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According to the draft law on Making Amendments to the RA Civil Code authored by the deputy of the RA NA Civil Contract Faction Gevorg Papoyan, it is proposed to prohibit the pledge of funds between the constructor and the buyer, or its amendments, until the completion of construction of the building, or until the signing of the deed of transfer of ownership or termination of the right to pledge part of the funds of the special account of the constructor opened in the bank before receiving the permit for the operation of the building.

The key rapporteur, the Chair of the Committee Gevorg Papoyan noted at the extraordinary sitting of the Standing Committee on Financial-Credit and Budgetary Affairs that the draft regulates the organization of the process of acquiring real estate from the constructor.

It was mentioned that the purpose of the draft is to limit the possibility of managing the constructor’s special account funds and to eliminate access to the special account funds for the constructors until the construction is completed.

The author, introducing the current situation in the field in detail, stated that the necessity for adopting the bill is conditioned by the organization of the process of purchasing an apartment with a mortgage loan from the primary market, in particular, it is necessary to limit the possibility of managing funds from a special account.

According to him, taking into consideration the fact that there are a number of cases when citizens have already paid a part of the money necessary for the construction of the building in order to purchase apartments and non-residential areas of multi-apartment or subdivision buildings under construction, but for various reasons the above mentioned constructor has stopped the construction having access to the special account funds opened on the basis of the contract, then risks arise regarding what funds should be used to continue the further construction of the building. In order to avoid those economic risks, it is proposed to make the above-mentioned amendment in the code, preventing the buyer, the construction organization, and the bank from bearing unnecessary economic risks.

Gevorg Papoyan also noted that two amendments were made in the draft. Clause 4 of Article 1 of the draft stipulates that the interest payable on the balance of the special construction account cannot be transferred to the constructor’s regular bank accounts and cannot be managed by the constructor until the construction of the building is completed or until the deed of transfer of ownership is signed or until obtaining a building, building operation permit.

It is proposed to remove the clause regarding interest so that, according to Gevorg Papoyan, the builder receives those interests and be able to complete the construction.

For builders, a 75% limit on access to special account funds is proposed instead of 100. It was noted that the builder will have access to that 25% to complete the construction.

“I propose to vote for the approval of the mentioned amendments, because on the one hand they are aimed at protecting the interests of consumers, and on the other hand, they will not allow inflation and will contribute to increasing the confidence of consumers,” the Chair of the Standing Committee on Financial-Credit and Budgetary Affairs Gevorg Papoyan said.

The deputy of the Civil Contract Faction Edgar Hakobyan inquired whether other options were considered to promote the construction of buildings outside of Yerevan, which would also help to avoid overcrowding in response to which Gevorg Papoyan stated that he does not rule out the subsidization of construction work to be carried out in regions in the future.

The co-rapporteur, the RA Deputy Minister of Economy Ani Ispiryan said that the Government has approved the initial version of the draft, and the proposed amendments will be debated by the Government before the second reading.

The draft was approved by the Committee.

It was proposed to include it in the draft agenda of the upcoming regular sittings.