Thread: Real estate crowd funding

Hi, there! Here in Russia there is such thing like share construction or participatory constructon. It's when ordinary people pre-pay money for the flats that don't even physically exist at the moment, at the stage of projecting. A building company announces such a project on TV and Internet, people come to the offices of the company, choose a flat according to the project, study documentation and sign contracts. They pay money and in a few years they get their apartments built and that's it.
There are a few regulatory constraints and laws issued by the government, which controls this real estate sector so theoretically it's safe.
Is there anything like this in your country? How is it properly called? Do companies try to cheat?

Medved the definition crowd funding is not correct.
They just invest through a collective investment scheme (CIS) to an off-plan (i.e. not already built) property.
In advanced countries is a common practice to raise money to build a luxury high-budget property.
Even in Cyprus in order to build high-buildings we use this practice.

Thanks. Are there any safety mechanisms protecting such investment scheme in Cyprus?

Originally Posted by Medved

Thanks. Are there any safety mechanisms protecting such investment scheme in Cyprus?

Except from the right to go the court in case the owner of the project does not honor the agreement you signed with him, no!
The danger is obvious: not raise the adequate money to complete the building.
In case you arlready gave money ... you should wait. Except if there is a specific schedule with specific deadlines.

Okay, now if we turn back to Russia we can see that it's quite common that ordinary people buy off-plan buildings for living in the future, not just for investment or raising money. They often use various bank loans to pre-pay for their future apartments as co-investors. Then, as the danger goes, if the developer for some reason is unable to finish the building, the private investors become offended. They still have to repay the loan and still unable to get their housing. The Russian government has made an attempt to protect the rights of such private investors but still, the situation is not even close to normal.
As far as I can suppose in Cyprus there is an option for 'investors' to pay in tranches, one sum at a time until the next deadline when the developer accordingly has to raise the building up to a specified stage. Then the next portion of money is paid and the development goes on and on until it comes to an end. Is that somr sort of Law/regulation/government protection obligatory for the developers, or is it just up to the developer, it may use this schedulr or not depending upon solely its good will?
m I right with that? Are there similar situations abroad?

Во Франции определенно есть такие проекты. Называются "Ventes en l'état futur d'achèvement". Буквально "Sales in future completion state".
А как называются в России?

Я не покупала квартиру через такие структуры, так что не точно знаю, защищены ли пользователи. Полагаю, что да.

Originally Posted by Lady Maria

А как называются в России?
.

Долевое строительство

https://ru.wikipedia.org/wiki/%D0%94...82%D0%B2%D0%BE

Именно. И защита российских участников долевого строительства - только на словах. Многие уже пострадали от этой лотереи.

Hi fellas, here's an article about one of the largest such cites in Russia with more than 2000 families being in a search for truth and justice after they had become cheated by the developer. I guess, this article needs proof-reading from native-speakers of English to make it sound flawless and spicy before publishing on facebook and in other media. Could you please help the people and correct the mistakes and pieces with awkward wording? Maybe split some complex sentences into parts for the convenience of the readers. This article is a translation and the original article in Russian can also be posted here for the sake of your learning of the Russian language.

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Russia is a show-off-country with thousands of homeless.
Optionally: Russia is a country of show-offs and thousands of homeless people

