Housing construction cooperative (HBC) - what it is, pros and cons

Why join a housing cooperative?

A housing cooperative is an association of buyers of a specific property. For example, an apartment building. The owner group maintains it and owns it jointly, and if necessary, carries out repairs or reconstruction.

As practice shows, developers generally enter into contracts with management companies, which set their own service rates, which are most often completely unprofitable for residents of the buildings. In this case, residents can get together themselves and organize the management of such a cooperative. This allows you to manage the property personally.

House Council and Chairman

In Art. 161.1 of the Housing Code of the Russian Federation sets out the regulations regarding the Council of an apartment building, the rules for its election, including for several buildings. This body participates in the activities of the management company. In Part 8 of Art. 161.1 of the Housing Code of the Russian Federation sets out the rights and responsibilities of the chairman of the council of an apartment building.

These are the following functions:

conducting negotiations on management and terms of contracts, communicating their results to owners;
management powers;
control over the fulfillment of obligations and provision of services;
speaking in court as a representative by proxy from the owners;
participation in decision-making on meeting issues.

By decision of the meeting, the chairman may receive remuneration together with the members of the council.

The rights of residents of an apartment building in 2021 have generally not changed since their inception in 2008. However, legislation is regulated on a regional scale. So, for example, on January 1, 17, Law No. 42 “On maintaining the peace of citizens and silence” was adopted in Moscow. House rules are intended to guarantee the legal rights of residents.

Is it worth doing?

To find out the answer to this question, it is necessary to examine all the features and pitfalls regarding joining membership, as well as the consequences of these actions.

Advantages of LCD and its various forms

There are the following types of housing cooperatives.

LCD

A peculiarity of housing cooperatives is that its members do not have the opportunity to register ownership of their property until their share is fully paid off.

ZhSK (housing construction)

It is an association of people pursuing the goal of building housing for themselves and capable of bringing this project to life.

The main document of such a cooperative is the charter, which prescribes the manipulation of joint property. Also within the organization there are such local bodies as the board, the chairman of the board and members of the audit commission.

In such a cooperative, general meetings of founders are often held, which initially must be at least five people. Housing construction is carried out through joint efforts by contributing shares to the common cause. Individuals and legal entities can join housing cooperatives.

The main advantage for a future member of the cooperative is the fact that almost immediately he is considered “one of our own”. Unlike a bank, numerous certificates and guarantees are not required here. A passport and a copy of the work book are the entire package of documents.

The advantages of housing cooperatives include the following facts:

There is no need for authorized capital.
The amount of the share contribution is calculated according to the estimate for building materials, construction work, etc.
The overpayment for housing is minimal, since this includes ensuring the activities of housing cooperatives only during construction.
There are no requirements for the minimum number of participants in housing cooperatives. This means that a project to develop a cottage house or several high-rise buildings can easily be organized by a very small group of people.
Citizens who have reached the age of 16, as well as legal entities, have the right to join housing cooperatives.

ZhNK (housing savings)

They work on the principle of mutual lending with the condition of accumulating material assets in the accounts. All installment payments must usually be completed by the time the property is put into use.

This version of the cooperative allows members to accumulate the cost of housing by making share contributions. In this case, apartments are purchased within not one residential building, but several. Among the advantages of ZhNK:

A one-time membership and share fee is required.
There are no construction risks.
The activities of the ZhNK are transparent to participants.

Disadvantages of different types of control

The procedure for citizens to join a housing savings cooperative, or ZhNK, and its functioning are regulated by the Housing Code of the Russian Federation and Law No. 215 “On Housing Savings Cooperatives” of December 30, 2004.

Let us outline the associated legal risks for members when joining such a cooperative:

Double sales of apartments. The reason is the lack of state registration of contracts with housing cooperatives.
If one of the founders has financial problems, then the remaining funds on the balance sheet will have to be contributed by other participants.
Entry, membership, target, and additional fees are usually not returned when a citizen leaves the cooperative. The financial obligations of ZhNK are usually limited to the amount of funds contributed by the shareholders themselves, since ZhNK is not a commercial structure.

