Purchasing an apartment owned by a bank

• Seizure of an apartment is one of the types of encumbrance, the possibility of imposing which exists in case of debt to the bank.
• In this case, the owner does not have the opportunity to sell, donate or take any other legal actions with his own real estate.
• As a result, you can find seized bank apartments put up for sale by the financial institutions themselves.

Table of contents:

• Why is the apartment under arrest?
• How to buy a mortgaged apartment secured by a bank
• Mortgage apartments from banks in Moscow
• Sale of collateral real estate at auction
• Sale of apartments from Sberbank at auction
• How and where are auctions held?
• Pros and cons of buying a mortgaged apartment from a bank

Why is the apartment under arrest?

As a result, the bank goes to court to seize the property from a citizen or organization for debts. But this is observed only in situations where a significant amount of debt has accumulated, otherwise the court does not satisfy the claim.

It’s worth knowing: there are other reasons why apartments are confiscated from ownership and seized. So, this happens due to arrears in paying taxes, as a result of the division of property or other situations of this kind. In this case, all actions are carried out by bailiffs based on a court decision.

However, with a competent approach to this process, both sides can win.

First of all, the buyer must independently find out from the bank whether they have any objections to the sale of a particular apartment. This is due to the fact that it is he who will have to carry out actions aimed at removing the encumbrances.

To do this you need to check:

1. Is the property subject to double encumbrance? Some owners manage to take out an additional loan, as a result of which another financial organization will also have a claim on the apartment.
2. Whether a seizure or a ban on registration of real estate has been imposed. All data on this is obtained in the form of an extract taken from the Unified State Register (USRE). You can obtain such a document through Rosreestr, MFC or the State Services portal.

But this is all extremely problematic and difficult. Another simpler option is to purchase confiscated apartments from the bank itself. This is due to the fact that the collateral becomes the property of the financial organization by court decision.

Most banks that issue mortgage loans have a large amount of confiscated real estate that was taken for debts. Typically, the average cost of such properties is below the market price and the discount on apartments for sale is up to 15%.

Please note: when purchasing such real estate from banks, the seller deals directly with a legal entity, which is regularly inspected by regulatory authorities. This reduces the possible risks of such transactions to a minimum.

The acquisition of such an apartment is carried out in the following order:

1. First, a preliminary agreement is concluded between the bank and the buyer. This document must be certified by a notary in the presence of the debtor, a representative of the financial institution and the buyer.
2. Next, the bank provides several cells, where funds for repaying the loan are placed in one, and money for the debtor is placed in the second (taking into account the amount paid to repay the mortgage).
3. If no objections are observed, a purchase and sale agreement is drawn up and a new owner is registered through Rosreestr, and the money from the cells is transferred to the intended parties.

Mortgage apartments from banks in Moscow

In the capital region, the number of apartments sold with encumbrances is the largest in the country.

Therefore, it is important to check the objects of interest before purchasing.

Otherwise, this may lead to receiving an apartment that is pledged or has a mortgage issued on it. This is a reason for declaring the purchase and sale transaction invalid.

Sale of collateral real estate at auction

This is carried out for several months after the arrest was made.

Usually a list of such real estate can be found using the FSSP website for the city of Moscow or in the regions. They indicate information about the objects being sold, as well as their exact address.

The initial cost by law is the amount specified in the writ of execution or in the relevant court decision. Due to this, the starting price, as well as the market price, usually differ significantly.

Please note: auctions are considered valid if two or more buyers took part and made their own premium offers to the original cost. In all other situations, the auction is considered failed.

Then the auction is rescheduled, but the price is reduced by 15% from the previous one. To do this, the bailiffs send an application to the court, which makes the appropriate decision.

Sale of apartments from Sberbank at auction

After complying with all formalities, the bank representative enters into an agreement with the debtor, which specifies the schemes according to which the property will be sold. This usually happens through online trading on the financial institution’s own platform.

To participate in such auctions, you must register and make an initial payment. The average duration of such sales varies between 3-6 months.

If it is impossible to implement in one go, the implementation is carried out again after 30 days.

How and where are auctions held?

Typically, auctions are held on open sites of the FSSP. To get to them, you first need to become a member.

To do this, after selecting the apartment you are interested in through the website, an agreement is concluded directly with the seller for the payment of a deposit. Its size is indicated in the description of a specific object.

1. All bidders do this, and those who lose receive this amount back in full.
2. When the buyer wins, but then refuses to buy the apartment, according to the rules, his deposit remains with the seller.
3. In total, after making a deposit, the following documents are required:

• application for participation completed in a special form;
• payment documents containing a mark from the bank to confirm the fact of making a deposit;
• copy of the passport;
• a list of submitted papers, indicating the date and time of sending the application;
• an envelope containing a sheet of paper indicating the transaction amount exceeding the starting amount. It needs to be sealed well.