We want to bring this to the attention of the world community and ask you to carefully read this letter. We are "defrauded participants of share building" from Russia. This term itself may be inexistent in your country because of the inexistence of the problem as such. You probably don’t know who this type of people are, maybe your country has legislation on the side of respectable citizens and it will be difficult for you to understand us. You may be even shocked that this sort of phenomenon can occur in the modern world of Space Ships and Nano Technologies.
Participants of share building are people who buy an apartment during construction or off-plan(in Russia, a lot of people do that, because a very large part of the population can’t afford buying a “ready to move in” home). Often people who are willing to buy a home under construction invest all their savings, take loans and sell everything that can be sold in order to acquire the required amount of money.
If the developer in the end manages to finish the construction of housing and hand it over to the participants then everyone is happy. But it happens very often, that the developer during the course of construction faces problems so that he can’t (or doesn’t want anymore to) continue to build. Then the developer is dissolved and the participants become “defrauded”. Off-plan construction in Russia is regulated by existing federal and regional legislation, but there are no real support measures for the victims, and share building participants are left alone faced with their problem.
The question that arises then is who in fact has defrauded the people? Is it the developer who overestimated his strength? Is it the developer who was not originally planning to complete his job and started it off just to cheat the money from people? Or maybe is it the Government that thoroughly checked the developer, permitted it to take money from people, tracked and controlled the financial condition of the developer and the course of construction? Maybe the State who is legally obliged to help and to solve the problem of non-professional private investors in case such a problem occurs but who turns away when it comes to real measures taking.
In our belief, defrauded participants of share building are people who were defrauded by the Government, in the person of the Russian governance. Ruined lives, our children, who, at the behest of our indifferent officials, suddenly became homeless, our unborn children, because people simply do not have the finance for their maintenance. That is the result, as well as old people among us who never waited for their own habitation and left for another world. After all, unlike professional real estate market investors, we are ordinary people who have neither the knowledge nor the time, nor the opportunity to get an expert developer evaluation. We buy houses for living, not for money-making, buying in most cases with our last bit of money and more often than not, getting into debt.
At the very beginning, our non-built residential complex called 'Smart City' was highly advertised on television. The start–up was also approved by ex-governor of Nizhegorodskiy region as a part of the Federal campaign 'Housing for Russian families'. It goes to show that the government guarantees the implementation of this program as the campaign was initiated by the government of the Russsian Federation.
Everything was good at the beginning and did not cause any suspicion. The developer fenced the construction site, put up a 24-hour security guard, brought in the equipment and started working. A lot of workers and equipment worked on the site, several buildings were being raised at the same time, storey by storey. However, in 2016 problems began. Construction started to fade out. The developer began gradually withdrawing people and equipment from the construction site. The guards were also called out when all constructors and equipment were moved out from the site. As a result, there are 25 residential buildings in different readiness: from excavations to constructed and painted buildings with installed windows.
At the stage of reducing the builder's activity, the participants started to worry about this situation. We addressed our officials verbally and wrote letters, but no one seemed to hear us. The representative of the regional Ministry of Construction assured us that everything was under control and construction was going according to plan. Unexpectedly for all of us, the former governor in an open air on radio has withdrawn his responsibility and refused to help us. He claimed us guilty for we had chosen an unreliable developer. As a result, in order to draw the attention of the authorities, we started to hold rallies, various actions on the empty construction site, we stood in pickets.
Now we have to protect our abandoned construction site so that any vandals do not steal anything what left on the territory. We are in an incredibly hard situation, spiritually and financially, in fact we have to survive, because we are hanging out on rented apartments and in dorms, for which we have to pay considerable sums every month. In addition, we have to pay monthly mortgage payments to the bank for homes we do not have. Almost all of us are young families with children who need to be fed, dressed, put in kindergartens and schools (for which we have to pay!). Among us, there are also elderly people. The situation is much harder for them. They live on a scanty pension, which our Government "generously" pays and which suffices only to not die of hunger. Also a lot of handicapped people are waiting for their homes and several elderly people from the number of defrauded participants of this share construction have already died while waiting for their apartments.
There’s more than 2000 families of residential complex “Novinki Smart City” who were defrauded. In 2018, the developer decided to file bankruptcy, the shareholders fled Russia and now are most wanted by FSB (Federal Agency). People are in a panic of despair. The situation is close to a social explosion! Some authorities still have the impudence to say that we who are seeking truth and justice "rock the boat on which we are sailing." As a result of last year in Russia there were 122 thousand defrauded participants of share building and this is only official statistics, which, as you know, cannot be trusted (usually, real figures are several times larger). Can you imagine the full scale of the disaster?
We want to emphasize that this is happening in the largest, the world's natural resource richest country, whose president, according to the Forbes magazine, is considered the most influential person in the world for the fourth year in a row. "The world’s most powerful person for four years running, Russia’s president has exerted his country’s influence in nearly every corner of the globe; from the motherland to Syria to the US presidential elections, Putin continues to get what he wants," Forbes said. This seems to be the ignorance of the editors of the magazine, or Putin does not really achieve in his homeland everything he wants, or he wants such a situation in his country. Maybe these are local authorities who fool Putin that everything's ok and there's no need for his intrusion. Either way, we clench teeth and keep on struggling for our homes.
Our authorities do not find the money to complete our apartments, at the same time the FIFA World Cup is held in Russia, for which an incommensurably greater amount of money was found and allocated. Actually, the new Stadium is a few miles from the abandoned construction site. There were also just cosmic amounts of money spent for the construction of the Crimean bridge and propaganda that we did not cede under the Western sanctions' pressure.
They keep on funding and reinforcing the peacekeeping Mission in Syria, they provide humanitarian aid and assistance to disaster victims abroad, whose houses have suffered earthquakes or flood damage. They help other countries, yet there's no one here to help the unimportant people, us. We wish they'd enforced peace here, domestically rather than internationally. We wish they sent aid to us, the honest Russian taxpayers. Because we are homeless as well. They write off billions of dollars in debts: Uzbekistan, Cuba, Kyrgyzstan, North Korea, Mongolia, Libya, Iraq, etc. the list can go on forever. But Russia doesn't appear to have money for its own citizens; they don't have the money to pay off our dead mortgages to the banks. Our officials prefer buying houses abroad, while we ourselves can't even buy one within the country.
Don't trust the Russian propagandistic media like RT or Sputnik, things are not so pretty here as they may be shown. We’ve been defrauded, lied to, betrayed and left alone to face our problems.
You can help us out by just telling your friends about us or reposting this article. Foreign media are welcome for cooperation. Thanks in advance.
Help Us. S.O.S.