The area of the finished apartment turned out to be different than in the contract. Who is guilty and who should pay someone for missing or extra square meters?
Consider the issue of sale and risk when investing in the primary real estate market from a legal point of view.
This article discusses situations in which the actual area of the apartment differs from the promised.
When you make a contract with the developer, you need to carefully read the conditions in order not to pay twice. Paying the entire amount that is specified in the contract, no one expects additional expenses for the extra space. But the difference between the project and the actual area of housing is not uncommon, which is officially approved in the construction industry.
The construction error is the deviation of the actual area of the room from the project one in a smaller or larger direction. Deviations from the project area are found in both panel construction and projects built on cast-frame technology.
Problematics
In any industry where the calculation of weight, volume and size play a role, an error is envisaged - also in the construction of houses. The construction error is an official term, which is defined as a deviation to a greater or lesser side by the number of square meters in the actual area from the area declared in the project. The error is found in panel houses of different series and individually designed. Due to the characteristics of the monolith-frame technology, construction error occurs in 90% of cases.
Officially, the size of the construction error is not fixed in the legislation; therefore, the Ukrainian construction companies prescribe in the contract the allowable difference between the design and the actual area of housing.
Some developers, wanting to get additional profit, create conditions under which the area of housing increases, and in the contract they tie the cost of an apartment to square meters. The buyer, not noticing this clause in the contract, faces a situation where the developer may not legally transfer ownership of the apartment until the investor pays for the “extra” square meters.
Extra square meters call the difference between the project and the actual area of an apartment or non-residential premises. The project area of the investment object is the total area of the apartment or room, which is prescribed in the contract before the construction is completed and the new building is put into operation. The actual area is the area that is fixed when measuring the finished apartment or non-residential premises for processing technical passports in the BTI.
Practical application
The preliminary and main contracts are made on an individual basis, depending on the construction project, the developer and the form of investment. The following statements have a narrow focus, so the law does not contain rules that would directly regulate such specific cases of legal relations. First of all, you must carefully read the contract before signing it. In most cases, such situations are initially spelled out in the contract or are entered into the second, main contract, which the investor signs after the construction is completed. Therefore, the following cases are considered when the settlement of payment for excess or missing square meters is not included in the contract. According to information provided by lawyers of Lexinvest, such controversial situations are either resolved in the process of discussing and amending the contract (signing an additional contract) or in court, appealing to the provisions of the Civil Code of Ukraine.
When you do not have to pay per square meter
Depending on the circumstances, there may be several options described below, when the extra meters will be beneficial to the investor.
- If the contract does not contain a clause on additional payment or compensation for the cost of square meters with the difference between the project and the actual area of the apartment. The contract establishes the full cost of the apartment, not the total cost of the projected square meters. In such a situation, the developer has no right to demand from the investor an additional payment for the construction error, since the investor has documented to pay for the apartment. In theory, the investor has the right to sue the developer for deviating from the points specified in the contract - albeit in a smaller or larger direction. Thus, it will be necessary to appeal to the Civil Code of non-conformity of the goods (in this case, the property) with the stated characteristics.
- If investment in construction took place by signing a share participation agreement, otherwise joining a housing and construction cooperative. When making a share participation agreement, the investor pays a share contribution equal to the cost of the selected apartment, therefore, in this format of the agreement there is no reference to the footage. Consequently, the investor has the full right not to pay the difference between the project and the actual area, exactly, as well as to demand compensation from the developer.
- In some cases, when the investor buys housing by purchasing targeted bonds. When issuing interest-free targeted bonds, the developer divides the property into units. As a result, the investor buys from the developer a package of bonds, the sum of units of which is the area of the selected housing. When buying a package of bonds, given the difference between the project and actual area, the conditions regarding the changes in the characteristics of the investee do not change. When drawing up the contract of sale and purchase of trust bonds, the investor remains in an advantageous position, since he can receive compensation for the difference in project and actual data in the investment object. If a clause is specified in the contract to increase the total actual area of the investment object with the subsequent payment to the developer, the investor will have to pay for the added area.
- In some cases, when investing in construction finance funds (CFF), real estate funds (VON) or joint investment institutions (CII). If in the preliminary and final contract for the sale of real estate in the section “contract price” there is no price adjustment clause, then neither the investor nor the developer has the right to demand compensation for the missing or extra space in the finished investment object.
When you need to pay square meters
The situations described below are possible when the developer has taken care of his own benefit and the contract is made in favor of the company offering the goods (in this case, the property).
- If there is a binding to the number of square meters and the permissible construction error is not spelled out, in which both parties will have no complaints. The developer has the right to demand to pay extra square meters, otherwise the apartment can not be put into operation. In this case, according to the documents, the investor owns only part of the apartment, albeit a large one.
- If in the preliminary investment agreement or the final purchase agreement with the participation of the FSF, VON or ICI, in the section "Contract Price" provides an item about the possibility of price changes. In this case, you should carefully review the price adjustment clause, since the contract can be drawn up in favor of the developer and the investor will have to pay for extra meters at a time when the developer is exempted from financial compensation due to the shortage of square meters in housing.
- When investing by buying interest-free target bonds in the case when the bond unit is an area of square meters, equal to the excess of an additional area of square meters in the apartment. In this case, the developer cannot demand payment for the added unit, but the investor will not be able to sign the final contract for the sale and purchase of residential property. As a result, he will not receive ownership of the apartment, and until the purchase of an additional unit of bonds, he will not receive the keys to the real estate, mostly belonging to him.
Standard situation
One of the equipment used in the delivery of apartments - the delivery of "rough finish", which does not include plaster walls. The transfer of an apartment to an investor in the “without finishing” condition is not uncommon among offers in Kiev new buildings. The total area of housing without plaster on the walls, at the same time, increases by 0.5-2.5 square meters. The number of "eaten" square meters depends on the area and the number of rooms in the apartment.
