Sooner or later, every person is faced with the need to purchase their own home.
Buying an apartment is a responsible matter, regardless of whether it is purchased on the primary or secondary real estate market, from a legal entity or an individual.
There are many nuances and pitfalls here, without knowing which you can lose both the money paid and the right to own the purchased home. Let's try to figure out what you need to know when buying an apartment in order to avoid financial and property losses.
Main risks and pitfalls when buying an apartment
Having decided to buy a home, first of all you need to have a good idea of what dangers exist for the buyer, what to look for when buying an apartment in order to protect yourself from them. The main risks associated with the acquisition of residential real estate include:
- unfinished: if an apartment is purchased in a new building, and the investment is made during the construction stage, there is a danger of work on the site being frozen for various reasons - and then it will be very difficult to return the money invested;
- problematic real estate: this may include apartments on the secondary and primary market, for which not everything is in order with the documentation or certain encumbrances have been imposed on their alienation by law;
- manipulations with contracts, when a purchase and sale transaction is carried out on conditions unfavorable for the buyer, allowing the seller to delay the process of signing the main contract on completely legal grounds, and in the future even challenge it in court;
- fraud involving the sale of an apartment using forged documents or by people who are not its owners.
There are various nuances when buying an apartment that you should know in advance, assessing all these risks.
When investing in unfinished buildings, you need to understand that you will be able to secure ownership of the apartment only after the house is put into operation.
Therefore, the priority here is the reputation of the seller, which has developed in the real estate market, and not the price per square meter, which unscrupulous developers often lure investors with.
The problem here may be the lack of permits for construction.
Checking the legal cleanliness of an apartment will help you avoid significant financial losses when purchasing problematic housing on the secondary market and in all cases of fraud. Distressed residential real estate includes:
- non-privatized apartment;
- housing that is in collateral or under arrest;
- not accepted inheritance;
- apartments whose owners have lost their ownership documents;
- housing with registered people.
Many of these problems can be solved, but this will require a lot of time and financial costs.
What you need to know when buying an apartment in a new building
Most often, housing on the primary market is purchased at the construction stage, since this allows you to purchase it at the most favorable price.
The first step to making a decision to purchase an apartment in a particular residential complex should be to check the reputation of the seller. Information taken from various Internet sources not associated with the developer itself is suitable here.
From what you need to know about the seller when buying an apartment, the following important points can be highlighted:
- the absence or presence of enforcement proceedings or liquidation procedures regarding the developer company;
- his experience in the residential real estate market as a legal entity;
- reviews of previously constructed and commissioned facilities (fulfillment of construction deadlines and contractual obligations, quality of work and other information);
- reputation of the company’s founders and management;
- the presence of legal disputes.
On the website of the local architectural and construction inspection, you need to check whether the object under construction is included in the list of structures, the legality of whose construction has claims from this government body.
The next stage of checking an apartment before purchasing in a new building is getting to know the property and studying the documents. The developer must have the following documents available, which you need to familiarize yourself with:
- a permit to allocate a plot of land for development, issued by a local government authority, which indicates the area of the plot, its intended purpose and the characteristics of the future object;
- State land act, if the site is transferred to the ownership of the company, or a lease agreement;
- FSF rules, if the investment is made through a construction financing fund, or the charter of the housing cooperative, which sets out the rights and obligations of members of the housing construction cooperative;
- urban planning conditions and restrictions;
- design documentation and technical specifications for construction.
After getting acquainted with the object and checking the documents, when purchasing an apartment in a new building, you need to agree on the terms of the contract, paying attention to the mandatory presence in it of clauses relating to:
- specific deadline for putting the facility into operation;
- the cost of the apartment and the payment procedure, where it is important to fix the amount in hryvnia equivalent (especially if the purchase is made in installments) and determine the schedule and method of making payments;
- the order and procedure for registering the buyer’s property rights (will he do this himself or will the developer take on these responsibilities);
- conditions and procedure for terminating the contract at the initiative of one of the parties, where it is necessary to stipulate sanctions and the deadline for returning the deposited funds.
Only after going through all these stages in sequence can you begin to sign an agreement, which must be notarized. It is recommended that payment under the agreement be made through a bank. When paying in cash to the company's cash desk, ask for a cash receipt and a receipt for the receipt order.
What to look for when buying an apartment on the secondary market
In our country, the rule is that the buyer pays a commission to the intermediary when completing a real estate purchase and sale transaction. Those who want to save on paying for real estate services are probably faced with the question: how to check an apartment before buying?
