Protection of share-construction participants and shared construction in Kazakhstan
Protection of participants in shared housing construction today is built not on a citizen buying an ordinary insurance policy but on special mechanisms provided by law. A developer may accept money only by following one of the methods established by law, and the contract must be registered. Before paying, it is important to check the project, the company's authority and the documents.
What has changed since the news item was published
The original material was published in 2012 and described a proposal to create a system for insuring share contributions in Kazakhstan. Since then the regulation has changed significantly. The Law of the Republic of Kazakhstan "On Share Participation in Housing Construction" is now in force, and special methods of organizing construction are provided for the lawful raising of funds.
Therefore the phrase "insurance of share contributions" should be understood with caution. The money of a buyer of housing under construction is not insured in the same way as a bank deposit. In one of the lawful options a guarantee of the Sole Operator, the Kazakhstan Housing Company, applies; in the other two, raising funds is possible with the participation of a bank or after the building frame has been erected and a permit from the local executive body has been obtained.
Three lawful ways to raise participants' money
1. Guarantee of the Sole Operator
The project receives a guarantee from JSC "Kazakhstan Housing Company" once the requirements provided by law are met. This mechanism is aimed at completing construction if a guarantee event occurs, in the manner and within the limits established by law and the contractual documents.
2. Participation of a second-tier bank in the project
The bank takes part in financing and monitoring the project, and the authorized company obtains the akimat's permit to raise participants' money. A developer's bank loan without the corresponding permit does not replace this mechanism.
3. Raising funds after the frame has been erected
The company first erects the frame using its own or other permissible funds, meets the established requirements and obtains the permit of the local executive body. Only after that may it lawfully conclude contracts with participants and accept payment.
The law does not permit raising money for the construction of an apartment building by any other methods. Current information about the permit can be obtained from the local executive body, and information about guarantees currently in force from the official resource of the Kazakhstan Housing Company.
A KZhK guarantee and an insurance policy are not the same thing
Guaranteeing of shared construction is a special statutory mechanism. It is not voluntary insurance of an apartment, of a financial risk or of a bank deposit. The buyer does not choose an insurer and does not purchase a separate insurance product: the guarantee relates to a specific construction project and is provided by the Sole Operator if the developer meets the requirements.
If you are offered to "insure your contribution to a new building" under a separate contract, first find out the legal nature of the product, the list of exclusions and whether the organization holds a licence. Such a document does not cancel the requirement for a lawful share participation agreement and does not legalize collecting money without a guarantee or permit. Insurance services are provided only by insurance organizations that hold the relevant licence.
How to check a project before paying
- Clarify how the project is organized. Ask to see the KZhK guarantee or the akimat's permit to raise participants' money.
- Cross-check the details. The name of the project, address, construction phase, developer and authorized company must match across all documents.
- Check the official source. Do not rely on a manager's screenshot: request information from the akimat, on the Housing Portal or on the KZhK resource.
- Study the contract. It must precisely define the share, the characteristics of the premises, the price, the payment procedure, the handover deadline, and the rights and liability of the parties.
- Obtain confirmation of registration. The contract is considered concluded from the moment it is registered with the local executive body. The participant can obtain an extract confirming the registration record.
- Pay by bank transfer to the authorized company's account details. The payment purpose must correspond to the contract; keep the contract, the extract and all payment documents.
Documents worth requesting
- the Sole Operator's guarantee or the akimat's permit;
- the standard share participation agreement and information about the authorized company;
- the title document for the land plot;
- the design and cost estimate documentation and a positive expert review;
- information about construction deadlines, the contractor and technical supervision;
- an extract confirming registration of the contract once it has been registered.
Dangerous schemes and warning signs
Particular attention is required to offers to pay a large amount under a reservation agreement, a preliminary sale and purchase agreement, an investment agreement, a loan agreement, an assignment, or through a housing cooperative, if the money is in fact going toward building the apartment. The name of the paper does not change the economic substance of the deal.
- the manager urges you to pay "today", promising an unusually large discount;
- the permit is supposedly "being processed", yet money is already being accepted;
- the documents name different legal entities or a different phase of the complex;
- you are asked to transfer payment to an individual or an intermediary, or to pay in cash without proper confirmation;
- they do not provide a draft contract in advance or refuse to confirm its registration;
- advertising speaks of a state guarantee although the specific project has no official guarantee.
What the contract should contain
Before signing, check not only the price. What matters is the exact number and location of the future apartment, its area and the permissible procedure for adjusting it, the floor, the state of finishing, the deadline for completing construction and handing over the share, the notification procedure, the grounds for changing deadlines, liability for delay and the termination procedure.
Separately, study the terms of additional payment if the area changes, and the procedure for acceptance and remedying defects. All promises regarding finishing work, parking, a storage unit or infrastructure must be reflected in the documents and not only in an advertising brochure or correspondence.
If construction is delayed
First send the authorized company a written request about the actual state of readiness and the new schedule. Keep the replies and proof of dispatch. Then clarify the project's status with the body that issued the permit or with KZhK if the project has a guarantee. Your rights and the course of action depend on how construction is organized, the terms of the contract and the circumstances of the delay.
In case of material violations it is advisable to obtain individual legal advice. Do not sign an additional agreement postponing deadlines, an acceptance certificate or a waiver of claims without assessing the consequences.
Archive context: the 2012 initiative
In July 2012 a programme article on social modernization proposed developing a system for protecting share investments in housing construction, improving the rental housing market, creating transparent standard rental agreements and simplifying the procedures for obtaining rental housing. Stimulating individual construction and developing housing infrastructure were also discussed.
These statements reflected the objectives of that period. The "Affordable Housing 2020" and housing and utilities modernization programmes mentioned at the time belong to the historical context and should not be used as a description of the conditions for acquiring housing in force today.
Key takeaway
Before buying an apartment at the construction stage, check the lawfulness of raising the money, the authority of the authorized company and the registration of the contract. The KZhK guarantee or the akimat's permit must relate specifically to the chosen project and phase. Do not replace this check with advertising promises or a separate "insurance" document.
This material is for information purposes only. Legislation and information about specific projects may change; before a deal, check current data in official sources and, if necessary, consult a lawyer.