Future or fulfilled investors always should know a background of the largest swindles in the real estate market.As as the Ancient Greek philosopher, Thucydides spoke: “The history likes to repeat”.
So, we will remember the last loudest swindle of the decade in the real estate market is “Elita-centre” swindle.
How did “everything” begin and what does to turn back
Everything began with the fact that the Elita-centre group of real estate development companies absolutely legally received from the Kiev city council 11 land parcels within the city announced a construction of a number of apartment houses, suggesting to everyone investors to participate in a construction.
All remember a result of all specified sites building of Elita -Center:
- within 10 years injured investors have tried to assert the rights, going on strike and requiring to return or compensate lost;
- echoes are heard even now: injured investors continue “to be knocked” on state authorities in hope to receive apartments;
- today apartments have received 235 people from more than 2000 injured investors,
- other victim didn’t offset the loss, and guilty persons, having received several years of imprisonment, continue to live life;
- the destiny of Alexander Shakhov,the main organiser of grandiose swindle is unknown. They say that he ran away but these rumours aren’t confirmed.
The global problems
Factitious all reasons for which Elita Center investors lost the investments with a total amount of 100 million dollars. are possible to divide into 2 categories:
- investors who made mistakes in case of the conclusion of agreements,
- fraudulent actions of Elita Center management .
As a rule,there is quite problematic to secure the investments at a stage when a money has already made in a construction object. The management of the builder made the decision to stop a construction or to make other fraudulent actions.
Generally speaking, it is connected with the fact that the official builder with whom the investor signs the agreement, as a rule, isn’t the actual builder. He attracts subcontractors to the performance of works. Therefore, a money “doesn’t linger on it”.
A correction of mistakes
Having analysed the most widespread mistakes which private investors made upon purchase of the apartment in a new system, LawyersDaily constituted the list of the reasons why have swindle under the name Elita-Center taken place.
- Investors didn’t check documents for the parcels of land which builder had determined under a construction.They “blindly” trusted representatives of the builder who declared that they would receive documents on new purpose soon” of land parcels. The majority of the land parcels were distinguished with another purpose (not under building by apartment houses) or couldn’t even are theoretically used under a building. As practice shows, lack of necessary allowing documentation on the land is a first disturbing “red flag”, demonstrating that the construction is illegal.
- Investors invested their money in so-called “ditch”. That is the construction which actually still hasn’t even begun. The similar option of investment is always fraught with “surprises”,even in the presence at the builder of all necessary documentation which gives the chance to estimate “possibilities” of the company only according to already completed projects. Thus, the potential investor has an opportunity to estimate any other an object of the builder, besides, in which he is going to invest.
- Investors didn’t check allowing documents of the builder. Verification of builder allowing documents is important at least then all previous points. It gives understanding about whether the builder has a legitimate right for a real estate asset construction. Even in the presence of all formally completed declarations and other documents, lawyers who work in real estate field recommend to check the content of the specified documents. For the last decade, many builders (who are building not only the unique house but also the whole complexes) have committed a”sin” with unreliable information which they recorded into declarations on the beginning of construction works. It threatens with monitoring authority cancellation of allowing documents.
- Investors had no suspicions concerning the builder in connection with the “dumping” prices. The price for square meters which is less than for 10-20% of the average price in the apartments market in the specified area new buildings may testify to the absence of the builder intentions to finish a real estate asset construction.
One may talk of injured investors who didn’t show due circumspection during the choice of an investment object. However, state authorities showed bigger criminal negligence, holding documents on the operating illegal construction objects. They haven’t taken absolutely any actions in relation to them in spite of the fact that it enters a circle of their obligations at early stages. Therefore , you should be vigilant and careful.