How to Check a Developer’s Reliability and Choose a Trustworthy Builder
Publication date: February 14, 2025
Choosing a developer is one of the key steps when purchasing real estate. Mistakes at this stage can lead to financial losses, construction delays, or poor-quality housing. That’s why verifying a developer before buying an apartment is an essential step to minimize risks and ensure a successful deal.
Developers differ in their reliability, quality of work, and adherence to obligations towards buyers. Therefore, before purchasing an apartment, it is crucial not only to study the market but also to conduct a thorough analysis of the developer. This includes checking documentation, financial stability, project completion timelines, and customer reviews. In this article, we will examine the key criteria for evaluating a developer, discuss construction inspection methods, and highlight the importance of construction supervision and assessing a building’s technical condition.
Criteria for Evaluating a Developer’s Reliability
Before signing a contract with a developer, it is important to carefully analyze their reputation and past projects. Below are the main criteria for evaluating a developer.
1. Company’s Experience and Reputation
How long has the company been in the market?
The longer a developer has been in the construction business, the better its stability can be assessed. Companies with over 10 years of experience usually have an established reputation and proven track records of successful projects. While newer developers may offer innovative solutions, they might be less stable in challenging economic conditions.
What successful projects have already been completed?
Review the list of completed projects, visit residential complex websites, and read tenant reviews. If the developer consistently delivers projects on time and without major complaints, it is a good sign. It is particularly important to check the condition of buildings after several years of use—whether there are issues with facades, engineering systems, or common areas.
Customer and Realtor Reviews
Do not rely solely on reviews from the developer’s website—check independent platforms (forums, real estate aggregators, review websites). If there are many negative reviews about delays, poor materials, or warranty issues, it’s a red flag. It’s also useful to talk to residents of completed projects to learn how the developer fulfills its warranty obligations.
2. Financial Stability
What are the developer’s sources of funding?
Reliable companies work with major banks and investment funds. If a developer has stable partners, the risk of bankruptcy is lower. Investors do not put money into unreliable projects, so the presence of significant capital and stable cash flow is a key indicator of reliability.
Are there debts or legal claims?
Check the company’s financial reports, arbitration cases, and tax debts. This information can be found in public databases or through specialized monitoring services. If a developer has ongoing legal disputes with contractors or buyers, it’s a serious warning sign.
What sales system does the developer use?
If a company offers extremely favorable conditions, such as large discounts on apartments, this may indicate financial difficulties and an urgent need to attract funds. Additionally, it is essential to carefully examine the payment schemes offered by the developer, as they can affect the security of the transaction.
The most secure option for buyers is a Shared Construction Agreement (SCA), which is regulated by law and outlines the developer’s clear obligations to clients. However, some companies offer preliminary sales agreements or other alternative schemes, which may involve certain risks.
What sales schemes are considered safe?
- Shared Construction Agreement (SCA) – the most reliable form of purchasing real estate under construction, as it protects the buyer’s interests and is government-regulated.
- Mortgage from accredited banks – purchasing an apartment through a mortgage from a reputable bank means that the project has been assessed and approved by the financial institution.
- Purchase through a Sale and Purchase Agreement (SPA) – applies to completed properties with registered ownership rights.
What schemes involve risks?
- Preliminary Sale Agreement (PSA) – does not guarantee the transfer of ownership but only records an intention to sign the main contract in the future.
- Assignment of Rights (Cession) – while legally valid, it can involve hidden risks, such as outstanding debts on the property.
- Investment contracts or cooperative schemes – less common but may involve non-transparent financing models without clear guarantees.
Before purchasing an apartment, carefully study the contract terms and ensure that the chosen scheme complies with legislation and does not pose hidden risks.
3. Documentation and Legal Transparency
Construction Permit
One of the most critical documents that confirm the developer’s legal operations. The absence of this document can result in construction halts or denial of property registration. It can also lead to contract annulments, creating serious legal and financial consequences for the buyer. Before signing a contract, request and verify this document’s authenticity.