The main thing you should pay attention to when buying an apartment is:
- identity of the seller and ownership: after asking the owner of the property to present a passport and title document for the apartment, check whether he is its owner (you can verify the authenticity of the presented certificate of ownership by requesting a certificate from the State Register of Property Rights to Real Estate on the website of electronic services of the Ministry of Justice of Ukraine );
- the status of the issued general power of attorney for the sale of an apartment, if the owner himself, for some reason, cannot take part in the transaction: you can check whether the power of attorney is valid with the notary who issued it, but it must be taken into account that upon the death of the principal, the power of attorney is automatically revoked;
- frequent sales: if the apartment passed from one owner to another several times, ask the seller to provide an extract from the register of property rights with information about the previous owners;
- the state of mental health of the seller, so that the fact of his incapacity does not become the reason for termination of the contract;
- the owner’s debts to third parties: you can check their presence in the unified state register of court decisions by entering the address of the property; if the apartment appears in court cases, it is better to refuse to purchase it;
- presence of registered minor children: such information can be obtained from the Central Administrative Office in form 13; if there are registered children in the apartment, consent to the sale will be required from the guardianship authorities.
From what you need to know when buying an apartment, other points are also important, for example, whether its layout has changed, whether this change was legalized accordingly.
In addition, the apartment being purchased may be joint property acquired during the marriage, which the divorced spouses own together after the dissolution of the marriage.
This may be a valid reason for invalidating the purchase and sale agreement.
What documents are needed to purchase an apartment on the secondary market?
Among the documents that need to be checked when purchasing an apartment, the following should be noted:
- documents confirming the right of ownership of housing, which are a contract of purchase and sale, gift or exchange, as well as a certificate of privatization of an apartment or the right to inheritance, and a Certificate of Ownership issued on their basis;
- an extract from the State Unified Register of Rights (USRE) for real estate, confirming the absence of a lien or lien imposed on it;
- an extract from the house register indicating that there are no residents registered in the apartment;
- permission from the guardianship authorities, if there are registered minors;
- consent of the spouse, including the former, if the owner of the home is divorced;
- a certificate from the BTI confirming the absence of illegal redevelopment;
- certificate of absence of debt on utility bills;
- a certificate from a narcological and psychoneurological dispensary for the owner of the apartment.
When paying for real estate, when concluding a contract, request from the seller a hand-written receipt of receipt of the money, so that in case of force majeure, you can return it through the court.
Knowing how to check an apartment when purchasing, you will be able to legally and safely conduct a purchase and sale transaction!
Pitfalls when buying an apartment on the secondary market
What are the pitfalls when buying an apartment?
If you want to buy a residential property, then you should think about the troubles that may await you. These circumstances can not only affect the result of the transaction, but also make it fail altogether. It is worth remembering to be careful and attentive when signing the contract, as well as when paying.
Important! All the troubles that may arise during a transaction involving the acquisition of residential premises on a paid basis can be divided into 2 types:
- Technical. These are risks that do not in any way affect the right of ownership, but can significantly spoil the desire to purchase housing. These include illegal redevelopment, furniture, the removal of which will be carried out after sale, plumbing, etc.
- Legal. These are risks that can directly affect the loss of ownership of the purchased housing, and even litigation in court cannot be ruled out. And to eliminate such risks you need to spend a lot of time and effort.
As practice shows, most of the troubles turn into reality after the transfer of funds to the seller. After this, it is already difficult to prove that you are right, and it is unlikely that you will be able to return ownership (if it is lost) or the money spent.
Therefore, it is worth carefully checking the residential premises before purchasing it.
Buying an apartment with maternity capital without a mortgage.
Risks when buying an apartment on the secondary market
When purchasing residential premises from the secondary market, be attentive to all the details, and do not forget about the pitfalls:
- registration of unauthorized persons, especially those belonging to the dangerous category,
- an encumbrance has been placed on this residential premises, the seller is interested in hiding this fact,
- there is unauthorized redevelopment in the residential premises,
- document fraud.
So buying a home from the secondary real estate market has its dangers.
Whether the deal will be successful depends only on your attentiveness and scrupulousness.
Attention! Our qualified lawyers will assist you free of charge and around the clock on any issues. Find out more here.
