The State Duma Committee on Construction and Housing and Utilities asked the Prosecutor General of the Russian Federation to stop the fraud of developers with escrow accounts, they write Izvestia.
The corresponding letter was sent to the Prosecutor General’s Office by State Duma deputy Alexander Yakubovsky, head of the United Russia working group for the protection of the rights of stockholders. The document says the developer has sold some of its apartments to affiliates at a below-market price, and in return, sells them to citizens at an inflated cost. Thus, the amount paid by the affiliated companies is frozen in their escrow accounts while the developer gets the rest of the funds. If the company goes bankrupt, the citizen who bought the property will receive less money.
To prevent fraud, Yakubovsky suggested that the contractor be checked by the prosecutor if he sells 10% of the apartments in a new building for 20% less than the market price.
Among the reasons for the rise in housing prices in Russia, an expert named including the introduction of an escrow account system.
On July 1, 2019, new rules came into force for financing the construction of joint housing in Russia using escrow accounts, which will store the funds deposited for the purchase of housing, while the construction is carried out at the expense of bank loans. . Banks will transfer funds from capital owners only after the developer has handed over the housing to the citizens.