Project Documentation and Expertise
All projects must undergo government review to confirm their safety and compliance with regulations. Check inspection results and object certifications. Pay special attention to conclusions from independent expert organizations, as they can reveal hidden inconsistencies with construction standards. If project documentation contains issues or has not passed the required reviews, it could lead to problems during construction and operation.
Shared Construction Agreement (SCA)
If buying during construction, the contract must comply with legal standards. Key elements to check include:
- Project completion deadlines.
- Apartment handover conditions.
- Penalties for delays.
Additionally, ensure there is a refund mechanism in case of contract termination and a process for fixing construction defects. Make sure the contract is registered in the state accounting system, which protects your rights in case of disputes with the developer.
The Role of Construction Supervision
Construction supervision is a process of quality control at all stages of a building’s development. Independent oversight increases project reliability.
What does construction inspection include?
- Verification of compliance with project documentation.
- Quality control of materials and work.
- Assessment of the building’s technical condition before completion.
For large-scale investment projects, developers must undergo investor-driven technical control, reducing the risk of construction violations.
Who can conduct independent construction supervision?
Certified construction experts with appropriate accreditation and experience in quality control. Engineering firms specializing in comprehensive construction monitoring also offer these services. Investors in major projects often conduct their own inspections to ensure compliance with standards.
Common Construction Defects and Violations
- Foundation problems – cracks, unevenness, poor waterproofing.
- Deviation from project documentation – use of subpar materials, unauthorized design changes.
- Engineering system failures – issues with electrical wiring, heating, water supply, and ventilation.
- Finishing defects – poor plastering, uneven walls, leaks, window and door deformations.
- Safety standard violations – poor soundproofing, weak insulation, non-compliance with building codes.
Conducting construction supervision allows for the early detection of these problems and ensures corrections before the property is handed over, significantly reducing risks for future homeowners.
What to Do If a Developer Is Unreliable?
Even after a thorough review, issues like financial difficulties or project delays may arise. Here’s what to do in such cases.
What if the developer has financial problems?
- Check the developer’s financial status, including court cases and tax debts.
- Contact the bank if you purchased through a mortgage—banks can offer legal support or loan restructuring.
- Join forces with other buyers—collective action can increase pressure on the developer.
- Report concerns to regulatory authorities if serious financial issues arise.
How to Claim Compensation for Delays?
- Review your SCA contract for penalty clauses regarding missed deadlines.
- Submit a formal claim to the developer.
- File a lawsuit if the developer fails to respond.
- Notify oversight agencies if delays persist.
Can You Cancel the Contract and Get a Refund?
Yes, in some cases, the contract can be terminated, and the invested funds can be refunded, but this depends on the contract terms:
- Termination of the Shared Construction Agreement (SCA) at the initiative of the buyer – possible if the developer significantly violates the construction deadlines or changes the contract conditions.
- Court compensation – if the developer delays the refund process, you can file a lawsuit and demand not only a refund but also compensation for moral damages.
- Developer’s bankruptcy – in this case, funds can be recovered through the procedure of inclusion in the creditor register, but this is a long process and not always effective.
If the developer declares bankruptcy, buyers must promptly submit an application for inclusion in the creditor register. It is crucial to act quickly, as the chances of recovering funds decrease over time. It is also advisable to consult with a lawyer to determine possible protection mechanisms and join collective lawsuits. In some cases, compensation can be obtained through construction risk insurance or at the expense of the developer’s assets.
Important: To minimize risks, it is necessary to thoroughly check the developer’s reputation, analyze documents, and review contract conditions before purchasing an apartment. If problems do arise, immediate action should be taken by involving real estate specialists and lawyers.
Conclusion
Choosing a developer requires a careful analysis of their reputation, experience, and legal transparency. Checking documentation, financial stability, and project completion timelines will help avoid issues. It is important to consider not only the developer’s claims but also real customer reviews, visit construction sites, and verify their compliance with declared standards.
Construction inspection and technical supervision are essential steps that ensure the quality of the building. If the developer meets all criteria, you can confidently proceed with the transaction. It is also crucial not to overlook warranty obligations and the mechanisms for their enforcement.
Choose only reliable developers and protect your investment, as purchasing real estate is not just a major financial transaction but also a long-term guarantee of comfort and safety for your future home.
