the contract. The developer had complaints regarding the quality of services received or work performed, failure to meet deadlines and other aspects of cooperation.
Important: in this case, the developer will not want to make the payment or, in case of prepayment, will demand it back.
Purchasing an apartment from a contractor by assignment in this situation is subject to risks; the buyer remains out of work while the courts continue, which in the worst case could invalidate already concluded contracts. In most cases, the developer will receive satisfaction of his claims, and even if the contractor wins in court, a lot of time will pass in anticipation and panic.
Litigation can drag on for years
Other risks when buying an apartment by assignment of rights
In addition to the cases considered in detail, purchasing an apartment by assignment of the right of claim also has other risks that can disrupt the buyer’s expectations and plans.
Initially, you should consider the reliability of the seller as a borrower. If he has old outstanding debts, creditors have the right to protest all his property transactions concluded in the last year.
Important: even deeds of gift available for transfer upon assignment will be contested.
The same point applies to the current debt taken out specifically for the purchase of an apartment at the time the foundation pit was formed.
If the shareholder has a mortgage, before selling the apartment by assignment, he must pay off the entire debt. Otherwise, the bank's consent is required.
Important: financial institutions rarely agree to such transactions, and it is almost impossible to obtain their consent.
In order to conclude a deal, the seller may not notify the lender about it. Having received news about a change of debtor, the bank recognizes the transaction as invalid.
Buying an apartment with maternity capital is associated with additional risks and problems. In this case, it is important to respect the interests of minors, who necessarily have a property share and are co-owners.
Here you will have to cooperate with the guardianship authorities and the Pension Fund, which controls the distribution of money under the certificate.
Important: it must be proven that there is no banal cashing out of maternity capital money. Children must be provided with similar housing; until this time they will be registered in the apartment.
If both parties are purchasing a home with a mortgage, it is important that the seller pays off his or her debt to the lender. Since the apartment will be the main collateral for the buyer, there should be no encumbrances or liens on it. Otherwise, the buyer will not be able to obtain a loan to pay the seller in the absence of an identical object that can act as collateral.
Important: either party can recognize the contract as void if it is drawn up with errors and does not contain complete, detailed information about the transaction.
Therefore, the essential terms of the contract should be taken seriously.
Danger No. 6. Matkapital
“If the apartment was bought with the help of maternity capital , but the children were not allocated shares, then the transaction is absolutely contested with all the ensuing unpleasant consequences. As a rule, this is revealed after inspections by the Pension Fund prosecutor's office. To find out this nuance in advance, realtors, as a rule, ask the mother to show the movement of funds for maternity capital in her account on the government services portal. If she refuses, she is sent to the Pension Fund for a certificate stating that maternity capital was not used to purchase the apartment. Also, when concluding an agreement, they indicate a statement about the circumstances, where they write that the funds from maternity capital were not used for, for example, repaying the mortgage,” said Vadim Shabalin.
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