What to look for when buying real estate
Let's look at the pitfalls that may await you when making a transaction for the purchase and sale of residential premises:
- Execution of documents by an authorized representative. It is worth signing a document with a trusted person only when all documents have been thoroughly checked. For example: citizen D. purchased residential premises from an authorized representative L., to whom the owner K. transferred the authority to formalize this transaction. After the transaction was completed and the funds were transferred, it turned out that the owner K. has a mental illness, that is, he is incompetent. In this case, the contract will be declared invalid,
- Legal entities take part in the transaction. This is the first bell to carefully check all the documentation; most likely, there is something wrong here,
- Housing was purchased using maternal capital. It is established at the legislative level that such residential premises must be registered in the name of all family members, including children. And if shares of minor children are sold, they must be registered at a different address. If the seller does not fulfill this condition, the transaction will most likely be declared invalid.
- The owner of the residential premises is a partially incompetent citizen. Typically, such individuals suffer from alcoholism, drug addiction, or mental illness. Of course, he is not prohibited from making this kind of transaction, but the state in which he enters into it may become a reason for declaring the transaction invalid.
- A transaction is being made in relation to jointly acquired property, which means there must be a notarized written consent of the second spouse,
- Heirs of residential premises. For example, a residential property is inherited into the ownership of two persons. But one of them is selling the property illegally and without notifying the second owner. As a result, the court will recognize the transaction as invalid and demand the return of the real estate,
- An encumbrance has been placed on the apartment. The residential premises are pledged
- Unauthorized redevelopment has been carried out in the residential premises, the consequences will have to be eliminated by buyers (pay a fine or restore the original position),
- Real estate is owned by several people in shared ownership. In this case, the co-owners have a preferential right to buy out the seller’s share. Therefore, the transaction is considered legal only if the remaining owners refused in writing to acquire his share. Violation of this rule may lead to a lawsuit not in favor of the buyer,
- The house is included in the list of houses that are subject to resettlement. Selling an apartment in such a building would be a violation of the law.
These are the main points that the buyer should not ignore before signing the purchase and sale agreement. Any inaccuracy or alarming fact should force you to double-check the legality of the transaction or consider another option.
Watch the video. Pitfalls of buying an apartment on the secondary market:
Risks when applying for a mortgage
Attention! You should be more careful when purchasing a secondary home using a mortgage loan. Pay special attention to the following points:
- Condition of housing: damage, condition close to emergency. This may lead to the transaction being rejected by the credit institution,
- Reputation of the credit institution and customer support.
Before applying for a mortgage loan, you should carefully study the mortgage lending conditions of a given credit institution.
How to buy a home while married and not divide it during a divorce?
What you need to know about selling an apartment with minor owners
The execution of a purchase and sale agreement for residential premises, among the owners of which there are minors, can be carried out with the consent of the guardianship and trusteeship authority. The main condition in this case is that the housing situation of minors should not worsen. Otherwise, the completion of such a transaction will not be allowed by the guardianship and trusteeship authorities.
The agreement is signed on behalf of minors by legal representatives.
And persons aged 14 to 18 years old enter into an agreement independently, but with the formalized consent of the parents, certified by a notary, with the permission of the guardianship and trusteeship authorities.
If minor family members do not own the residential premises being sold, there is no need to obtain permission to sell from the guardianship and trusteeship authorities.
How to submit an application to Sberbank for a reduction in mortgage rates?
Read why banks refuse to apply for a mortgage here.
How to arrange the purchase and sale of an apartment yourself, read the link: https://novocom.org/nedvizhimoe-imushhestvo/zhilaya-nedvizhimost/kak-sostavit-dogovor-kupli-prodazhi-kvartiry-samostoyatelno.html
Technical points
There is no need to rush before purchasing a home. Pay attention to the following elements, the omission of which can lead to unpleasant consequences: from administrative liability in the form of a fine to endless repairs.
Notice! Points that you should pay special attention to when signing a contract for the sale and purchase of residential premises on the secondary market:
- Condition of the house: you should not complete the inspection only outside the living space in an apartment building; you should inspect the entrance, as well as the attic and basement spaces,
- Cleanliness of the local area, entrance, garbage chute,
- Is there fungus, mold and dampness?
- The condition of electrical networks, water supply, heating system (unfortunately, faults in this case are not immediately visible),
- The location of the apartment relative to the light and the view from the windows,
- The material from which the house is built, the convenience of the layout: you can, of course, arrange a redevelopment later, but it is better to purchase housing that satisfies your desires,
- If there is a redevelopment in the apartment, is it legal (most often the seller hides the fact of illegality). Such redevelopment may result in the imposition of an administrative penalty on the owner in the form of a fine. Then it will be extremely difficult to prove your innocence,
- Social status of neighbors: if problems start with neighbors, then it can naturally be assumed that it will be impossible to live in this apartment.
Tax deduction when purchasing an apartment in 2018.
