Regulation on compensation fund for shared construction incorporated in 214-FZ
The draft law of Ministry of Construction of Russia on improvement of legislation in the field of shared construction was updated with the regulation on creating a state compensation fund. This was announced by Minister of Construction, Housing and Utilities of the Russian Federation Mikhail Men.
This draft law aimed at improving the federal law “On Participation in shared construction” (214-FZ) was already approved by the Committee of the State Duma of the Russian Federation on financial markets. Now the document will be recommended for adoption by the Russian State Duma in the second reading.
“State Compensation Fund will not duplicate means of securing obligations of developers towards the participants of shared construction. After launching the Fund the rules on insurance and guarantee of banks will gradually pass out of use,” said Mikhail Men.
With regard to the fund management mechanism, the amount and the order of contributions to the fund, as well as the conditions and procedures for the use of its means will be determined only after the amendments to the Federal Law 214 will be accepted.
The need to create a state compensation fund for completion of unfinished residential units was defined by the Russian President Vladimir Putin in May, at the State Council on construction.
Developers will transfer to the Fund 1% of the estimated cost of a residential project. If a company cannot cope with financing, the fund will provide money for completion of project. According to experts of the Russian Ministry of Construction, the fund’s assets are estimated at 30-35 billion rubles a year.