Common disadvantages of housing cooperatives:

The owner will have to personally communicate with developers and architects, purchase building materials, hire builders, etc.
Unfortunately, there is always the possibility of an organization going bankrupt.
Privatization of housing is possible only after full payment of the entire amount.

Among the disadvantages of housing and communal services:

Living in such an apartment is possible after paying at least half of the cost of housing, and becoming an owner is possible only after full payment of the entire amount.
The final costs are significantly higher than those of members of the housing cooperative.
In order not to fall into serious waste, you need to carefully study the organization’s charter and be aware of the financial statements of the selected cooperative over the past few years.

Conditions for demolition of cooperative housing stock

At the end of today’s article, let’s pay attention to the possibility of demolishing the cooperative building. The conditions for such a measure are reflected in Articles 32, 86 and 134 of the Housing Code of the Russian Federation. If you wish, you can familiarize yourself with them without much difficulty. The interpretation and reflection of all legislative concepts are made accessible to Russian citizens.

When demolishing a cooperative building, several outcomes are possible:

Residents will be provided with adequate state apartments with the possibility of subsequent privatization.
Cooperative members will be paid compensation.

Note! If the shares are not fully repaid, the citizen receiving housing or compensation will be obliged to fully fulfill his obligations to the cooperative in the previously agreed upon manner.

Perhaps this is where the most important points on the topic of today’s article end. We hope that the presented material was useful to all readers and provided answers to their questions.

As you can see, there are no particular difficulties either in the phenomenon under consideration or in the rights of residents of a cooperative building. Everything is extremely simple and transparent to understand.

Cooperative home - pros and cons, what problems there are in the video:

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Discussion: there is 1 comment

Ivan says:
10.26.2019 at 14:05
I am now buying an apartment in a building that was previously considered a cooperative building. But the current owners have all the documents for ownership of this property. Could some unpleasant nuances arise later?
Answer

Comparison with other forms of management of MKD

Among the forms of management of an apartment building (hereinafter referred to as MKD) there are:

Personal management of premises owners in an apartment building. This form of management is acceptable if there are no more than 30 apartments per building. Pros: cost-effectiveness and convenience, although responsibility and financial support rest entirely with the owners.
HOA - homeowners' association, TSN - real estate owners' association. In this case, responsibility for the maintenance of common property rests with the HOA.
Management company (MC). The conclusion of an agreement with the management company can be carried out according to the results of the general meeting of homeowners. The management company is responsible for providing the types of services specified in the agreement with homeowners.
The main responsibilities of the company include maintaining the house and surrounding area, carrying out major repairs if necessary, and providing utilities.
The owners may decide to change the management company and terminate the contract if it fails to fulfill its obligations or violates the terms of the agreement.

House elder: rights and responsibilities - understanding the laws of the Russian Federation

As noted earlier, the legislation of the Russian Federation establishes that residents of an apartment building (MCD) elect managers for their common property and undertake to monitor them. Of course, it is simply inconvenient to monitor separate groups, periodically changing, so at a meeting of apartment building residents, a senior person is often chosen for the entire house or a separate entrance.

The first priority is to initiate elections, or rather a general house meeting. To do this, it is enough to notify all residents of the apartment building in writing about the collection 10 days before the event.
On the day of the assembly, elections are held directly. However, they are possible only by drawing up a protocol of those present and only on the condition that citizens who own more than 50% of the living space of the apartment building came to the meeting of residents. Under other circumstances, the election of a senior is impossible, since it would be illegal.
If it is possible to carry out the selection procedure, then it is carried out by ordinary voting for the proposed candidates. The one who gets the most votes, accordingly, wins and from that moment becomes the eldest in the house or entrance whose residents elected him.

Comparison with other similar types of acquisition

Participation agreement

An equity participation agreement (EPA) implies an agreement between the developer and the shareholder, which means the investment of financial resources in equal shares for the construction of a residential apartment building and the transfer of a specific apartment by the developer to the owner after completion of construction.