What to pay attention to when completing a transaction with joint property of spouses
In accordance with the Family Code of the Russian Federation, jointly acquired property of spouses is recognized as common property, and accordingly, it must be disposed of together. For transactions with such property, a notarized consent of the second spouse to the alienation of property is required. Although such a document is not always drawn up.
If this consent is absent, the second spouse has the right to challenge the legality of the transaction through the court. Therefore, it is worth clarifying whether the residential premises are joint property.
How to Avoid Scams
Please note! To avoid unpleasant situations, you should adhere to the following rules:
- Carefully check the seller’s documentation, as well as an extract from the unified state register of real estate and the house register,
- Try not to get involved with residential premises received as an inheritance, or when a trusted person acts on behalf of the owner,
- If you transfer cash to the seller, you should make sure that he gives you a receipt for receipt,
- Do not neglect the services of professionals.
- When purchasing a residential property, a considerable amount of money is at stake, so you should be careful.
- Watch the video. How to check an apartment before buying: what documents are needed when purchasing:
What are the pitfalls when buying an apartment on the secondary market?
Buying an apartment on the secondary market, like other similar transactions involving large sums of money, is associated with serious risks. In this article we will talk in detail about the pitfalls that may await a secondary buyer.
- Risk factors
- Legal pitfalls
- What do you need to know about selling an apartment with owners who are minors?
- What should you pay attention to when completing a transaction with the spouses’ common property?
- Technical points
- How to protect yourself from illegal redevelopment of the apartment you are buying?
- Transaction security
- Buying Tips
Risk factors
Real estate transactions in general represent a complex category of civil law relations: this concerns checking the “cleanliness” of apartments, the stages and timing of transactions and settlements, and legal registration. In addition, the serious money that accompanies the purchase of an apartment is a bait for various kinds of scammers and swindlers.
- Legal problems related to the so-called cleanliness of the apartment. This is an extremely serious risk, as it risks losing your home ownership. This risk is due to the significant complexity of the purchase and sale transaction, as well as the low legal knowledge of buyers.
- Problems related to the characteristics of the apartment and technical documentation for it. They do not affect ownership, but can create very uncomfortable living conditions. Of course, these problems are not as terrible as legal ones, but they can entail significant financial expenses. A typical example of such a risk is unauthorized redevelopment.
- Problems related to transaction security.
Let's look at each group of factors in more detail.
Legal pitfalls
- Sale of an apartment using forged documents or by a person who is not the owner, by proxy. Why should this be a concern? There are often cases when a power of attorney turns out to be fake or expired. If the power of attorney is genuine, it can be revoked by the person who issued it.
Fraudsters issue powers of attorney for lonely elderly people, orphans, disabled people, and alcohol and drug addicts. As for the real owner, he may either not know that his apartment is for sale, or he may already be dead by this time.
- Privatization of an apartment completed with violations.
For example, in the 90s, violations of the rights of minors, who were not included in the composition of the owners during privatization, were quite common. The danger is also posed by the tenants who participated in the privatization, who promise the buyer to check out of the apartment after the transaction is completed.
- The history of the apartment being sold contains transactions of a dubious nature, especially with the participation of state-owned enterprises, government agencies, and other legal entities.
- Sale of an apartment received under a gift or rent agreement, by inheritance, as well as under other agreements that affect the interests of third parties.
In these cases, after the purchase of an apartment has been completed, previously unknown persons may appear, for example, heirs, who may lay claim to this apartment. Also, do not forget about persons who have a legal right to an obligatory share in the inheritance.
- Violation of the procedure for registering ownership of an apartment, fully or partially acquired at the expense of maternity capital. According to the law, such housing must be registered as the common property of not only the parents, but also the children, and the size of the shares is indicated. However, this rule is not always observed.
Why? Firstly, it is not possible to identify the exact proportion in all situations. Secondly, some owners deliberately try not to burden their apartments with the rights of minors. Unfortunately, such violations are quite real, since at the moment in Russia there is no effective system for monitoring the fulfillment of this obligation by owners.
- Sale of an apartment, one of the owners of which is a minor, mentally ill person, alcoholic or drug addict, i.e. a person who is incompetent at the time of the transaction. Such citizens are not prohibited by law from making transactions, but they may be challenged in the future.
- Sale of an apartment that is under arrest, pledged or is the subject of litigation, as well as other hidden encumbrances.
- The presence among the owners of the apartment for sale of persons who went to prison, military personnel or disappeared in an unknown direction.
Such people retain the rights to reside and use the apartment, but they may not “show up” and move into the housing you bought through the court right away.
