Buying an apartment in installments from an individual and a developer: risks, pros and cons

The buyer does not always have the full amount required to purchase an apartment. In this case, he can purchase the property in installments. This option has become a good alternative to a mortgage, but it involves many nuances and features that need to be taken into account in order to minimize risks for both the seller and the buyer.

When is installment needed?

Installment payment when purchasing an apartment is beneficial for the buyer: it allows you to buy a home cheaper than when taking out a mortgage loan. If the buyer can pay the initial amount and is sure that in the near future he will have money to pay the balance, then this option is the most optimal. For example, if you need to improve your living conditions, you should first buy a new living space in installments, and then sell the old home and pay the balance.

Property owners may agree to sell an apartment with installment payment in one of three cases:

1. the living space is difficult to sell, and the search for a buyer has been delayed;
2. the seller urgently needs money;
3. the seller is a young developer company that is new to the real estate market.

This sales method is most often used for two types of real estate:

• apartments in a new building (including at the stage of laying the foundation);
• housing with significant shortcomings (needs repairs, living space in collateral, etc.).

Selling an apartment in installments is considered a simple but risky way to sell housing. The positive aspects of such a deal include:

• faster search for a buyer;
• speed of concluding a contract;
• no need to involve a bank or wait for a long time for approval to issue a mortgage loan;
• minimum interest;
• no extra costs for health and life insurance, which is required to obtain a mortgage.

The disadvantages of such a purchase and sale are as follows:

• this option is not suitable for sellers who want to receive the entire cost at once;
• there is a risk that the buyer will not pay the full amount, and then the seller will need to go to court;
• If the contract is drawn up incorrectly, there is a risk of encountering scammers and losing your apartment and money.

1. Installment plan with an initial payment of about 50% of the cost and for a period of 3 to 6 months. With this method, interest is not calculated due to the short duration of the period during which payments are fully completed.
2. Installment plan for a long period from 1 to 2 years with an initial payment. In this case, interest is charged on the remaining amount (no more than 1–3%).
3. Payment in equal installments over several months without paying a large amount at the very beginning. This method is used infrequently, usually when purchasing housing in a new building from a development company.

The procedure for buying and selling real estate consists of several stages:

• the parties agree on the sale of the apartment;
• the payment schedule is agreed upon;
• documents are checked;
• At the final stage, an agreement and an acceptance certificate are signed.

Before selling an apartment in installments, you should learn about the specifics of drawing up an agreement for such a transaction.

Secondary

If the object of the transaction is an apartment on the secondary market, then a purchase and sale agreement must be concluded, which differs from the usual one by the presence of additional clauses on installment payment. The transaction is carried out in accordance with the provisions of Articles 549–558 of the Civil Code of the Russian Federation. The parties must agree on the moment of making the initial payment - before or after state registration of the property.

The installment purchase agreement contains the following information:

• passport details of both parties: last name, first name, patronymic, place and date of issue, registration;
• exact information about the object of sale: address, floor, area;
• obligations and rights of each party to the contract;
• the period and procedure for transferring living space to the new owner;
• real estate value (in two versions: in numbers and in words);
• information about the installment plan: the amount of the initial payment and the moment of its payment, the size of the installments and payment terms.

If desired, the agreement can be notarized. From March 1, 2013, state registration of the purchase and sale agreement is no longer required. The transfer of ownership must be registered with Rosreestr.

Before purchasing a home, the buyer needs to check the apartment for the absence of any encumbrances. To do this, the seller must contact Rosreestr, obtain an extract from the Unified State Register of Rights to Real Estate and Transactions with It (USRP) and provide this document to the buyer. Additionally, you should find out:

• is anyone registered in the apartment being purchased;
• are there any debts to pay for utilities;
• whether there is a spouse’s consent to the sale (if the property was acquired during marriage).

When concluding a contract for the purchase and sale of real estate with installment payment, the buyer must have a passport with him, and the seller must collect a package of documentation

1. passport;
2. certificate of ownership;
3. title documentation (sale or gift agreement, certificate of inheritance, court decision, etc.);
4. cadastral and technical passport;
5. a document from the BTI confirming that no unauthorized redevelopment was carried out in the apartment;
6. an extract from the Unified State Register containing information about the absence of encumbrances at the time of sale;
7. extract from the house register;
8. notarized, written consent of the spouse for the sale;
9. consent of other owners or guardianship authorities, if there are minors among the owners.

If the real estate is not being sold by the owner, the buyer needs to carefully read the power of attorney provided by the seller. When submitting documents to Rosreestr, you will need to pay a state fee of 2,000 rubles.

New building

When the object of the transaction is an apartment in a new building, an equity participation agreement is concluded in accordance with Federal Law No. 214-FZ. This agreement includes the following information:

• information about the developer;
• buyer's passport details;
• complete information about the construction site;
• duties of the parties;
• deadline for putting the house into operation;
• stages of construction;
• conditions for transfer of real estate;
• guarantee period;
• full cost and installment terms.

Details regarding the installment plan and payment schedule are included in the application. DDU must be registered with Rosreestr.

Before concluding a contract, you must check the documents of the development company:

• constituent documents;
• state registration certificate;
• financial statements;
• audit report;
• design documentation;
• certificate of land title;
• building permit.

