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Government Expected to Extend Moratorium on Penalties for Developers

The Russian government is anticipated to extend the moratorium on penalties for developers, a move that would further postpone the ability of shareholders to sue construction companies for delays in project completion. Ural economists predict this extension, citing ongoing challenges faced by developers.

The initial moratorium on developer liability regarding shared construction agreements was implemented in March 2024 as a measure to bolster the construction sector during a period of economic instability. Originally set to expire on December 31, it was later extended to June 30, 2025.

This moratorium specifically prohibits the collection of penalties for delays in building completion, failure to promptly address construction flaws, and other developer oversights.

While the current ban is slated to end in June, legal experts and economists suggest that a further extension is likely. They argue that the construction industry still requires this support.

Economist Maxim Maramygin, a professor at USUE, stated that developers have already been negatively impacted by high key interest rates and declining mortgage volumes. He suggested that the moratorium should remain in place until the key interest rate returns to a more normalized level, aligning with the annual inflation rate.

Maramygin believes that the moratorium can only be lifted when the key interest rate is near the level of inflation.

Lawyer Pavel Nevolnichenko also anticipates a continuation of the moratorium beyond June 30. He clarified that while the ban is in effect, shareholders cannot sue for penalties related to delays, but they can still seek compensation for other types of losses.

Nevolnichenko further explained that if a court has already ruled in favor of a shareholder and awarded compensation, the plaintiff can still receive their money despite the moratorium. However, if a writ of execution has not yet been issued, shareholders must wait until the moratorium is lifted to receive funds for construction delays.