Establishment of a construction finance fund

The Construction Finance Fund (CFF) is the most common housing investment vehicle. The purpose of creating such a fund is to raise funds to finance construction with the subsequent transfer of housing (or non-residential premises) to investors (principals). CFF is not a legal entity. In essence, these are funds transferred to the Manager for use in the construction of a specific facility under the terms of the rules of the fund and the agreement on participation in it.

The CFF manager acts on its own behalf in the interests of the principal, managing the funds raised by concluding an agreement with the developer. The CFF manager can be a financial company that has the appropriate license or a bank. The prerequisites for obtaining such a license are a break-even activity during the last two quarters (except for newly created financial institutions) and the presence of a paid-in authorized capital of at least 1 million euros. The trustee of the CFF can be an individual, a legal entity or a general investor in a real estate fund.

There are two types of CFF:

CFF type A: the current price of a measurable unit of the construction object, consumer properties of investment objects and the construction object, floor and comfort coefficients are determined by the developer, while he assumes the risk of insufficient funds raised for the construction of the construction object
CFF type B: the current price of a measurable unit of the construction object, the consumer properties of investment objects and the construction object, floor and comfort coefficients are determined by the manager. He also assumes the risk of insufficient funds raised for the construction of the construction site.

To create a CFF, a financial institution must:

Obtain a property management license to finance construction projects and / or real estate transactions in accordance with the Law of Ukraine "On financial and credit mechanisms and property management in the construction of housing and real estate transactions" (for a bank - permission to take over commercial risks);
Approve the rules of the CFF;
Conclude an agreement with the developer;
Open an CFF account in a bank in your name (if the manager is a bank, it opens an CFF account in its balance sheet).
To create a CFF of type B, the manager must also obtain permission from the National Financial Services Commission to assume commercial risks.

The company "Finance Business Service" will help you deal with all organizational issues and effectively use the financing scheme through the CFF. Our services include:

Advising on the issues of obtaining a license and the creation of the CFF;
Help in choosing a name;
Development of CFF rules, as well as internal documents regulating its functioning;
Preparation of documents (protocols, certificates, questionnaires, etc.);
Notarization of copies of documents and powers of attorney;
Assistance in the recruitment of personnel (manager or chief accountant) or advanced training and obtaining relevant certificates/certificates (if necessary);
Preparation of an agreement with the developer and documents on the fulfillment by the developer of its obligations to the manager (mortgage agreement, agreement on the assignment of property rights to real estate, which is the object of construction, with deferred conditions, contract of agency with deferred conditions);
Preparation of a standard contract with the principal;
Formation and verification of the completeness of the packages of documents required to obtain a license and permit;
Submission of documents to the relevant authorities;
Opening a bank account;
Representation of interests and full legal support of processes for interaction with government agencies.

The client must provide:

The founding document of the financial institution;
Audited financial statements of a financial institution
Copies of documents confirming the ownership of the premises or the right to use them at the location of the financial institution;
Copies of certificates or certificates of the head and chief accountant of the applicant on advanced training and passing an exam for compliance with professional requirements for the relevant standard advanced training program (if any);
Copies of documents confirming the ownership of the premises or the right to use them at the location of the financial institution;
Information about the developer and the construction object;
Confirmation of the impeccable business reputation of the head, accountant of a financial institution and all persons who own a significant participation in it (no outstanding criminal record, deprivation of the right to hold certain positions or engage in certain activities, connection with terrorist activities, work as a director / accountant or significant participation in a financial institution for a period of at least 6 months in the year preceding the decision to apply certain enforcement measures to this financial institution or declare it bankrupt);
Confirmation of the availability of the website, means of communication, necessary computer equipment and software for the accounting and registration system, security tools.

Upon completion of the FFS creation process, the client will receive the following documents:

License to carry out activities to attract funds from the founders of property management (principals) to finance construction projects and / or carry out real estate transactions (for a bank - permission for the manager to assume commercial risks);
FSF rules;
Internal documents regulating the functioning of the FSF;
Permission of the National Financial Services Commission for the manager to assume commercial risks (if necessary);
Contract with the developer and documents on the fulfillment by the developer of its obligations (mortgage contract, contract for the assignment of property rights to real estate, which is the object of construction, with deferred conditions, contract of agency with deferred conditions);
Model agreement with the principal;
Bank account number.

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