Baku, Azerbaijan, July 19
By Azad Hasanli - Trend:
Protection of interests of equity holders in Azerbaijan will be strengthened with the adoption of new amendments to the housing and construction legislation, member of Azerbaijan’s parliamentary committee on economic policy, industry and entrepreneurship, Azerbaijani MP Rufat Guliyev told Trend July 19.
The MP noted that a new draft law is being prepared, which is planned to be submitted for discussion at the autumn session of the Azerbaijani parliament.
Guliyev noted that the draft law will oblige construction companies to register objects under construction in the register and conclude all transactions on purchase and sale notarially.
“The new draft law will make it possible to strengthen state supervision over the construction sector, and will give confidence to people that they won’t face any fraud,” the MP added.
Nevertheless, the MP recommended taking additional measures before buying housing in order to avoid problems.
“First of all, it is worth collecting more information about the real estate developer, asking the developer company’s clients if there is any negative information about this company,” the MP said. “Secondly, it is necessary to appeal to a lawyer before signing a contract for the purchase of housing. The lawyer should study the contract first.”
Protection of interests of equity holders is a topical issue, he noted, adding that in courts there is a large number of cases related to their claims, cases of deception.
In the world practice there are different mechanisms for protecting the interests of equity holders, he said.
For example, the Fund for the Protection of Interests of Equity Holders has been operating in Russia since last year, where construction companies pay contributions, the Azerbaijani MP added.
In case of bankruptcy of a company, the Fund can cover the costs for completing construction of housing or reimburse the equity holders for the expenses for the purchased housing, he said.
Guliyev noted that there is no need in Azerbaijan for the creation of such a structure, because the amendments that are being prepared can fully ensure protection of equity holders.
The same opinion is shared by director general of the MBA Group consulting company, an expert in real estate Nusrat Ibrahimov.
“If the amendments are adopted, they will solve all problems with violation of the rights of equity holders,” he said. “Everything is written down in the draft law: when and in what volume the equity holders will pay the cost of housing, how developers should implement documentation, etc. For example, developers will conduct mandatory registration of real estate. A plot of land where a building is being constructed acts as collateral and if the developer goes bankrupt, the plot of land will be sold and the money will be returned to the equity holders.”
The expert added that according to the amendments, during construction of housing, a buyer will be able to pay only 10 percent of the cost of housing. Another five percent will be paid at the completion of the construction, 10 percent - after the completion of technical work, such as the connection of water pipes to the building, the expert said.
“If new amendments are adopted, there will be no need to create a special fund to protect the interests of equity holders in Azerbaijan,” the expert added.
---
Follow the author on Twitter: @AzadHasanli