Unscrupulous developer traps: May be tempted to keep nonexistent homes

The commercial real estate sector is becoming residential

For several years, most of the new real estate projects have been developed in the capital Vilnius. Therefore, most of the cases in which buyer suffers due to developer dishonesty are known here. This year, the municipality of the capital circulated a series of notices urging residents to pay attention to the real estate they intend to acquire and evaluate the object’s seller, the developer, to be interested in the project itself. There have been a number of cases where developers have sold apartments in an unlicensed apartment building, the design of which has not yet been repaired. It is also noted that some small developers do not pay attention to the fact that the municipality does not issue any building permits: the property is still for sale. Vilnius city chief architect Mindaugas Pakalnis “Delfi Būstas” says that such cases, when the buyer buys a bag in a bag, can be divided into several groups. First, the developer speculates on the purpose of the real estate object.

“There are houses for sale called creative workshops, guest houses, apartments, salons and the like. This is done for various reasons. If due to some bureaucratic obstacles it is not possible to make residential, but the place is suitable to live, for example, the Vilnius Naujamiestis district. There we have an area where the National Land Service does not allow a change of destination. And we as a city need residents to emerge there to form a normal city, not to remain an industry and a corporate territory.

In this case, we require that, regardless of whether the project is a guest house or a bathroom or a creative workshop, they must have all the necessary infrastructure and construction indicators for the house as they are for the house (density, intensity of building) “. – explains M. Pakalnis and adds that the risk that residents face when buying such real estate is the possibility of paying higher taxes in the future, because the premises managed by them are not residential, but commercial.

“It is worse when the developer does it so as not to equip the parking spaces necessary for a residential house and mandatory for residential real estate, playgrounds or to build more square meters than the residential house allows. This is how we started to notice and prevent these cases since 2017. I think that the vast majority of these cases we managed to prevent. It is the responsibility of both the people who buy and the legislation that allows them to register their residence in the garage, “says the architect.

You have not received permission, but the real estate is selling

A week ago, the municipality of Vilnius city circulated a report to the media about the illegal sale of eight single-family homes on the grounds of one house. According to M. Pakalnis, this case is different from speculation about the purpose of the building, but it is no less risky for residents to acquire such real estate.

“With the entry into force of the Architecture Law, we have been granted the right and the obligation to evaluate in context. It means that not only according to the solutions of the general plan, but also what is the urban architectural context. And here the problems arise that block houses are being built on individual house blocks. 4, 6, 8, 10 houses are being built on a plot. And as if everything was fine according to the regulations, but the established principles of construction, way of life, the expectations of the surrounding residents are different. You buy a plot for an individual house, and on the plot you build a house with eight apartments with 16 parking spaces and other problems ”, explains the architect.

According to the interviewee, because the project did not meet the requirements, he, like other similar projects, did not receive a building permit, but was still in the ads for the real estate agency.

“In this case, I think it was one of the most obvious cases. Because they did not receive any special architectural requirements, they then submitted that project anyway, the employee rejected it because it does not fit the context, then they reloaded the same legislation with their explanations and little to sell those houses, although the municipality said it would not issue a permit. ” , – says M. Pakalnis.

According to Vilnius’ chief architect, such purchases can only be avoided if they are interested not only in the real estate project that is being developed, but also in the company and the seller who are developing it. In cases where a resident buys a home on a project for which a building permit has not yet been issued, he buys the expectation that his home will be built.

“You have to be vigilant and request the construction permit documents. All the construction permits are public, you can see who was granted the construction permit,” emphasizes the interlocutor.

Become co-owners

Some developers also avoid problems with building permits in other ways. For example, according to M. Pakalnis, without obtaining a permit to build an apartment building, he builds a one-bedroom apartment and sells it for parts. In this case, people who buy a certain part of the house become co-owners.

“People buy a part of a house, a non-self-sufficient property, and then, to do something, they have to get the consent of their co-owners. In such cases, no one can restrict the builder, “emphasizes M. Pakalnis.

According to the architect, in cases where the real estate is sold without permission, or when the house sold is for a purpose that is not positive for the buyer, both the architects who have worked with the developers of said project and the developers and sellers of such real estate are brokers.

“We have filed a request with the Consumer Rights Service, which has punished both builders and sellers for such actions,” says M. Pakalnis.

This is how small developers play

Mindaugas Statulevičius, head of the Lithuanian Association for Real Estate Development (LNTPA), says that the vast majority of projects that sell unlicensed homes or other real estate are developed by small developers.

“From the developers, we have more than 100 companies in Vilnius alone, who are building 120 projects in development, it is probably realistic to expect that some of them are” marginal “projects: legality and fairness on the margins. Because everything can be done legally, but not always correctly, “says M. Statulevičius.

It is true that, according to the interlocutor, not all questionable projects are specifically designed to circumvent the law. According to M. Statulevičius, developers and brokers have admitted their mistakes in developing and selling real estate on projects that have not yet received construction permits or on projects that have been returned to the developer for repair.

“But it is the bigger players that may have been doing it without abuse. And the small developers, who sometimes try to evade certain legal acts, plan, design where it is not possible, and until there is a new master plan for Valid Vilnius that will limit such cases, developers sometimes use it. I would not like to comment on a specific case, but the principle is that small players, through semi-legal means, agreements, escape such locks to get a Quick profit. Here, apparently, buyers should be very careful and follow the information, call the municipality and ask if the projects are sustainable, if they have all the necessary infrastructure, if they lack knowledge themselves, “explains the head of the LNTPA.