An amount of about 40% of the value of the property is paid in advance. It is recommended that further payments be tied not to fixed deadlines, but to the completion of individual stages of construction. In this case, you will not have to pay if construction is temporarily frozen.

Calculation features

To pay debts under the contract, the following can be used:

• government subsidies;
• maternal capital;
• cash (transfer of money must be carried out in the presence of a notary or
• witnesses);
• payment through a letter of credit – debiting money from the buyer’s account in favor of the seller.

An amount of about 40% of the value of the property is paid in advance. It is recommended that further payments be tied not to fixed deadlines, but to the completion of individual stages of construction. In this case, you will not have to pay if construction is temporarily frozen.

One of the convenient and safe payment methods is to rent a safe deposit box when concluding a purchase and sale transaction.

This is how the initial amount is transferred, which can be 30–50% (and in some cases up to 70%) of the entire cost of the apartment.

The buyer deposits money in the locker, and after the transaction is concluded, access to it is given to the seller, who presents a registered agreement. If the real estate installment sale transaction falls through, the money will be returned to the buyer.

After a successfully concluded transaction, the balance is paid in installments according to the payment schedule specified when drawing up the contract.

The nuances of not repaying debt

The main difficulty is getting the buyer to pay. If the buyer’s financial situation worsens, payment may be late, which will result in the following being required:

• the amount of the next payment;
• interest accrued on the debt amount;
• fine;
• penalty;

Disputes on these issues are resolved in court.

Possible risks and ways to minimize them

When concluding an agreement for the purchase and sale of an apartment in installments, both the seller and the buyer have risks.

The seller's main risk is that the buyer may not pay the full price of the property, that is, stop making monthly payments. In this case, you will need to go to court.

If at the time of the trial the buyer paid less than 50% of the value of the property, then the seller can demand the apartment back by returning the amount paid.

If more than half has already been paid, the court will oblige the buyer to pay under the contract and pay a penalty.

If the contract does not take into account the nuance with the transfer of ownership rights, then the new owner of the living space can sell it before the end of the payment period.

To prevent this from happening, it is necessary to indicate in the contract that the apartment is pledged until the full cost is paid, and ownership will pass to the new owner only after full payment.

Risks for the buyer may be associated with the “dark” past of the property. In order to avoid them, you need to check the legal cleanliness of the apartment. There is no difference here from the usual method of purchasing housing with a one-time payment of the entire cost.

The information provided here will help you draw up the contract correctly and take into account all the nuances of the purchase and sale.

Knowing how to buy and how to sell an apartment in installments without risk, you can safely make a profitable deal.

This method of selling is not considered uncommon in the real estate market, so if you need qualified assistance, you can always find a realtor with extensive experience in selling apartments in installments.

How to buy an apartment in installments?

If, under the terms of mortgage lending, the bank deposits the amount to the seller, and you then return the funds to the financial institution with an interest rate of 8% to 15+%, then with installments everything is simpler. The buyer pays part of the amount and “stretches” the rest over a couple of years.

You won't have to overpay the bank. There will be no need to collect dozens of documents and certificates.

But what are the pitfalls of such a proposal? In this review, we will analyze all the pros and cons of purchasing an apartment/house/cottage in installments. You can make a deal not only with the developer, but also with the seller, a private individual.

But the likelihood of finding a seller who agrees to “spread out” payments over several years is low. As a rule, individual sellers still want to receive money immediately. Let's see what it means to buy an apartment in installments and how it works.

What does it mean to buy an apartment in installments?

Everything is exactly the same as with the purchase of any equipment/furniture. You draw up an agreement and pay part of the amount at once. The remaining 30%, 40%, 50% or more are “scattered” over 2-3 years.

You deposit funds to pay off the debt not to the bank, but directly to the seller (whether it is a developer in the primary market or an individual in the secondary market).

The Ivanov family decided to purchase real estate from the developer. The cost of a one-room apartment was 1,500,000 Russian rubles. The developer indicated that 30% must be paid immediately (i.e.

This means that the Ivanovs will have to pay the developer 41,667 rubles per month (1,000,000 debt / 24 months = 41,667 rubles per month).

The benefit is that there is no interest or additional payments (usually). But you need to be careful when concluding a contract.

There are nuances associated with:

• the presence of additional payments established in the contract;
• transfer of ownership rights (at the conclusion of the transaction, after payment of the down payment, after payment of the entire amount of the debt);
• possibility/impossibility of early repayment of debt;
• penalties and fines for late payments;
• the right to transfer ownership rights to another person (or lack thereof).

It is not enough to know the norms and requirements of the law perfectly . You will have to study the conditions specified in the contract. As a rule, they are typical. Those. No one will really adapt to you and your needs.

It is unlikely that you will be able to persuade the manager to change the conditions specifically to suit your requirements and your request. When you know what it means to buy an apartment in installments, we will talk about standard conditions from developers and individuals.

Obtaining installments for an apartment from the developer

An installment plan for an apartment from a developer allows you to buy real estate without contacting banks and financial institutions. This is beneficial for the company, since the deal allows:

• draw attention to the object being built or erected;
• increase the cost of the apartment by 10-15% (when compared with offers that involve paying the full amount at once);
• refuse to cooperate with banks and financial and credit organizations.
• The buyer should be aware of the basic conditions for providing installment plans from the developer.