According to the current standards of technical inventory in residential premises, finishing should be carried out to correctly display the area in the apartment’s technical passport.
In order to receive compensation for the area missing due to wall decoration, you first need to sign an act of acceptance and transfer of real estate. Next, you need to independently conduct measurements, hiring a licensed organization, and go with the correct areas after plastering the walls. For the preparation of official documents you need to get the postal address for which you need ownership of the apartment.
The developer, until the additional square meters are paid, will not issue the right of ownership or documents for obtaining the right of ownership.
In this case, the investor must perform the following steps:
- pay the developer a set amount for the additional area;
- obtain ownership of the apartment, and with it the mailing address;
- to finish the walls in the apartment;
- hire a licensed company to measure the area;
- after receiving the exact area, to apply with the received documents of ownership and a statement about changing the technical passport to the apartment in the BTI;
- after receiving a new technical passport to the apartment to prepare an application demanding the return of money for a non-existent additional area.
Application for the return of funds per square meter
The application can be written if the case relates to those situations when a refund can be made in accordance with the current legislation of Ukraine and in the case when there is an fact of overpayment for a non-existent area in the apartment purchased.
1. A claim must be written in the name of the director of the construction company. The document must specify the current bank details for a refund.
The complaint must be printed out in two copies and handed over to the director or his deputy against the receipt. On its copy of the document must be left a mark on the receipt of the developer document.
2. If it is not possible to submit the application in person, you can send the document by registered mail with return receipt. If you choose this form of notification, you need to keep a receipt of the dispatch and an email notification of the recipient receiving the letter with the application.
3. If the refund for the specified area was not made before the agreed time, then you can request payment through a court claim. For this you need to file a claim for consumer protection.
Tips
- If the contract specifies the price adjustment clause for the difference between the project and actual area, but does not specify the amount or at what cost per square meter the investor has to pay - you can agree on the exchange for a smaller property, if it is available.
- If there is no real estate for the exchange, and the clause does not stipulate the item, at what cost the investor will have to pay, the cost of the excess area, the surcharge amount is calculated by multiplying the difference between the actual and project area by the cost per square meter specified in the contract.
- If the contract describes a scheme for increasing the cost per square meter depending on the construction stage, the investor may require, orally or through the court, to pay extra square meters at the same cost when the investor made the last payment for the future apartment.
- When investing in real estate through the FSF, it is necessary to prescribe in advance in the contract a clause on the terms of payment for additional living space. In this case, the cost of extra square meters, if any, will be fixed and the developer will not be able to require the investor to pay additional meters, based on the final cost per square meter.
- In case the price adjustment clause is not detailed in the contract, the situation may arise that with the selected contract form, the developer turns out to be right. Sometimes it is cheaper to agree to the terms of the developer and enter into an additional agreement on the period and the amount of payments for the additional area. In some cases, you can agree on installment payments.
- If you delay with ship processes against the developer, a situation may occur that the investor will have to deal independently with the registration of property rights, delaying the timing of which, implies additional financial costs. Moreover, until the investor and the developer agree on the conditions, the investor will not be able to access the apartment.
findings
- When investing in a project under construction, no one is immune from construction errors in the form of the difference between the actual and project areas.
- When signing the contract, it is necessary to carefully study the points and clarify with the developer, on what conditions the calculation will take place on the missing or extra space in the apartment.
- The developer may wrongfully demand money for extra square meters and in this case it is necessary to resort to the norms of the Civil Code of Ukraine.
- In a situation where the investor has the right to demand compensation for the missing area in the apartment, you need to carefully prepare a claim and have weighty arguments in the form of extracts from the law and references to the contract.
- In cases where the amount for the missing or extra space is insignificant, you should not spend time clarifying the relationship with the developer, because the process, as a result, may be financially unprofitable.
In which cases the investor pays for the extra space (in Ukraine)
1. When in the contract there are no points on construction error.
In some contracts, where there are no cases when the project area is different from the actual, and the subject of the contract is the number of square meters. At the same time, if the investor refuses to pay, he will not receive the rights to the apartment. By law, this dwelling will partly belong to the developer, so he has the full right to take part in making decisions about the disposal of an apartment.
In the contract of this kind there are pluses. If the actual built-up area is less than the project area, the investor may file a claim against the construction company and receive compensation for the unfinished area.
2. When the contract with the participation of the CFF, CII or VON provides for an item on the price change.
If the preliminary or main investment agreement through the FSF (construction financing fund), CII (joint investment institution) or the VON (real estate operations fund), under the terms of the “Contract price” section indicates that the total value can be changed, the investor should carefully read with such conditions. If the contract states that the price can be changed without explaining the reasons - and it is quite possible - the contract clauses should be discussed with the developer independently, accompanied by a lawyer, and in case of disagreement it is better to refuse the purchase. If the contract indicates the reasons, but the explanations are confusing - in this case, legal advice is also necessary. The contract can be drawn up in such a way that the investor will have to pay for the extra space while the developer will be exempt from compensation for the missing square meters of housing
3. When construction financing occurs through the acquisition of trust bonds.
If the contract is made for the purchase of interest-free target bonds and the unit is equal to a square meter or half a square meter - or the sum of the units of bonds equals the difference between the amounts of the project and the actual area. In this case, the developer does not have the right to demand payment, but he also does not have to sign the final purchase agreement and, therefore, the buyer’s rights to the apartment are only partial. In this case, the investor may agree to replace the apartment with a smaller living space, if there is one, or take his money back. In case of missing square meters, the investor can get compensation for the difference in the area without the involvement of lawyers.
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