one of the ways to become the owner of a newly built house, besides earning a decent profit, is to participate in the construction . But in order to build a residential apartment through a contract of participation in construction, we must pay attention to certain legal complications and nuances. Failure to consider these important points while concluding a contract may result in risks such as loss of capital, fraud, or failure to properly implement obligations.

In the following article, we intend to explain in simple terms the construction of residential apartments in Tehran through the participation in construction contract , point out the rules governing such contracts, know the profit sharing mechanism between the parties to the contract, and explain the vital points for concluding a perfect contract. to give Stay with us.

What is participation in the construction of residential apartments ?

Participation in the construction is a contract in which one party is the owner of the land or house and the other party is the builder who owns the capital to build the residential apartment . The owner of the house or land may be one or more natural or legal persons.

In the old neighborhoods of Tehran, many construction participation contracts for the reconstruction of the old tissues of the city have been concluded between a few neighbors who own several houses and a builder or contractor to build a residential apartment with a known share; Therefore, in general, the contract of participation in the construction is concluded between the owner and the builder with specific conditions, obligations and legal criteria.

How do they determine the amount of the share and the amount of profit of the parties in the contract of participation in the construction ?

the profit of the parties to the contract of participation in the construction of residential apartments in Tehran is determined based on the square meter price of newly built apartments in each region and the relevant customs. Of course, usually, in addition to determining the interest percentage of the parties, they consider an agreed amount called “gratuitous amount” in the contract. This amount is paid by the builder to the owner at the beginning of the contract, so that he can rent another house during the construction of the new apartment .

If we consider the number of apartment floors as useful residential floors on the ground floor and with an occupancy level of 60%, according to the average price of 41 million tomans for each square meter of a newly built unit in Tehran in July 1401, the average percentage of the share of each party of the construction participation contract from the respective profit It will be as follows.

• Construction of a 4-storey residential apartment : 55 to 45% in favor of the owner, with about one million tomans per square meter free of charge and without determining the loan amount.
• Construction of a 5-storey residential apartment : 60 to 40% in favor of the owner, 3.5 to 5 million tomans free of charge and without determining the amount of the loan
• Construction of a 6-story residential apartment : the first five floors are 60 to 40 percent in favor of the owner, the sixth floor is 60 to 40 percent in favor of the builder, 3.5 to 5 million tomans per meter free of charge and without determining the loan amount.
• Construction of a 7-story residential apartment : 60 to 40 percent in favor of the owner, 60 to 40 percent in favor of the builder, 70 to 30 percent in favor of the builder, seventh floor 70 to 30 percent in favor of the builder, 3.5 to 5 million tomans per meter free of charge and without determining the loan amount.

What are the most important processes of participation in the construction of residential apartments ?

• • After the owner decides to participate in the construction, it is necessary to choose a reliable builder with a suitable track record to participate in the construction of the residential apartment through sufficient investigations.
• You must prepare the contract of participation in the construction in the attorney’s offices or official documents, so that you have a strong performance guarantee in case of possible problems.
• The details of the legal representatives of the parties should be fully included in the contract.
• The amount of each party’s contribution should be clearly stated in the contract.
• The material requirements of a collaborative project may cause many future disputes. Preparing a complete list of agreed materials in a construction participation contract will greatly reduce the occurrence of possible future claims.
• In order to guarantee the fulfillment of the obligations of the parties, it is necessary to include an executive guarantee in the form of conditions attached to the contract.

What are the rules governing the contract of participation in construction ?

• The 2800 regulation is one of the most important criteria for determining the resistance of buildings against earthquakes, which was first approved in 1367. According to this code, buildings in each region are designed for earthquakes that have a 90% chance of occurring.
• Some exemptions for the reconstruction of worn or loose structures are considered by institutions such as municipalities as incentives for construction participation contracts . For example, 60% (equivalent to one full floor) incentive density is provided for combining four municipal license plates.
• The new law on pre-sale of buildings approved on 12/10/2018 and its executive regulations govern pre-sale of buildings , but its effects also spread to contracts that are mainly based on pre-sale and pre-purchase contracts. According to this law, it is impossible to officially pre-purchase an apartment from a builder who does not have a share in the ownership of the land with an official document and the contract of participation in his construction with the land owner is not official.

What are the different ways of concluding a construction participation contract for the construction of a residential apartment?

According to the methods of profit sharing between the owner and the builder according to the construction partnership contract , the builder’s share may be awarded in one of the following ways.

• The first case is that the builder, as the executor of the construction participation contract , undertakes to deliver the building with the desired quality and in a certain time. Finally, the owner and the contractor share in the totality of the property.
• The second type of contract is the granting of the builder’s profit share in the contract of participation in the construction of residential apartments in stages. In this way, with the completion of each stage of construction, a share of the property is transferred to the builder. For example, the parties may agree to transfer a dung to the contractor upon completion of the skeleton work.
• The third mode is to make an agreement between the owner and the builder regarding the fact that if the construction of a residential apartment reaches a certain stage, the owner of the land will give a power of attorney to the builder. Such a power of attorney is given to him in order to transfer the constructive share so that he can proceed to prepare the official document.
• The fourth case is that at the beginning of the construction participation contract , three dongs of the property are transferred to the builder and the construction process begins.