Conditions for purchasing real estate in installments from the developer:

1. The offer applies to new buildings . These can be either completed (ready) objects or not yet put into operation. You cannot ask the developer for an installment plan to purchase a house/cottage or finance the construction of a summer house.
2. Installment plans for the purchase of an apartment are provided at interest or free of charge . The conditions are specified in the contract. If the developer takes a percentage, it is much less than the bank. As a rule, the rate is at the level of 2-3% per annum. If you are offered a deal at 7-10%, then it is better to take advantage of mortgage offers from banks (Sberbank, VTB24, Rosselkhozbank and others).
3. The amount of the down payment is 30-70% of the value of the property . For mortgage lending, banks ask for about 10-30% as a down payment. There are offers that do not require an initial payment. If you have a certificate for maternity capital, then the bank can use it to repay the down payment (in whole or in part). If you have half the cost of the property, you can easily agree on an installment plan with any developer. There are companies that reduce the down payment to attract customers (or cancel the payment altogether). But similar players on the market can be counted on one hand. As a rule, reducing the down payment is a “trick” that the developer needs to sell “illiquid assets.”
4. The duration of the installment plan is about 2-3 years . If you can count on 20-30 years with a bank, then with a developer everything is much stricter. During the specified period, the company manages to build housing and put it into operation. Some companies offer installment plans for a period of 5 years. But extending the term automatically means that the developer will take an additional percentage (or will offer not the best quality property).
5. Deferred payment is possible, but not for all enterprises . As a rule, companies cannot offer more than 1 year of “waiting period”. Therefore, be careful and attentive.

To make it easier to sort out all the pros and cons, weigh and evaluate the possibilities, we offer a small table:

Comparison criterion	Mortgage from the bank	Installment plan from the developer
Submission deadline	From 1 year to 30 years	2-3 years (maximum 5)
Bid	8-15% per annum depending on the bank and program conditions	2-3%
Down payment amount	From 10% to 30% In some cases it is absent. Plus there is the possibility of repayment using maternity capital	30-70%, since it is important for the developer to get more money first (and reduce the risks of non-payment).
Objects covered by the offer	Primary real estate (houses, apartments, cottages); garages (including those with land plots); parking spaces; dachas and garden houses; secondary real estate (apartments, houses, cottages).	Only primary real estate from the developer.
List of documents	Includes dozens of items (passports, marriage certificates, salary certificates, marriage certificate, certificate of financial capital).	Passport + consent of the spouse, certified by a notary (but check with the developer for a specific list of documents).
Impact of credit history	Yes	No
Choosing housing	There are practically no limits.	It is only possible to purchase products from a specific developer.
Registration of insurance	As a rule, mandatory. If there is no insurance, then several points are added to the interest rate.	Not required.

When concluding a contract, you will need to request from the developer:

• documents that confirm the rights to the land plot;
• package of design documentation for the facility (under construction or ready);
• project justification documentation;
• report on the state examination (issued in the form of a certificate).
• installment payment agreement.

Carefully read the conditions prescribed by the developer! The contract may provide for additional payments or hidden fees, encumbrances on real estate.

Conditions of the installment agreement from the developer:

1. Information about the party that provides the installment plan . If this is a developer, then his details must be written down (account number, registration date, company name, TIN, as well as other information). If a bank appears in the documents, then this is a completely different type of agreement.
2. Contribution amount . It is indicated not only as a percentage. Additionally, the numbers are recorded in words.
3. Regularity of payments and the possibility / impossibility of increasing them . As a rule, special tables are compiled in which the month and repayment amount are indicated. Roughly speaking, you see: March 2023 – 87,432 (balance of debt – 3,431,987 rubles); April 2023 – 80,643 rubles; May 2023 -79,874 and so on.
4. Conditions and requirements for early repayment . As a rule, early payment of installments is welcome (and benefits the developer). But there may be some issues related to interest.
5. Moment of transfer of ownership rights. Along with the property rights, all risks of accidental death are transferred to you. As a rule, the contract specifies the transition when:
   • making a down payment;
   • full repayment of obligations;
   • commissioning of a residential property.
6. Penalties for delay . For example, if the client regularly violates the terms of payment, the developer has the right to terminate the contract and withdraw a commission from the amount paid.
7. Transfer of powers to a third party . It is important to understand whether the possibility of re-registration of the contract is provided. This situation occurs when you do not have the funds to pay off the debt, so you, as it were, “resell” the rights to a third party.

What can we say in the end? Selling apartments in installments is one of the profitable activities for the developer. As for the buyer, he may be unable to repay his debt obligations.

Instructions on how to buy an apartment in installments

The first step is to find out whether the developer offers such conditions. For example, in Moscow it will be possible to buy an apartment in installments from the companies Etalon, Samolet Development, GLOBESezar, Pirner, and Troika Red.

Standard scheme:

• study whether the developer provides installment plans for the purchase of real estate;
• contact the company and provide a list of required documents (passport, application, spouse’s consent, certificates of employment, as well as others);
• study the terms of the contract that the company offers (amounts, terms, payments, deferments, the moment of transfer of ownership, as well as other points);
• conclude a deal and make the initial payment set by the developer;
• pay contributions to repay the installment plan;
• become the full owner of the property.

Now you know what an installment plan is when buying an apartment in a new building, how to use it, and under what conditions you can get it.

There is also the opportunity to “split the fee” when concluding an agreement on the secondary market (when you buy a house or apartment from a private person). But there are pitfalls here too.