At the same time, before concluding a transaction, sellers often try to convince potential buyers that the absent tenant will not lay claim to the apartment, supporting their arguments with written consent to sell it.
- Violation of the rights of spouses.
- Violations of pre-emptive rights to sell rooms (or shares).
According to the Civil Code of the Russian Federation, in these cases the seller is obliged to make an offer to neighbors (or shared owners) to buy out the rooms (shares). Quite often this process is labor-intensive, so sellers try various ways to get around this requirement.
- Selling using a fake or invalid passport (the document could have been stolen from another person, or the fraudster receives a new passport and conducts the transaction using an old one, allegedly lost).
- A transaction with an apartment on the secondary market may also be declared invalid if the house is included in the resettlement plan. Moreover, the seller may simply not know about this or may not take it into account, but the buyer will suffer in such a situation.
What do you need to know about selling an apartment with owners who are minors?
Registration of a transaction for the sale of an apartment, among the owners of which there are minors, must be carried out only with the consent of the guardianship authorities. The main condition in this case is that the living conditions of citizens under 18 years of age should not worsen. Otherwise, the transaction may be declared invalid.
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On behalf of minors under 14 years of age, the agreement is signed by their parents/legal representatives. And citizens aged 14 to 18 years old enter into a transaction themselves, but with the notarized consent of their parents/legal representatives who have received prior permission from the guardianship authority.
If minors are not the owners, but are only registered in the apartment being sold, there is no need to obtain a guardianship permit.
What should you pay attention to when completing a transaction with the spouses’ common property?
According to the Family Code of the Russian Federation (FZ-223 of December 29, 1995), property acquired during marriage is recognized as the common property of the spouses, therefore, they must dispose of it together. For real estate transactions, this order takes the form of a notarized consent of one of the spouses for the sale. However, in practice this document is not always drawn up.
If there is no such consent, then the second spouse can challenge the transaction for the sale of the apartment. Before concluding a contract, we recommend that you make sure that the apartment was not purchased during marriage. If not, then the consent of the second spouse is not required (except in cases of shared ownership).
Technical points
- the condition of the house as a whole: do not limit yourself to the boundaries of the apartment you have chosen - you need to inspect the entrance, and it is also very advisable to look into the basement and attic;
- cleanliness of the entrance, local area, garbage chute;
- defects such as fungus, dampness, mold;
- the condition of electrical wiring, plumbing, heating systems (the serviceability of these systems, unfortunately, is not always easy to immediately assess);
- the location of the apartment relative to the cardinal directions, the view from the window;
- the material of the walls of the house, the convenience of the layout: of course, in the future some adjustments can be made to the layout of the housing, but it is still better to choose an apartment with a layout close to your expectations;
- legal registration of the ongoing redevelopment (often sellers hide its unauthorized nature) - illegal transformation of an apartment can significantly complicate the life of its owners: such redevelopment is an administrative offense that entails quite serious fines, while responsibility rests with the current owner, and it is necessary to prove that the previous owner did it apartment owner is incredibly difficult;
- social status of neighbors: a close, homogeneous social environment is the key to peaceful relations between neighbors, and on the contrary, different social status often leads to mutual misunderstanding between residents of the house.
How to protect yourself from illegal redevelopment of the apartment you are buying?
Very often, residents of secondary housing make redevelopments in the apartment, removing unnecessary partitions and combining rooms. However, such changes are not always documented. Often, due to legal illiteracy and reluctance to spend money and time, citizens refuse to contact the competent authorities in order to legalize redevelopment.
Buyers of a modified apartment without documents will subsequently face fines, which they will have to pay themselves, since the apartment will already be their property.
What should I do?
To begin with, we recommend that you inspect the apartment most carefully: some redevelopments are visible to the naked eye. For comparison, you can check out the similar living space of your neighbors.
If in doubt, we recommend asking the owner for an extract from the BTI or a technical plan of the apartment for comparison. The documents indicate the original (construction) state of the premises. If you find changes, convince the owner to register the redevelopment and postpone the deal until the paperwork is properly completed.
Transaction security
- When concluding a purchase and sale agreement, in order to save on taxes, the seller may offer to indicate in the document a cost significantly lower than the actual value (for example, according to the BTI estimate). You shouldn't agree to this. The contract should reflect the actual cost of the transaction. Why? Firstly, you will be able to return part of the amount paid for the apartment in the form of income tax (property deduction). This procedure is regulated by Art. 220 of the Tax Code of the Russian Federation (FZ-146 of July 31, 1998). If the contract indicates an underestimated value, then the deduction will be significantly lower. When indicating an unreliable sales amount in a contract, you must also remember that such a transaction can be challenged in court and declared invalid. In addition, if for any reason the contract is terminated, the buyer will be able to claim a refund only of the amount that was specified in the contract.