The advantages of DDU include protection of the owner from double sales, transparent documentation and the right to terminate the contract with subsequent compensation for damage caused. Shared construction is usually cheaper than buying ready-made housing.

Mortgage

It is known that mortgage lending is a burdensome way of obtaining housing for an ordinary person.

Today, a mortgage provides a good opportunity to purchase your own real estate, but in its essence it is an enslaving way . In fact, it turns out that the apartment is purchased at double or even triple the price, depending on the period for which the loan was issued. There are also certain difficulties with the initial payment, which for an ordinary person is not so small.

The main difference between a residential complex and a mortgage is that after accumulating the down payment, the shareholder receives the missing amount as a loan, and not as an interest-free loan, and pays it off within a certain period.

Until the debt is fully repaid, the owner has only a share, which he can bequeath, sell or donate. However, in a cooperative, housing is owned by the community until the last moment, which means the situation may not develop in favor of the unlucky member.

According to the mortgage agreement, a person initially receives ownership of the property , but if his financial situation suddenly changes for the worse, the bank may initiate legal proceedings and attempt to repossess the apartment.

About the phenomenon of the cooperative house

What does a cooperative house mean? How is a cooperative house different from an ordinary one? Cooperative housing is an interesting system of providing citizens with living space, invented in the distant USSR.

Since everything was common in the Soviet state, the purchase or personal privatization of the same apartments was impossible. Despite this, there were many who needed housing or simply wanted their money.

cooperative house - pros and cons

After analyzing the current situation, state rulers decided on the possibility of forming cooperative housing.

The success of such an innovation was phenomenal, as many residents of the “soviets” decided to get new housing. The principle of cooperatives has not yet changed and represents a convenient, first of all, purchase of living space for the citizens themselves. If we simplify the acquisition scheme as much as possible, we can distinguish the following stages:

Cooperative participants form a common share for the construction of a house by third parties.
Waiting for this process to finish.
They move into the constructed housing, gradually pay off the remaining shares (not always) and use the property in proportion to the funds contributed.

Essentially the same form of mortgage loan. However, in this case there are no interest, penalties or penalties. Conventional share payment system.

Naturally, in a cooperative house, each resident has his own share, but the property is in the possession of all residents (of the cooperative). The latter organize their associations to maintain the resulting house.

Important! The principle of common ownership is not permanent. That is, when paying the entire part of the share contributions for the housing received for use, the citizen becomes its full owner. You shouldn't forget about this.

A few words about the types of housing cooperatives

Possible risks and pitfalls

The most dangerous moment for any cooperative is bankruptcy , which can lead to reorganization and liquidation. But for a member of the cooperative this does not always mean losses. Under any circumstances, the shareholder can buy out his apartment, but the debt must be repaid ahead of schedule before the interim liquidation balance sheet is approved. And if this option is excluded, then it is possible to purchase housing at auction. In the latter case, funds already deposited will be considered credited.

In any case, everyone who wants to become members of a housing cooperative should pay special attention to the reliability of the company with which they will cooperate.

Key points in organizing a cooperative

To organize a housing construction cooperative, it is necessary to hold a meeting of the founders, at which, among other things, the charter of the organization is approved. It spells out all the main points, including the procedure for forming property, the size of shares and initial contributions, who and how can become a member of the cooperative, who and for what reason can be expelled from the organization, as well as the main points related to holding meetings and meetings. Particular attention should be paid to what powers are vested in the board members, chairman and other members, and, of course, what compensation will be received by those who want to leave the cooperative.

The first step is to submit an application to the housing mortgage lending agency, in which you should clearly state information about your intention to create a cooperative. The appeal indicates what type of development is planned, how many participants there will be, etc. After that, lists should be generated and an application for the provision of a site should be sent. After all the paperwork is completed, the cooperative is registered, all information is transferred to the housing mortgage lending agency, which must make a decision on transferring the land to the cooperative. After the facility is put into operation, the land is transferred to the ownership of the shareholders.

Thus, a cooperative house is already being built in the city of Grodno without attracting preferential loans. The average cost per square meter in a property is about 700 rubles.