Obtaining installments when purchasing real estate on the secondary market

The main thing is to check the ownership rights of the seller (as well as family members) . If it turns out that he did not have the right to enter into the transaction, it is declared invalid.

The legislation allows concluding an agreement for the purchase and sale of real estate in installments between individuals. But in case of unforeseen circumstances, there is a risk that the apartment will be returned to the seller (and he must return the money he paid to the buyer).

2 parties voluntarily agree to encumber the property in Rosreestr. It can only be withdrawn after full payment.

The advantage is that:

• the buyer does not need to provide dozens of certificates and documents;
• no insurance required;
• There will be no overpayments of interest (like in a bank).

Of course, such deals are rarely concluded between strangers. As a rule, the contract is drawn up between relatives/friends/acquaintances (and is largely based on trust). But even in this case, it would not be superfluous to review the whole list of documents.

Information to check before purchasing real estate:

1. Passport and other identification documents . Only the owner can enter into transactions for the purchase and sale of property.
2. Extract from the Unified State Register of Real Estate . It presents the main characteristics of real estate and registered rights to it. You can order a document through the MFC (or do it yourself). Price – 200 rubles. But the document will tell you about all the pitfalls better than the owner and his neighbors. By the way, the document is only valid for a year. After this you will need to get a new one.
3. Document confirming ownership. These will include:
   • contract of sale;
   • transfer agreement (in case of privatization);
   • gift contract;
   • annuity agreement;
   • equity participation agreement;
   • certificate of inheritance;
   • the court's decision;
   • property division agreement.
4. A document that reflects the marital status of the seller . If there is a legal spouse, the seller must provide his consent, certified in notarial form (if the property is recognized as jointly owned).
5. Apartment bills . The documents should not contain debts for telephone communications or utilities. Otherwise, you will have to pay off the minus.
6. Certificate from the PND (psychoneurological clinic) . You can take it just in case. Keep in mind that a contract with an alcoholic or drug addict may be invalid. The seller will retain ownership (but will be required to return the funds paid to you). But it is unlikely that it will be possible to recover anything from antisocial individuals.

Scheme for buying and selling an apartment in installments

You already know the terms of purchase. Points related to installment plans are specified in the contract. It is for this reason that you will have to go to the notary and pay fees. The document will contain information about the property (+ a specialist will check all the powers of the seller).

The contract usually states:

• data of the seller and buyer;
• cost of the apartment;
• apartment address and description;
• rights, obligations, and responsibilities of the parties;
• deadlines for vacating living space;
• guarantee from the seller (that the property was not mortgaged or purchased with financial capital);
• down payment amount;
• the amount of payments and the procedure for making them;
• transfer of ownership rights, as well as other issues.

The contract will state: “Ivanov pays 20% of the cost in the amount of No. No. No. rubles (and here the same amount in words). The remaining 80%, i.e. No.No. undertakes to pay within No.No. months. The amount of payment per month is No. No. rubles.

In 2023, changes are expected in the construction industry, so the question of how to buy an apartment without a mortgage in installments will become even more relevant. We sincerely wish you success in concluding deals and finding partners!

Buying an apartment in installments from a developer

Buying an apartment in installments from a developer is an advantageous offer that can satisfy the interests of both parties to the transaction. But, before entering into such legal relations, you need to make sure of the profitability of the purchase and the reputation of the developer.

Conditions for registering an apartment in installments from the developer

The main condition that the developer relies on when providing installment plans is the increased initial price of the apartment. The cost may be increased by approximately 10%, in contrast to alternative offers that require payment of the full cost at once.

The main nuances of installment payment when purchasing from a developer:

1. The property is new buildings only;
2. Large down payment;
3. Reduced payment terms.

In an unstable economic situation, developers try to reduce the down payment when buying an apartment in installments to a minimum or even refuse it altogether. If we talk about highly liquid projects, then in these cases there is usually no installment plan or it is provided for a very short period (3-6 months) and with a large down payment (from 50%).

Reasons for providing installments:

• Weak demand for the constructed facility or low purchasing power of the local population;
• The developer company is little known and attracts potential buyers with an offer to pay in installments;
• Attracting additional funds from shareholders to complete construction.

Required documents

Applying for an installment plan from a developer is not a very troublesome action, since a minimum package of documents is required. Among them:

1. Apartment buyer's passport;
2. Notarized consent of the buyer's spouse;

Before concluding a contract, you must familiarize yourself with the documents for the residential building in which you intend to purchase an apartment. The developer must provide:

• Title documents for the land plot on which the apartment building is located;
• Project documentation for the real estate;
• Project justification documentation;
• Report on the state examination (in the form of a certificate).

Installment payment agreement: what you should pay attention to

1. An indication of the party providing the installment plan (the developer himself must be indicated as such; if the installment plan is provided by a bank, then this is a different type of obligation, which determines other payment terms, fees, interest rates, etc.);
2. The amount of the contribution, the regularity of payments and the possibility of increasing them (the amount of the contribution must be calculated individually and must be reflected in the contract);
3. Early repayment;
4. The moment of transfer of ownership of the apartment (after making the down payment; after repaying the installment obligation; after putting the housing into operation);
5. Penalties and penalties for late payment (if the terms of payment are regularly violated, the developer may provide for the possibility of unilaterally terminating the contract and deduct a commission from the previously paid amount upon its return);
6. Transfer of obligations to another person (does the company allow the contract to be reissued to another person? This becomes relevant when the original borrower understands that he cannot cope with the imposed burden and wants to resolve the situation as profitably as possible);
7. Possibility of converting the obligation from an installment plan to a mortgage.