According to M. Statulevičius, developers sometimes provide projects without parking lots, playgrounds, green areas, denser than they should be, etc. It is also notable that there are apartment buildings that appear in individual houses, garden settlements. Such offers are often attractive to residents due to promotions, discounts, etc.

“It is not always possible to regulate it by legal acts, the municipality itself recognizes it and often issues permits for such projects. This is general educational work here, which should compel abandoning such projects, encouraging developers to complete projects. in its entirety, reduce intensity, make additional playgrounds, green areas, etc. “, comments the interlocutor.

According to the head of the LNTPA, in such situations it is not necessary to forget about real estate agencies and the brokers who work in them, who are engaged in such real estate trade.

“When it comes to brokers, it is generally a company, so they should talk about company policy, dig deep and not rush to sell, train and help people understand what they are buying,” says Statulevičius.

It is true that the interlocutor points out that a distinction must be made between real estate that is sold after the municipality refuses to issue a construction permit and requires the project to be repaired, and the cases in which the apartments are sold in an apartment building, although no response has been received from the municipality. When buying a property, the construction of which for one reason or another has not yet been obtained, it is necessary to remember that only the reservation contract is signed, the reservation fee is paid, which, if the project is still canceled, must be returned to the buyer . However, according to M. Statulevičius, although it seems that the buyer is not losing anything, it is not true. Residents waste time during which they can find an apartment in an already implemented project. Therefore, it is very important to choose a reliable developer and before buying real estate, take a look at their reputation and experience.

The broker must know the details of the project.

Cases are sold where the real estate for sale, for whose construction a building permit has not been issued, or the object is for a purpose other than that claimed by residents, is often known from advertisements published by real estate agencies. However, Artūras Daubaras, the head of the Lithuanian Association of Real Estate Brokers (LTNTBA), says that such houses are not sold by brokers, but by builders and developers who sign agreements with real estate agencies and sell such properties through agents. real estate. According to the interlocutor, selling such properties is unethical and dangerous.

“If you sell real estate and you don’t get a building permit, you can also get legal consequences from clients. First of all, you are not professional. Of course, this practice should be eliminated as it has legal consequences for all parties. One person it is not looking for another home, it is focused on this, although a construction permit cannot be issued. Therefore, such a practice should be forgotten, starting with the developers, “says the interlocutor.

According to the LTNTBA chief, the broker’s activity is currently not licensed in Lithuania. This means that your only legal liability may apply under the Civil Code, but the sale of real estate for which a building permit has not been issued in Lithuania does not constitute a violation of the Civil Code.

Of course, the broker is consulted and all the information is known by all parties, if the broker is no longer consulted and attacks to sell without permission, the broker does not know if there is a permit, it is no longer professional. However, it is much easier to regulate a developer and a developer who simply does not sell or capture the consequences, organize much more rationally with the causes than with the consequences, and then catch a million and a half brokers, “he says. A. Daubar.

Affected residents can apply to the State Consumer Rights Protection Service

Although developers and brokers say the buyer himself should be more interested in buying real estate, the State Consumer Rights Protection Service (SCRPA) Delfi Būstas reports that in 2017 the service conducted an investigation on its own initiative about the activities of various construction companies, possibly misleading consumers about sales in Vilnius. The purpose of the premises. The investigation revealed that the companies were involved in unfair practices and therefore violated the provisions of the Insurance Law against Unfair Business Practices for Consumers. The companies obtained permits to build hotels and leisure facilities, and misled consumers about the purpose of the premises by advertising the premises and entering into preliminary contracts.

“We note that the information provided to consumers who purchase goods and services, including real estate, must be provided in a clear and understandable manner. Failure to provide essential information may be considered non-disclosure. Unfair business practices or the dissemination of misleading advertising can lead to result in a fine of up to 3%. annual income of the company in the previous year, but not more than 100 thousand. and if said infraction were repeated within a year, the fine would be up to 6%. annual income of the company, but not more than 200 thousand, emphasizes SCRPA.

The service has also prepared tips for real estate buyers. It is stated that the conditions of the concluded sales contract should be read carefully first. Then discuss in detail the object of the contract; establish mutual rights and obligations, issues of cooperation and dispute resolution; proportional liability for breach or improper fulfillment of contractual obligations: interest, fines; payment terms, discuss the conditions for suspension of payments if the work has not been done or has been done incorrectly; details of the terms of acceptance-transfer; to establish the terms of the guarantee; discuss the terms of the contract termination notice and its methods.

“Yes, in the event of a dispute, it will be easier for the consumer to justify what terms have been agreed and what contractual obligations the seller has failed to meet.” Additionally, we inform you that a consumer who believes that their legitimate rights and interests have been violated, in accordance with the provisions of the Consumer Protection Act, must first contact the seller or service provider in writing and submit their claim. The vendor or service provider must review the consumer’s request free of charge and, if it does not agree with the consumer’s requirements, must provide the consumer with a detailed reasoned written document-based response no later than 14 days from the date of receipt of the consumer’s request. The consumer, not agreeing with the response received, has the right to request an alternative (out-of-court) resolution of the consumer’s dispute from SCRPA, ”the information is shared by SCRPA.