- When buying an apartment with the participation of a real estate agency, pay special attention to the clauses of the contract that stipulate the responsibility of the realtor, including in force majeure and crisis circumstances.
- If the parties decide to pay for the apartment by bank transfer, consider an instrument such as a letter of credit. What is its essence? The seller opens a special bank account in his name, to which the buyer transfers the amount of funds corresponding to the terms of the purchase and sale agreement. In this case, the seller can use this amount only after certain documents are submitted to the bank. This could be, for example, a purchase and sale agreement with a registration mark or any other document (package of documents) previously agreed upon when opening a letter of credit. Details and conditions of this procedure can be obtained from any banking specialist.
- It is convenient and safe to make cash payments through a safe deposit box rented from a bank (for more details, see: “The nuances of transferring money using a safe deposit box when buying an apartment”). To do this, the buyer, in the presence of the seller, puts the required amount in the cell. In this case, the money is counted and checked for authenticity in the presence of both parties. The conditions under which the safe deposit box can be opened are negotiated (for example, the seller will have access to the contents of the safe deposit box only after presenting a notarized purchase and sale agreement to the bank). The buyer, by mutual agreement, can also gain access to the money, but later, for example, a few weeks from the moment the money was invested. Using a safe deposit box for settlements, the parties have the right to choose almost any procedure and package of documents, describing these conditions in the agreement with the bank.
- A very important issue is making a deposit or advance payment for an apartment (see: “How to properly fill out a deposit when buying an apartment (form, sample)”). These concepts are often confused, but advance and deposit are not the same thing. An advance is actually a preliminary method of payment. If the transaction is canceled for any reason, the advance payment is returned to the buyer in full. Making a deposit if the transaction fails entails legal consequences for both the buyer and the seller. So, if the buyer is at fault, the deposit will remain with the seller. If the seller is the initiator of the transaction rejection, the deposit must be returned to the buyer in double amount.
Buying Tips
- Before you decide to buy the apartment you like, be sure to check the following points:
- the exact number of owners (a certificate of ownership will help with this);
- sources of financing for previous transactions (do not forget about the possible “catch” when paying for an apartment with maternity capital);
- whether there are minor children or incapacitated persons among the owners;
- whether any of the owners are currently serving in the army or are in prison;
- the number of registered residents in the apartment, as well as their willingness to leave it;
- relevance of the technical passport, availability and legality of redevelopment;
- if the seller received the apartment by inheritance, you need to find out on what basis.
- Make copies of absolutely all documents and keep them for yourself. At the end of the procedure for checking the legal purity of the apartment, you should not be left with any ambiguities. In addition, these documents, in the event of litigation, will help you look like a bona fide purchaser and defend your rights.
- If you are planning to purchase an apartment that is not clean enough, do not rely on the registration authority, bank or insurance company - these services will not fully check the legal cleanliness.
- What options for purchasing secondary goods should you be wary of:
- repeated resales of the apartment, especially within a short time;
- dubious, suspicious identity of the seller;
- concealment of information about the owner;
- selling an apartment by power of attorney (be sure to check its authenticity, powers, and validity period);
- sale of an apartment at a price significantly lower (from 10%) than the cost of similar properties;
- counter sale of apartment and resettlement.
- Check whether the owners' passports are valid; there should be no erasures or corrections in them.
- Read the documents about the timing of major home repairs.
- Remember that it is best to explore the interior of the apartment and the features of the yard during daylight hours.
- When inspecting a home, do not rush in any way: you need to clarify all the nuances for yourself.
- View no more than two apartment options at a time.
- Talk to people in your yard or neighbors: they will be able to tell you about many of the features of your chosen area and home.
Pitfalls when buying an apartment | Gordon and Partners
A. Gordon
Lawyer Gordon Andrey Eduardovich
An apartment, living space, place of residence are necessary conditions for the daily life of every person, just like food. Everyone solves the housing problem in their own way.
Ownership of an apartment in Russia can be obtained as a result of privatization of the apartment, under an apartment purchase and sale agreement, it is not uncommon for an apartment to be inherited, someone receives a deed of gift for an apartment, a life annuity agreement has been used for many years, etc.
The desire to own an apartment is understandable, especially when you have found the option you like on the secondary market and you have the money to purchase it. All you have to do is carefully and carefully avoid the pitfalls when purchasing, and you will not only become the owner, but also reduce the possible negative consequences of the transaction to a minimum.