Download the installment payment agreement for an apartment with the developer (sample)

Pros and cons of buying an apartment in installments from a developer

Pros:

• Short terms for consideration of applications for installment plans;
• Minimum package of documents;
• Wide selection of primary housing;
• Unlike the secondary market, new buildings are cheaper;
• Credit history does not influence the developer's decision;
• It is not necessary to obtain insurance for the purchased object.

Minuses:

• Ownership of an apartment can be registered only after making the last installment payment or be considered limited;
• High monthly premiums;
• Short terms for fulfilling obligations (on average, no more than 3-7 years);

Bottom line

An offer to pay in installments when purchasing an apartment is not always cost-effective and reliable.

It can entail both a pleasant benefit in the form of savings per square meter, and severe disappointment due to the inability to cope with debt obligations and the loss of part of the amount for penalties.

Before formalizing a relationship, you should check the position of the developer in the market and compare the terms of the installment plan with your personal ability to pay for it.

Buying an apartment in installments - what are the pros and cons

Installment principle

How exactly does installment work? It consists of stage-by-stage payment for the purchased residential premises. The main share, as a rule, falls on the initial payment, which can be up to half of the total cost of the apartment. The remaining funds must be transferred to the seller on the terms specified in the agreement.

This method is well suited if it is not possible to pay the entire amount at once, but there is reason to believe that the buyer’s financial situation will improve in the near future. For example, he plans to sell his old apartment or withdraw money from interest-bearing deposits, but the time for this has not yet come.

Installment programs are:

• short-term (for a period of up to one year). They are usually interest-free, but the down payment sometimes exceeds even 50% of the total cost,
• long-term (more than one year), which sometimes includes a small percentage.

The terms of the installment plan depend on the developer company, however, the transfer of ownership, as a general rule, occurs after full payment of the cost of the residential premises.

If a share participation agreement was concluded, then this happens when the house is put into operation.

It is worth paying attention to the debt repayment schedule: it is better if it is tied not to a specific date, but to the construction stage.

Documents for applying for installments

Usually, on the part of an individual, only a passport is enough. The seller provides more documents upon request. So, you should familiarize yourself with the certificate of state registration, as well as registration with the tax authority. The buyer must make sure that the developer has permission and estimate documentation.

If we are talking about secondary housing, then you should ask the owners for a technical and cadastral passport, documents confirming the right to an apartment, and a certificate stating that there are no encumbrances or claims from third parties.

Agreement with installment plan

Before entering into an agreement, you need to know how to correctly draw up the installment plan. This is usually done through:

• purchase and sale agreement (usually an appendix is ​​drawn up to it, which is called a “debt repayment schedule” or all the nuances are written down in the text of the agreement itself),
• or an agreement for participation in shared construction.

As with any other agreement, the contract has mandatory details, the inclusion of which must not be forgotten. So, at the beginning of the text you need to indicate the personal data and details of both parties.

The subject of the contract must also be clearly defined. In this case, this is an apartment, which contains exact information about the address, the floor on which it will be located, and the area.

There may be other characteristics that set this living space apart from others.

In addition, the agreement traditionally contains:

• powers of the buyer and seller when making a transaction,
• liability for violation of any conditions,
• the time frame within which the buyer deposits funds,
• circumstances upon the occurrence of which the transfer of ownership of the object occurs,
• penalties for any types of delays,
• force majeure circumstances, as well as the algorithm of actions upon their occurrence,
• conditions for termination of the contract.

• All nuances must be clearly stated in the agreement so that they have an unambiguous interpretation and cannot be challenged in court.
• A sample purchase and sale agreement with an installment plan can be downloaded here , and then make the necessary changes there.
• We remind you that even if you thoroughly study all the data that is in the public domain, this will not replace the experience of professional lawyers!
• To get a detailed free consultation and resolve your issue as reliably as possible, you can contact specialists by phone numbers listed at the top of the page, or through the online form .

pros

The main positive characteristic of installment plans is the ease of obtaining them. The development company most often does not require any documents from an individual to prove his solvency or financial solvency. Also, no one checks a person’s credit history.

In addition, an agreement for the purchase of housing under construction in installments is drawn up individually, so it is quite easy for the parties to the agreement to agree on the amount of payments and the time frame within which they must be made. At the same time, developers do not always fine shareholders if they miss the date for paying the next installment.

Another advantage is that there is no need to attract guarantors or place a pledge on any property. Also, the buyer may not spend his money on obtaining additional insurance or paying commissions, as well as interest.

If for some reason a person ceases to fulfill financial obligations and make payments established by the agreement, the agreement is terminated. The positive in this situation is that the buyer will be returned the money that he has already paid, but minus a penalty (or other fines specified by the developer).

Minuses

You need to understand that there are certain risks associated with installment plans. The main one is related to the possible bankruptcy of the developer. Some people believe that in this case there will be no need to pay the remaining amount, but this is not the case.

If the company responsible for the construction is found to be insolvent, buyers risk paying more than they bargained for. This may happen because the house will be transferred to a new developer, and he has the right to set his own price.