On the day of bidding, all documents of participants are checked, according to the results of which a person is admitted or not. A refusal can only be obtained if the submitted documents are missing or incorrect.

Pros and cons of buying a mortgaged apartment from a bank

When purchasing a mortgaged apartment, there are a number of negative aspects:

• duration of the procedure;
• the ability of previous owners to challenge the sale through court;
• cancellation of the transaction with loss of funds if the previous owner used maternity capital for the purchase.

But there are also certain positive aspects:

• quality of real estate (banks, when issuing loans, do not take junk as collateral);
• legal purity of the transaction;
• lower cost of the apartment.

When people whose real estate is pledged to the bank do not repay the loan, the financial institution seizes it through the court. After this, through open bidding, the apartment is sold.

Typically, such properties are purchased at a price below market value, which makes them attractive.



How to buy a mortgaged apartment?

According to realtors, in recent years the demand for the purchase of collateral real estate has increased.

Perhaps this trend will continue in the future, given the fact that more and more people are purchasing mortgage housing.

Some of the borrowers, unable to cope with their debt obligations, are forced to sell their mortgaged property. In some cases, purchasing such housing can be a very profitable acquisition.

Dear readers! Our articles talk about typical ways to resolve legal issues, but each case is unique.  

If you want to find out how to solve your particular problem, please contact the online consultant form on the right or call +7 (499) 938-65-46. It's fast and free!

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You just need to know about all the nuances of such a transaction and minimize all risks.

Peculiarities

• What does a buyer of housing pledged by a bank need to know?
• Most banks keep the original documents of title for the pledged property.
• This entails certain difficulties for the potential buyer, who, when signing a preliminary contract, cannot receive real estate documents (even with a deposit guarantee) and familiarize himself with them thoroughly.

In this case, the risk for the buyer is that the seller may simultaneously take several deposits from different persons. The property remains pledged to the bank until the loan is fully repaid. You can sell and, accordingly, buy housing with encumbrances only with the consent of the bank .

Such a transaction is accompanied by greater risks than a regular apartment purchase.

Collateral real estate can be purchased with the participation of the bank and purchased directly from the borrower.

With the participation of the bank

The safest option for purchasing collateral real estate is purchasing an apartment with the participation of a lender. In this case, the bank (with the help of an accredited realtor) accompanies the entire purchase and sale procedure. The buyer can choose one of the options for completing the transaction.

Buy an apartment by paying off the remaining debt for the seller

After closing the loan, the bank issues a certificate to the notary indicating that there is no debt on the loan, the property is removed from the mortgage register, and the encumbrance is removed from it.

Next, a purchase and sale agreement is drawn up, full payment is made, and ownership of the living space is transferred to the buyer.

Important! The bank ensures the security of such a transaction by providing a safe deposit box as a guarantee of saving the buyer’s funds.

Purchase collateral real estate on credit

This means that to purchase this property, the buyer takes out a loan from the same bank and becomes a borrower himself. Often, banks even offer special programs for such buyers on preferential terms: reduced interest rates, a minimum advance and an accelerated transaction procedure.

You can buy real estate from the bank at an open auction. In this case, there is a real opportunity to purchase an apartment at a price below the market price, since this property was forcibly seized from the borrower, and the bank independently sets the starting price. You can learn about trading on banks’ websites, from specialized newspapers and magazines.

You should not participate in the auction if the bank is selling the apartment without the borrower’s consent or if minor children are registered in the apartment.

There is a risk that the former borrower will challenge the court decision and the legality of the transaction.

Buying directly from the borrower

You can buy collateralized real estate directly from the borrower without the participation of the bank , but with the consent of the lender for sale.

In this case, the buyer pays the full price .

From this amount, the borrower repays the debt to the bank and closes the loan. Next, the encumbrance is removed from the apartment, then it is re-registered to the new owner.

Attention! You should be very careful when making such a transaction. If the advance is made before the apartment is released from collateral, the buyer may lose his funds. It will be very difficult to prove anything to the court, since the entire procedure was carried out without the participation of the bank.

There is also a second option: buying not the apartment itself, but the debt . This means that the buyer purchases housing along with a mortgage encumbrance . This transaction is called a “debt assignment.” Its initiator, that is, the borrower, sells his loan obligations and property rights to housing for a certain compensation.