Each method of purchasing an apartment described above has its own characteristics; let’s consider purchasing under an apartment purchase and sale agreement.
Risks when buying an apartment on your own
Unlike privatization, donation and inheritance, when you purchase specific real estate free of charge, the purchase and sale of an apartment is the purchase of an apartment of your choice: whichever you want, where you want, on what terms you want and most importantly - for your money. It's even more interesting when you use a bank mortgage loan.
- The main risk when buying an apartment is the possibility of losing the apartment (in whole or in part), and it will not be easy to return the money paid.
- The second risk when buying an apartment is that, along with the ownership of the apartment, you will receive encumbrances on the right of unauthorized persons to live in this apartment.
- The third risk is losing money when purchasing.
Pitfalls when buying an apartment
The pitfalls when buying an apartment can be divided into three components:
- Legal flaws in the history of the apartment
- Legal defects when purchasing an apartment (mistakes during the current apartment purchase and sale transaction)
- Technical shortcomings of the apartment.
Legal flaws in the history of the apartment
Our long-term practice of legal support of transactions with apartments in Moscow and the Moscow region, as well as apartment courts, undoubtedly testify: there can be legal defects in the history of any apartment.
Apartments purchased under a shared-equity construction participation agreement (DDU) are not an exception. You should not hope that there can be no legal defects if you are the first buyer of an apartment purchased from the first owner after the DDU.
- In a transaction for the purchase and sale of an apartment, the buyer’s task is not to take on risks from the history of the apartment; let the owners (sellers) deal with them.
- The second task of the buyer is to correctly conduct the purchase and sale transaction of the apartment, so as not to become the reason for the loss of the apartment and not to cause problems with the documents.
- You should not rely on a notary if your current transaction or previous transaction with an apartment is formalized in notarial form.
The law does not oblige the notary to check the entire history of the apartment. The position of the notary - we check the current status, the rights of the seller are registered in the Unified State Register, the rest is not his concern, but yours. If claims subsequently arise against you from the “past” history of the apartment, the notary is not aware of these past violations when completing your transaction.
Risks when buying an apartment with a mortgage
If you buy an apartment and take out a mortgage loan, do not expect that the bank will guarantee and completely inspect the apartment. The bank will only check what is on the surface, obvious things. If it happens that after the transaction, the bank will collect the debt on the loan from you, even if your apartment is confiscated by a court decision on behalf of one of the previous owners.
When buying an apartment with a mortgage, be doubly careful!
Risks when buying an apartment under DDU
Purchasing an apartment under the DDU carries not only the risk of the developer being late in delivering the house on time, but also legal risks, which many are not even aware of.
The grounds for termination of your ownership of the purchased apartment are violations during any transaction with your apartment - during privatization, during inheritance, during donation, etc.
Pitfalls of privatization:
Typical violations during the privatization of apartments are:
- One of those “registered” in the apartment was unable to participate in privatization, and his share of the apartment was not registered. Typically, these are people serving sentences in prison, those who have served in the military, or those who have gone on a long business trip.
- When an apartment was privatized, the children registered in it did not participate in the privatization and were not given a share of ownership in the apartment.
- One of those registered in the apartment refused to participate in privatization, and he acquired the right to lifelong residence (use) of the apartment.
The above violations are also accompanied by outright abuses by sellers when they try to sell a privatized apartment with common shared ownership using forged powers of attorney, using passports with pasted-over photographs, etc.
How to protect yourself as a buyer:
Checking the legal cleanliness of the apartment
For the selected apartment, it is mandatory to check the legal cleanliness of the apartment: checking the legal history of the apartment, the history of the owners, residents, the procedure for changing owners, checking the sellers.
The buyer should, if possible, obtain from the sellers copies of all documents relating to the apartment. They will be needed to check the legal purity, and in extreme cases, they will be useful in court.
What to check before buying an apartment:
- If there was privatization, documents for privatization. Violations of the law during privatization are checked.
- If a person who refused to participate in privatization is registered in the apartment, it is necessary to notify him about the sale of the apartment and obtain his consent to change his place of residence. At the same time, it is necessary to discharge him from the apartment before the transaction is completed.
- Pay special attention to non-standard transactions in the history of the apartment: rent, inheritance, transactions with legal entities.
Rent and inheritance are champions of dispute through the courts.
Moreover, as a rule, claims arise years after the opening of the inheritance, and can be brought against you several years after purchasing the apartment.