Most often, it exceeds what was specified in the original contract.

In addition, if the house has already been put into operation, the buyer, if he does not agree with the new conditions and price, will only be able to demand the return of funds already paid, and not obtain ownership of the home.

An obvious disadvantage also includes the need to find a large enough amount in a short time to pay off the remaining amount by the date established by the contract. In addition, even if the house has already been put into operation, the buyer cannot dispose of the apartment until he finishes paying the installments. So, it will not be possible to rent it out, remodel it, or resell it.

You should find out about the possibility of providing installment plans in advance, since not all developers or sellers are ready to consider such a condition. For example, most individuals who own residential premises prefer to receive the entire amount at once.

Installment plan from the state

The state provides all possible assistance in purchasing housing to people and families who are not provided with sufficient material resources, as well as to disabled people and those who have many children.

In each subject of the federation, the situation is resolved differently, but one of the most convenient options is to provide installment plans for the purchase of premises under the state program.

Usually, to do this, you need to fulfill certain conditions, get on a waiting list for improved housing conditions, provide certain documents: certificates, acts on the financial situation of the family, as well as that its members do not own apartments or houses, as well as other possibilities get them.

There are also federal programs, for example, “Housing for Young Families.” It provides for the purchase of real estate at a low price with interest-free installments.

Summary

Installment plans for purchasing primary real estate from a developer have existed in our country for about 20 years. It is considered an anti-crisis product, since in normal, economically prosperous times it is rarely used. It has its pros and cons.

Thus, unlike a mortgage, installment plans are more accessible to citizens because they have no interest, are processed faster, and do not require a guarantee.

However, in this case, you will need to make a down payment, which sometimes reaches 50%, and the apartment will become the property of the tenant only after the entire remaining amount has been fully repaid.

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Installment plan from the developer: risks and benefits - Knowledge Base BN.ru

Installment plans are a fairly common mechanism for purchasing housing on the primary market: in St. Petersburg, from 20 to 40% of apartments are sold with its help. Sales using this financing scheme are possible under equity participation agreements, housing cooperative agreements, as well as purchase and sale agreements - in cases where the house has already been put into operation, and there are still apartments in it.

Installment plan from the developer

During years of economic crises, when banks give out housing loans with difficulty, construction companies are forced to support consumer activity - they come up with and launch new, more loyal installment programs. With the increasing availability of bank mortgages, this method of purchasing housing fades into the background.

Let's look at the advantages and disadvantages of installment plans from the developer. Let's start with the positives.

Availability

The first and main positive difference between an installment plan and a mortgage is its absolute, one hundred percent availability for all buyers. Banks may refuse a loan to a client if his credit history is damaged, there is no way to confirm income with a 2-NDFL certificate, or the salary does not satisfy the lender.

Developers, on the contrary, are ready to sell apartments to everyone, without being particularly interested in their solvency and accuracy in paying off past debts.

Simplicity of design

The second advantage of installment plans is the ease of registration. A passport is sufficient to sign the contract. An installment plan from a developer can be arranged in one day, whereas with a bank mortgage loan the process takes an average of a month.

Service cost

In most cases, an apartment purchased in installments turns out to be cheaper than a mortgage. As you know, over the years of servicing a bank loan, the cost of the purchased property due to interest payments can double or more.

Developers in most cases offer either interest-free installments, or, if we are talking about long terms, at an annual interest on the balance, and the interest is noticeably lower than the bank interest.

This concludes the list of positive aspects of installment plans - let’s move on to the disadvantages.

An initial fee

The “entry threshold” for installments is usually higher than for a mortgage. Banks provide mortgage loans with a minimum down payment of 15-20%.

Developers are more cautious. In most cases, to buy an apartment in installments, you need to pay at least 30% of its cost at a time. And the best conditions for debt servicing are provided to buyers who have made a down payment of 50-70% of the cost of the property.

Object price

The downside of the availability of installments is the higher price of the apartment - 10-20% higher than with a lump sum payment or mortgage. There are cases in the St. Petersburg real estate market when a construction company, offering installment plans for a long period, increased the cost of the property by 50%.

Deadlines

A bank loan can be taken out for 10, 20 or even 50 years (provided that the age and health of the borrower allow). The duration of the installment plan is much more modest.

Most often, it is provided until construction is completed - that is, for two to three years. However, some developers, at their own peril and risk, extend the payment terms to four to five years.

Thus, the apartment is fully paid for after the house is put into operation.

Ownership

A completed apartment purchased with a mortgage is transferred to the ownership of the buyer (although it remains pledged to the bank). With installments, it’s a completely different story.

A construction company that provides the opportunity to pay for a project after completion of construction prefers to retain it until settlements with the buyer are completed.

Delay in taking ownership raises a number of legal issues. How to register in an apartment? How to build relationships with housing and communal services? How to sell this property if life circumstances have changed?

Risks

Finally, about the most unpleasant aspect – the risks associated with buying a home in installments. Let's imagine the worst situation: the developer was unable to fulfill his obligations and left the market (this happens during economic crises).

As a rule, city authorities deal with the fate of unfinished buildings: they find an investor who is ready to fulfill the obligations of their predecessor to shareholders.

For buyers who purchased housing in installments, the new developer may ask for a different, higher price for the unpaid meters. There were such cases in St. Petersburg.

