MECHANISMS OF INVESTMENT IN REAL ESTATE

 One of the mechanisms for attracting investors' funds to finance housing construction is the Institute for joint investment. Institute for joint investment are corporate and mutual funds. A corporate investment fund is a legal entity formed in the form of a joint stock company. A mutual investment fund is not a legal entity, but is created by an asset management company (AMC), which in the future manages the assets of these funds.

  The most popular and widespread models of financing housing construction through the Institute for joint investment is the forward contract (one of the types of derivatives). Forward contract is an agreement that certifies the obligation of a person to purchase or sell the underlying asset at a specified time and on specified terms in the future, with the fixing of the prices of such sales at the time of the contract.

 Conventionally, the scheme of investing in housing construction through forward contract can be divided into three stages.

I. Initial

 The investor is not involved at this stage. The developer applies to the commodity exchange, which on its electronic platform in accordance with the agreement concluded with the developer, organizes and conducts an open auction for the sale of property rights to real estate, by concluding a forward contract. Next, AMC, which manages the assets of the fund participates in this auction for the purpose of concluding the forward contract. According to the results of the auction, between the developer and the AMC is concluded forward contract, the subject of which is the underlying asset, namely, for example, property rights to the apartment, which will become real estate in the future. This contract is registered by the commodity exchange.

II. In the second stage, an investor appears

 The investor turns to the developer to invest. Further from his participation, an application for participation in an open auction and a one-time order for the purchase of such a forward contract is submitted. In this case, all documents are submitted to the commodity exchange. According to the results of the auction, a purchase and sale agreement is concluded between the AMC and the investor. To fulfill this agreement, the investor pays money to the fund (the amount is specified in the agreement). After full payment, the derivative is transferred from the AMC to the address of the investor, about which an act is drawn up.

III. In the third stage there is a relationship between the developer and the investor

 The investor applies to the developer and submits it to the forward contract, which is the act of acceptance and transfer of such a contract. In parallel, a contract of sale of property rights to the apartment. The investor is then obliged to pay to the developer. Upon completion of construction, a deed of transfer of property rights is drawn up between the developer and the investor. The developer also submits all the necessary documents for further registration of ownership. The end result is an extract from the Register of Real Rights.

 If you have additional questions - contact the lawyers of "Prikhodko & Partners" Law Firm, we will be happy to help you, as we have many years of experience in real estate.