Conducting a transaction without the participation of a bank is very dangerous . The risk of getting caught in a scammer's network is quite high.

To avoid being scammed, here are a few tips to consider.

Carefully study all original documents of the seller. Visit the bank and get the lender's consent to complete the transaction. Under no circumstances agree to make an advance payment.

1. It’s better to buy an apartment with an encumbrance, and then pay the rest of the debt to the bank.
2. To make payments, rent two safe deposit boxes: for the seller and for the bank.
3. Money intended for repayment of debt is deposited in a cell for a financial institution.
4. access to the cells only after registration of ownership rights in favor of the buyer.

As for risks, they always exist , even when buying free housing, not burdened with encumbrances. In the case of purchasing collateral real estate, the risks increase slightly.

It was already said earlier that the safest transaction is with the participation of a bank. However, even here the buyer can expect a “pitfall” in the person of the former owner, who will try to challenge the court’s decision for various reasons (for example, unfavorable terms of the transaction, etc.). How to anticipate such incidents?

Experts recommend concluding a preliminary agreement , according to which the former owner and members of his family undertake not to make any further claims to the buyer.

a minor child is registered in the apartment .

• Typically, in such cases, the property is not put up for auction.
• But it happens that the baby’s parents did not register him in the apartment, however, the child is automatically registered after the mother.
• The buyer is unlikely to be able to find out about this on his own.
• It is best to hire a specialist who can thoroughly check all the information relating to all homeowners.
• title insurance as an additional guarantee for the buyer .

In general, the sale of a mortgaged apartment can potentially be considered a profitable enterprise for all participants in the transaction.

The bank receives its money, possibly with interest, and can use it for further financial transactions. The seller gets rid of the debt obligations that burden him and becomes financially independent.

The buyer purchases the desired apartment, possibly at a certain discount or on credit on preferential terms, thereby becoming a bank borrower.

1. Why ignore a potentially profitable deal?
2. It is only important not to forget about the risks and be sure to foresee them.
3. Remember that competent planning and careful preparation of the transaction, taking into account all the risks, will help to avoid unpleasant moments associated with the purchase of collateral real estate.
4. Didn't find the answer to your question? Find out how to solve exactly your problem - call right now:
5. +7 (499) 938-65-46 (Moscow)

+7 (812) 467-41-57 (St. Petersburg) 

It's fast and free!

Buying an apartment from a bank: risks for the buyer of collateral real estate

• Buying an apartment as collateral from a bank, the risks of a real estate buyer, the features and dangers of purchasing collateralized housing, read so as not to lose money.
• The wide distribution of mortgage loans has led to an increase in sales of apartments pledged by the bank, put up for auction by a credit institution, due to the refusal or impossibility of mortgage holders to pay monthly installments.
• Real estate sold through bank auctions is offered at a price that is obviously lower than the market price and the banks do not know that the buyer is at great risk, but do you know?
• Read about all the buyer's risks when buying an apartment on the secondary market.

Buying an apartment from a bank: risks

1. A collateral apartment is a living space that is pledged to a banking organization and is subject to an encumbrance by force of law.

2. The law allows the bank to seize the collateralized property if mortgage payments have not been received from six to 9 months (Art.

   334 of the Civil Code of the Russian Federation and Article 37, 50 of Federal Law No. 102 “On Mortgages”

3. Options for purchasing collateral housing:

1. The buyer repays the owner’s debt to the bank;
2. DCT with the participation of the mortgagee’s bank (settlement through two safe deposit boxes - read more below);
3. Change of mortgagor (the buyer assumes obligations to pay the mortgage debt to the bank)

In order to objectively weigh the pros and cons of buying an apartment that is pledged to the bank, we will consider the pros and then the risks of the buyer.

Advantages of purchasing an apartment owned by a bank:

• Obtaining a favorable price for real estate sold at bank auctions;
• High-quality housing (everyone knows that before issuing a mortgage, the bank approves not only the borrower, but also the collateral);
• Legal “purity” of the property (although one can argue here);
• The sale and purchase transaction is completed by the auction organizers.

List of risks for the buyer of a mortgaged apartment

1. Seizure is carried out in court and this is the first risk! The court decision can always be challenged in a higher authority and the property can be returned to the former owner;
2. Registered minors, for example, are often taken out by young families with children and register a mother and child in the new living space, who also cannot be discharged without the consent of the court.

   The situation is similar for the legally incompetent;

3. The housing is sold before the bank puts it up for auction, and in this case, it is necessary to make sure that the amount for the sale of the apartment is agreed upon by the seller and the bank, in order to avoid suspension of the transaction;
4. The terms for concluding a transaction with mortgaged apartments are several weeks longer than regular real estate purchase and sale transactions.