One can also imagine the following situation: bankruptcy proceedings are initiated against the construction company after the house has been put into operation. In this case, buyers who pay for housing in installments, unlike mortgage holders, can only claim a refund of the amounts paid, but not the finished apartment.

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When buying an apartment in installments, the buyer makes a down payment and pays the remaining amount in equal monthly installments or in accordance with the established payment schedule, say experts interviewed by RIA Real Estate.

In this case, installment plans can be provided for a period from 3 months to 2 years, but usually for no more than 8 months, so the monthly payments on it are quite large.

In addition, the down payment can reach 50%, and in some cases more, of the cost of the apartment.

The expert advises such people not to postpone the purchase of an apartment and to take advantage of installments, especially if housing is purchased in a house under construction, because it is during the construction stage that the maximum increase in the cost per square meter occurs.

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As real estate market players say, in comparison with a mortgage, the overpayment on installments is minimal, because it is provided for only a few months, and the installment rate, according to Ivanova, is usually only 1% per month. Sometimes installments can be interest-free.

• In addition, when purchasing an apartment in installments, there are no additional payments, including life insurance, bank commissions, adds the agency’s interlocutor.
• And finally, to receive an installment plan, the buyer does not have to collect any documents confirming his solvency - he only needs a passport.
• However, despite all the obvious advantages, installment plans, of course, also have their own nuances that the buyer should take into account.
• Options to choose from
• As Maria Litinetskaya, general director of the Metrium Group company, says, first of all, a buyer who wants to purchase an apartment in installments needs to decide which installment plan is right for him.

“Almost all developers offer two options. The first is a short-term installment plan for 3-6 months, which is most often interest-free. The second option is an installment plan, which is issued for a long period - from 12 months or more, that is, long-term. In this case, the installment plan will be interest-bearing, the average rate is 12% per annum,” she clarifies.

The down payment, according to the expert, will be, depending on the option, from 20% to 50% - most often a low down payment is set for long-term installments, and a high one for short-term installments, but some developers are ready to accept from the client an initial payment of 20-30%.

At the same time, Litinetskaya adds, there are cases when the developer does not provide installment plans for the project. However, in case of urgent need, the seller can meet the buyer halfway, but the installment period in this case will be minimal - two or maximum three months, and the down payment will be more than 50%.    

In the case of interest-bearing installments, it is very important to pay attention to how interest is calculated. “Suppose there are such formulations - 1% per month on the balance or 12% interest per annum. The total amount that the buyer will have to pay will be different in these two cases. If the payments are annuity, and the rate is 12% per annum, then the amount will be higher,” explains Litinetskaya.

Check and recheck

After the buyer has decided on the choice of a suitable installment plan option, negotiated with the sales department manager and agreed on the terms of the installment plan with the developer, the stage of paperwork begins. Here the buyer should be very careful and meticulous, carefully check and double-check everything, as in principle with any housing transaction.

According to the agency's interlocutors, there are different options for purchasing an apartment in installments - concluding a purchase and sale agreement, an agreement for participation in shared construction (DDU), as well as a preliminary purchase and sale agreement.

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According to Vitaly Borodkin, a senior lawyer at Prioritet, a purchase and sale agreement with an installment plan must indicate the characteristics of the apartment being sold: address, area, condition of the apartment at the time of sale. The contract also defines the installment payment schedule, that is, in what order the installment payment is made.

The buyer must provide a passport.

The seller, if this is an individual, must submit, in addition to the passport, a certificate of state registration of ownership of the apartment being sold, a BTI passport, as well as an extract from the Unified Register of Rights to Real Estate and Transactions with It confirming that the apartment is not encumbered with the rights of third parties persons who are not on bail or under arrest. If the seller is married and the apartment is the common property of the spouses, then the transaction for the alienation of the apartment is carried out only with the notarial consent of the spouse.

If an apartment is purchased from a legal entity under a sales contract, the lawyer advises the buyer to carefully study the organization with which the contract is concluded. “It is necessary to find out the history of the organization over the entire period of its existence in the real estate market, work experience, pay attention to the image of the organization, completed projects, which objects have already been put into operation,” he clarifies.

Installment plans can also be used when purchasing an apartment under a shared participation agreement in construction.

In this case, the developer, in accordance with the provisions of Federal Law No. 214, is obliged to provide the buyer with his constituent documents for review, including a certificate of state registration, a certificate of registration with the tax authority, reports on financial and economic activities, approved annual reports, accounting balance sheets and accounts for the last three years of work, as well as an audit report for the last year of work.

In addition, the developer must provide the buyer with all information about the property - the full construction address (section, entrance, location on the floor), area, footage, presence of a loggia, balcony.

He is also obliged to inform the deadline for transferring the object to the participant in shared construction, the price of the contract, the timing and procedure for its payment, the warranty period for the shared construction object, a link to the project declaration and construction permit, Borodkin reports.

According to Litinetskaya, when purchasing an apartment in installments under the DDU, an annex is usually drawn up, which is an integral part of the equity participation agreement, which indicates the amount of the down payment, the period for which the installment plan is possible, the frequency and methods of making payments.

The expert adds that at a certain stage in the “life” of a new building - after receiving permission to put the facility into operation - the developer no longer has the right to sell apartments under the DDU and switches to a preliminary purchase and sale agreement.

