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State Duma adopts law on scheduled checks of developers

The law norms will make state control and supervision in this sphere more effective and establish order in this sector

© ITAR-TASS/Alexander Krasnov

MOSCOW, December 23. /ITAR-TASS/. The State Duma lower house of Russia’s parliament on Monday adopted a law that changes the frequency of scheduled checks of developers that attract money from citizens for the construction of apartment houses. The lawmakers passed the law in the second and third readings at a time.

Under the current legislation, scheduled inspections of developers are allowed once in three years, while the average time of construction of a residential house is one or two years. As a result, it may be impossible to conduct a scheduled inspection of the activity of developers related to the attraction of money from investors, including the targeted use of the funds by the developers.

So, the law adopted by the MPs stipulates that the scheduled inspections of developers shall be conducted annually. In addition, unscheduled inspections may be conducted under the relevant circumstances, in particular, appeals of the power bodies or citizens, including individual entrepreneurs, legal entities, as well as mass media and internet reports. The law also specifies the powers of the government agencies in the sphere of control of shared construction of apartment houses.

In the second reading of the bill the lawmakers supported an amendment that excludes the possibility of using housing construction co-operatives as a scheme to bypass the shared construction. The author of the amendment, MP Alexander Khinshtein, had previously said that there was a “loophole” using which unscrupulous developers used already established construction co-operatives. He said these co-operatives were de-jure founded and created by physical persons, but de-facto - legal entities acquired by major construction organisations though which they worked. “We don’t ban co-operatives, they are needed, should exist, but it is absolutely inadmissible to use the co-operatives as a scheme to bypass the shared construction,” Khinshtein stressed.

The law is to take effect on January 1, 2014. The law norms will make state control and supervision in this sphere more effective and establish order in this sector.

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