What points should we follow to conclude a participation contract in the construction of a residential apartment in Tehran ?

In order for the construction participation contract to have appropriate executive guarantees and to end without significant time delay or loss of work quality, we must observe some points when concluding the contract or during its implementation. In the following, we mention the most important items.

• Property and builder authentication must be done properly. For this purpose, it is necessary to make sure that the owner’s claim is correct or that person proves that he has the necessary legal permission to do so. The property must also have an official document. At the same time, it is very important to pay attention to the real or legal identity of the parties and their legal residence. The conclusion of the contract of participation in construction with legal contracting companies must be done with the official signature and seal of the company.
• In the contract of participation in construction , it is necessary to specify the exact amount of the capital value of the parties and the shares in the floors according to the inflation rate and changes in housing prices in the market. In this contract, before any action, you must calculate the value of the property and the final value of the project.
• The obligations of each of the parties must be accurately, separately and in detail in the contract, and provide for the necessary performance guarantee for non-fulfillment of the obligations.
• The duration of the participation contract in the construction of residential apartments and its appropriate timing should be determined. In this regard, you must stage the work and include the end time of each stage in the contract. For example, the exact date of excavation, skeletonization, stiffening and carpentry until the completion of the work and the minutes of the separation meeting.
• It is better to appoint a person as an arbitrator at the time of concluding the contract of participation in the construction to judge between the parties in case of possible problems. In this case, you don’t need to refer to legal authorities to resolve many disputes. However, in the contract, you should allocate a clause to dispute resolution and arbitration.
• Provide the necessary warranties in the contract; including the following:
  • o We recommend that you try to get a valid bank check instead of a promissory note in the contract of participation in the construction of a residential apartment . Because it is easier to follow.
  • To guarantee the good performance of the work, we suggest that you mortgage the builder’s share to the land owner or the bank until the construction work is finished. This will largely prevent violations.
  • In the construction participation contract guarantee , foresee that for every day and every month of delay in fulfilling the obligations, an amount will be considered as a deposit or damages. In this case, the land owner can compensate the damages from the guarantee.
  • o The capital guarantee is usually obtained for the gradual ownership of the common part of the area and the developer’s commitment to build residential apartments .
• Specify exactly the right of termination of the contract parties. For example, if the construction partnership contract expires, but the project has not been completed, there will be no right to terminate the contract or damages for either party, unless they have already included conditions in the contract about this.
• Provide things like building insurance, soil testing, and construction and implementation responsibility in the contract. Also specify the manufacturer’s permitted and unauthorized delay period.

Construction of a residential building in Tehran

With an experienced team of engineers, Ista Banaye Rasekh Company provides specialized and technical advice in the field of construction and construction of residential and commercial complexes with full details to respected employers.

Building a residential building in Tehran is a difficult and time-consuming matter in terms of cost and administrative matters. According to our experience and strong connections, our company is ready to undertake zero to one hundred management of residential building construction contract in Tehran.

Estimating the cost of building a residential apartment

Heavy construction costs should be measured by an experienced and professional estimator. These costs include engineering and design processes and project materials. Among the heavy costs of building an apartment, the following can be mentioned:

• Cost of building structure
• Costs available at the construction site
• Landscaping costs
• Other possible costs

Cost estimation depends on market conditions as it affects the cost of materials, labor and project schedule. All these costs will be calculated and estimated by the technical unit of Ista Banaye Rasekh and its experienced team. These costs are calculated from the start of the project to the completion of construction activities.

Also, one of the most important aspects of construction is the provision of high-quality materials at reasonable prices. These days, with the heavy and daily increase in the price of materials and inflation in the country, it is important and dangerous to procure materials at the lowest market price. Our company, with several years of experience and cooperation with reputable domestic companies in the field of construction materials, gives you this guarantee that it will provide you with the best materials at the right price.

Time management in construction projects

Time management is a strategy related to the time needed to organize and execute various activities in a project. No aspect of the project can be controlled without proper planning and timing.

This helps in deciding the fastest and most economical way to do the job according to the available resources. Also, with time management, you can recognize possible problems and deal with them, thus guaranteeing smooth and continuous progress.

In the professional team of Ista Banye Rasekh, the complete management of the project will be done in a professional manner by a professional project manager. This will help to advance your project.

Implementation of the structure

The implementation of the structure can be concrete or steel according to the type of structure. To learn about these steps, read the article on the implementation of concrete structures .

Steel deck roofs have become the first choice of employers for their metal structures due to increased work speed and reduced structure weight. Our company, with a brilliant history in the preparation and implementation of steel deck roofs , will also do this in the best possible way in the process of designing and building residential, office and commercial projects.

Conclusion

Participation in construction is a contract concluded between the owner and the builder by providing land from one side and construction capital from the other side. The unit price of a new property in Tehran is effective for determining the profit share of each party. Considering the many lawsuits that have been brought up in the judicial courts regarding failure to fulfill the obligations of construction participation contracts , we recommend that you make sure of the authenticity of the builder’s work and its good reputation while providing the necessary executive guarantees to fulfill the obligations.