“But if the developer offers to issue a PDKP when construction has not yet begun or the house is already ready but not put into operation, then such sales are illegal, and in this case it is better to refuse the deal,” advises the general director of Metrium Group. 

However, in practice, a company can take money as part of a preliminary agreement, disguising this payment as a kind of security payment.

The lawyer points out that the preliminary agreement must be concluded in the same form as the main agreement.

“The main risk is waiting for the ownership of the apartment to be registered. Without this document, legally you will not become a full owner, you will not be able to register at your place of residence, or perform any actions with housing,” he says.

In this regard, the lawyer advises to indicate precisely the moment of concluding the main contract, so as not to wait for the one-year period established by law.

In addition, it is also necessary to constantly remind the seller of his obligation to conclude the main purchase and sale agreement, and, if necessary, force him through the court to conclude the main agreement.

Money up front

Experts also point out that until the buyer of an apartment in installments has not paid the seller in full, he is somewhat limited in his actions - for example, according to Borodkin, when drawing up an agreement for the purchase and sale of an apartment in installments, sellers usually include a clause according to which buyers will not have the opportunity to sell the apartment, rent it out and carry out redevelopment until the full cost of the apartment under the contract is paid. 

The agency's interlocutor also draws attention to the fact that from March 1, 2013, apartment purchase and sale agreements are not subject to state registration.

But the ownership of an apartment is subject to state registration and arises with the buyer precisely from the moment of such registration.

“If we talk about buying an apartment under an installment purchase and sale agreement, then, as a rule, it indicates from what moment the transfer of ownership takes place, that is, when the state registration of the transfer of ownership takes place,” adds the lawyer.

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2. If ownership is registered before the full price of the apartment is paid, then the apartment is registered as a property with an encumbrance, says Litinetskaya, in turn.  
3. Buying an apartment in installments under an agreement for participation in shared construction has its own subtleties.

If real estate is purchased under an agreement for participation in shared construction, then the buyer signs a DDU with the developer and registers it with Rosreestr, says Vasily Sharapov, a lawyer for the development company City-XXI Century.

The buyer acquires ownership of the purchased apartment after putting the constructed building into operation, transferring the apartment to the buyer according to the transfer deed signed by the developer, paying the state fee and submitting all the necessary documents to Rosreestr.

• At the same time, Sharapov advises buyers to read the contract carefully - after all, if it states that all installment payments must be made to the developer before the date of transfer of the apartment, then the developer has the right to refuse to transfer the apartment until the buyer has fully paid the entire purchase amount.
• Nuances of delay

It is important for the buyer to carefully study the apartment purchase agreement also for possible sanctions in case of delay in installment payments.

“As with any loan, in case of late payments, the developer has the right to charge penalties and even terminate the contract unilaterally and return the funds spent to the buyer’s bank account, possibly withholding any commissions (at the discretion of the developer).

So you should carefully read the agreement, including the clauses that stipulate sanctions in case of failure to fulfill payment obligations,” says Ivanova from PIK Group.

As Sharapov adds, if the buyer, when making installment payments under the DDU, violated the deadlines for making payments more than three times during the year or allowed a delay in making payments for a period of more than two months, the developer, by law, can terminate the contract unilaterally.

“At the same time, the law does not clearly state that the developer is obliged to return the money paid to the buyer in this case.

1. When the money runs out
2. Of course, ideally, it is better not to let things go past due, but if the buyer can no longer make installment payments, he has several options to solve the problem. 
3. In particular, Sharapov offers two ways - either to enter into an agreement with the developer to terminate the DDU and at least partially return the funds paid, or to transfer your rights and obligations under the DDU for a fee to another buyer with the consent of the developer by concluding an appropriate agreement.
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In turn, Litinetskaya points to a fairly simple option - switch to a mortgage. “The banks support him and welcome him in every possible way. They understand that the buyer has already paid most of the amount, thereby confirming his solvency,” says the agency’s interlocutor.

• According to her, if a client plans to switch to a mortgage, he will have to negotiate with the developer to change the terms of payment, obtain approval from the bank, conduct a loan transaction and register an additional agreement to the main purchase agreement.  
• Whip for the developer
• But there is also the other side of the coin - problems can arise not only on the part of the buyer, but also on the part of the seller.

“For example, the bankruptcy of a developer. If this process is initiated, then the shareholders who contributed only part of the amount can only demand the return of the money, but not the ownership of the apartment,” says Litinetskaya.

In turn, the Priority lawyer points out that quite often the developer does not meet the delivery deadlines for the house. “For example, in 2010 a contract of agreement was concluded.

The deadline for delivery of the house specified in the contract is the second quarter of 2011, but 2012 has come, and the house has not been delivered, and the developer promises to deliver it in April 2012 at best.

In this case, you can wait for the house to be delivered, and for the period of delay, demand a penalty - double the size of 1/300 of the refinancing rate established by the Central Bank of the Russian Federation,” says the expert.

In order to avoid possible abuses on the part of the developer, it is advisable to tie the deadlines for making installment payments not to specific dates, but to the completion of certain stages of construction, for example, the final payment is within a few days after putting the facility into operation, advises, in turn, a senior lawyer at a law firm “ Avelan" Anna Polevaya.

He explains that otherwise, if construction is frozen or significantly behind schedule, the buyer has the right only to demand termination of the contract and the return of his funds, but he will not be able to suspend the next payment, since failure to make payment will be grounds for the developer to collect a penalty.