How to conduct an apartment purchase and sale transaction
- Check the seller's passport and check his credentials. A transaction with an unauthorized person will be declared invalid in court.
- Check the seller's ability to negotiate.
- Determine who is selling the apartment - the owner or another person by proxy.
There is no benefit from either of these options.
Firstly, because both methods are absolutely legal, and secondly, fraudsters use both of these methods to steal. Fraud occurs especially often in relation to escheat apartments - apartments of deceased single people.
It is not uncommon in Moscow and the region for scammers to try to sell an apartment using a fake passport; a front person sells the apartment using the owner’s passport, while the front person is selected according to the age and size of the owner and is made up to look like the owner. We know of cases where “interested” notaries, fake documents, etc. are used in transactions.
- It is not uncommon for court decisions to be used to legalize stolen apartments.
- A transaction for the purchase and sale of an apartment by power of attorney can be challenged in court for the following reasons:
- — use of a revoked power of attorney;
- — challenging the power of attorney itself in court;
- - use of a fake power of attorney.
3) Make sure that the apartment is owned by one owner (not shared). Particular attention to single sellers.
4) If the apartment is a common shared property, the owners of other shares of the apartment have a pre-emptive right to purchase the share. When buying a share, check the seller: he is obliged to notify other owners of apartment shares about the sale and conditions.
When purchasing an apartment from shared owners, it is necessary to check the legal purity of each share and the owner of each share.
In addition, the reason for the emergence of shared ownership of the apartment is clarified. If this is privatization, it turns out that there are persons who have the right to lifelong residence (use) in the apartment. You can get an apartment “with minced meat”, you will not be able to evict such a tenant even through the court.
- An inheritance in the history of an apartment is a separate reason to think about the feasibility of a purchase. Heirs sometimes appear several years after your purchase. Check, perhaps the dispute over this apartment is already in court.
- It is standard to check the apartment for arrests, liens, prohibitions and disputes.
- Redevelopment of an apartment can be an obstacle if you buy an apartment with a mortgage loan. The bank will accept the documents if the redevelopment is properly completed - it is a legal redevelopment.
Mistakes when buying an apartment
There are so many mistakes people can make when buying an apartment. Typical errors:
Buying an apartment begins with making an advance payment. Apartment buyers regularly lose their down payment when they cancel the purchase. The reason is an incorrectly drawn up advance agreement. Most often, buyers end up with a deposit or security payment. If the buyer refuses to purchase, the deposit will not be returned.
It’s not uncommon for even real estate agencies to come to us with such problems. To return the advance, you need to draw up the contract correctly, that is, make the advance correctly.
Many real estate agencies complete the legal clearance check with an extract for the apartment from the Unified State Register. What can we say about a buyer who knows about real estate transactions on the Internet.
An apartment purchase and sale agreement is not standard. It is not enough to simply download it from the Internet. The contract must be tied to your specific situation, to your object, and reflect all the essential conditions in it. Without these conditions, the contract is not considered concluded.
It is not uncommon for sellers to require that less than the full price of the apartment be indicated in the contract. Is it dangerous. In addition, the buyer limits himself when paying personal income tax, including in the case of selling an apartment.
Calculations are a very important element of the transaction, which must be clearly known at the stage of preparing the purchase and sale agreement.
The timing of registration of rights, the timing of transfer of the apartment, the timing of payment must be included in the purchase and sale agreement. In addition, the terms of settlements are transferred to the agreement with the bank.
This could be a lease agreement for a safe deposit box, or an agreement for non-cash payments between the seller and the buyer.
It is extremely important to take into account the moment of settlement, the state registration of the buyer’s property rights and the moment of settlement. The fact is that since 2013, an apartment purchase and sale agreement does not require state registration and is considered concluded after the parties sign the agreement.
What to look for when buying an apartment
The buyer of an apartment can ask the seller questions already at the stage of selecting an apartment. What to look for when buying an apartment:
- Selling an apartment by proxy
- Long-term “concealment”, evasion of the realtor from your personal meeting with the owner
- Inappropriate behavior of the owner
- Repeated transactions with an apartment over a short period of time
- Failure (evasion) of the seller to provide original documents for the apartment
- Significant difference in apartment price from the market (understatement)
- The seller’s demand to significantly reduce the price of the apartment in the contract compared to the actual transaction price
- Insisting the seller on completing the transaction with a specific notary
Checking the legal cleanliness of the apartment helps eliminate doubts. Neighbors are a highly effective way to clarify the situation about the owner.
In general, the more information collected before a transaction, the less likely it is to have problems in the future.
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