   During this time, the credit institution may be deprived of its license or go bankrupt, which is often the case lately, and it is almost impossible to get the money back;

5. When purchasing housing, the seller used maternity capital, in this case, the guardianship and trusteeship authorities, having found out that the child is being deprived of a share in the apartment, will demand that he be reinstated in his rights and he will become a co-owner. Do you need it?
6. Often the seller offers to pay off the mortgage debt with a down payment and then transfer ownership. If you do this, then the owner, having paid your money to the bank, may change his mind about selling the living space and the deal will drag on for years;

How to minimize risks when buying an apartment as collateral from a bank ?
It’s easier not to purchase such living space. And if you have already decided, then:

• use two safe deposit boxes, dividing the payment into two amounts - to repay the debt to the bank and the remaining money to the buyer;
• sign a preliminary purchase and sale agreement, including penalties and specifying the conditions under which the buyer will not create obstacles either before or after the transaction;
• do not issue an advance, but a deposit when signing a preliminary agreement.

You learned about buying an apartment from a bank and the buyer’s risks when purchasing living space from an unsuccessful mortgage lender.

An apartment is pledged to the bank: is it possible to buy it?

You have found a suitable option for purchase. But we found out that the apartment was under mortgage. This means it is pledged to the bank. Is it possible to buy such real estate and is it safe? Let's say right away: yes. Now let's take a closer look.

What does this mean: an apartment with a mortgage? 

If real estate is purchased with a mortgage, then until the loan is repaid, it is pledged to the bank. Information about this is entered into the Unified State Register of Real Estate - EGRN.  

While the property is pledged, you cannot simply sell it. Rosreestr will see the mortgage record and will not register ownership of the new buyer.

To complete the transaction, the seller must first repay the loan debt. After this, the bank will inform Rosreestr that there is no debt. And the record that the property is under mortgage will be deleted. This is called releasing the encumbrance.  

So, you can’t buy an apartment with collateral?

Can. And such transactions take place quite often. You can stipulate in the purchase and sale agreement that the money received from the buyer will be used to repay the loan. “Money in the morning – in the evening the encumbrance is removed and the buyer’s property rights are registered.”  

In transactions with collateral real estate, it is better to contact experienced lawyers or realtors to get everything done correctly.

What if I want to buy a secured apartment with a mortgage?

It's even easier this way. If the apartment is pledged by Sberbank, and the buyer also wants to buy it with a mortgage, for example on DomClick, then the pledge will simply be transferred to the new owner. There is no need to do anything; the bank will arrange everything itself.

The process will be almost the same as when applying for a regular loan and will take the same amount of time.

You need to apply for a mortgage online at DomClick or at a bank office. If the application is approved, all that remains is to collect the standard package of documents for real estate approval. The mortgage manager himself will request most of the documents from the seller and order them from Rosreestr. He will also prepare a purchase and sale agreement with the bank’s lawyers.

Most often, the buyer only needs to provide a real estate appraisal report. It can be ordered from your mortgage manager. But sometimes additional documents may be required depending on the specifics of the transaction.

The purchase of Sberbank collateral real estate has restrictions. You can only buy it in the same city where you are applying for a mortgage. Interregional transactions with such real estate are not yet carried out. But if you need to buy real estate without encumbrances with a mortgage, you are welcome.

Will I have problems if the seller is late on loan payments? 

The circumstances of selling an apartment with a mortgage may vary. Someone decided to change apartment due to the birth of children. Someone needs to move to another city, someone urgently needs a large sum of money. And some were unable or unwilling to continue paying their mortgage.  

Whatever the reason for the sale, none of this will affect the buyer after the transaction. No obligations of the seller, including fines or penalties, can be transferred to him.

I heard that more and more mortgaged apartments are being sold. People can't pay their mortgage?  

Not at all. It’s just that every second real estate transaction in Russia now involves a mortgage. However, nothing prevents you from selling such real estate until the loan is paid in full.  

Important questions about mortgages

How to apply for a mortgage

How to check your credit history

Reverse mortgage: I want to take out a loan secured by my property

Congratulations, you have been approved for a mortgage! What's next?

How to pay off your mortgage early

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Is it possible to buy an apartment with a mortgage?

Last update: 11/22/2018

Question:

I want to buy a mortgaged apartment that is pledged to the bank. Is it possible to buy an apartment with a mortgage? What are the risks for the Buyer?

Answer:

It is possible to buy such an apartment, and such transactions occur regularly in the real estate market. The Buyer's risks here are small (more about them below) if he understands the features and technology of such a transaction. Let's explain in more detail.

A mortgage is an encumbrance on property rights. At the same time, the ownership right of the apartment owner does not disappear anywhere. There are simply some restrictions on the disposal of your property.

In particular, if the apartment is mortgaged by a bank , then it can be bought (sold) only with the consent of the mortgagee (that is, the bank). The Civil Code speaks directly about this (clause 2, art.

346, Civil Code of the Russian Federation) and the Law on Mortgage (clause 1, article 37).

But you don’t have to wait for this consent. How so?

The fact is that buying an apartment with a mortgage encumbrance can, in practice, happen in different ways. This depends both on the agreement between the Seller and the Buyer, and on the position of the mortgage bank.

Who can have the right to use the apartment? Surprises for the Buyer.

Purchasing a mortgaged apartment that is pledged to the bank

There are three main ways to organize a transaction:

1. Early repayment of the loan by the Seller and subsequent sale of the apartment.
2. Early repayment of the loan by the Buyer in the process of purchasing an apartment.
3. The mortgage debt is not extinguished, but is transferred to the Buyer as a result of the transaction. That is, in fact, a mortgaged apartment is being purchased using a mortgage .

Which way is better to go? What is the procedure for purchasing an apartment with a mortgage? Where will the Buyer's risk be higher? The answer is ambiguous and will depend on the specific situation. In the real estate market, all three options for purchasing a mortgaged apartment . Let's look at them one by one.

Assignment of rights of claim under the DDU - how does this happen? Nuances, risks, features.

1. Early repayment of the loan by the Seller and subsequent sale

The easiest way to get rid of the encumbrance of a mortgage apartment is to repay the loan ahead of schedule . Then the Seller can act freely, without asking the bank’s consent to the transaction. The only question is how exactly (by what means) will the Seller be able to repay the debt to the bank?

It all depends on the size of the balance of this debt. If the Seller has a relatively small amount left to pay the bank (for example, 50-100 thousand rubles.

), then this amount can be transferred to him by the Buyer before the transaction as an advance or deposit.

Having repaid the mortgage loan with this money, the Seller obtains a debt repayment certificate from the bank and removes the encumbrance from the apartment from Rosreestr.

Another option for early repayment of debt for the sale of a mortgaged apartment is refinancing the Seller for the duration of the transaction.

That is, the Seller takes out a regular consumer loan for 2-3 months (from the same bank or another), pays off the balance of the mortgage debt, removes the encumbrance from the apartment, and sells it to the Buyer.

Having received money for it, the Seller immediately repays his short-term consumer loan.

This method of purchasing an apartment with a mortgage (collateral) from a bank is the easiest, most reliable and safest for the Buyer. But expensive for the Seller. After all, consumer loans have the highest interest rates. Therefore, he needs to reduce the term of such a loan to a minimum.

What should be indicated in the Apartment Acceptance and Transfer Certificate - see the Glossary at the link.

2. Early repayment of the loan by the Buyer during the transaction

If the Seller has a significant debt balance, and he does not have the opportunity to refinance, then it is too risky for the Buyer to transfer him a large amount as an advance (to pay off the debt).

In this case, the purchase of a mortgaged apartment pledged to the bank occurs with the involvement of the bank itself .

The bank here requires not only written permission for the transaction (needed for registration), but also its direct participation in the transaction itself.

The key point here is mutual settlements under the transaction . After signing the Sale and Purchase Agreement, the Buyer transfers money for the mortgaged apartment in two parts at the same time - one part to the bank (to pay off the debt), the other part to the Seller (the price of the apartment minus the debt).

The method of transferring money for an apartment can be either cash or non-cash. For cash payments, respectively, two safe deposit boxes , and for non-cash payments, two letter of credit accounts (see how this is all done at the specified link in the Glossary).

After the agreement is signed, the transaction is registered in Rosreestr, and the payments are completed, the bank issues the Buyer a certificate of repayment of the mortgage loan. With this certificate, the Buyer himself removes the encumbrance from the purchased apartment in Rosreestr.

Refund of the advance (deposit) for the apartment. Is it possible? The answer is in the note at the link.

3. Buying an apartment with a mortgage - how it’s done

Here we are talking about a case where the Buyer himself expected to use a mortgage loan to purchase an apartment, but the chosen apartment also turned out to be mortgaged and already mortgaged to the bank. How can we be here?

There can be two situations:

1. The buyer takes out a mortgage loan from the same bank in which the apartment he has chosen is mortgaged.
2. The buyer obtains a loan from another bank .

In both cases, the very possibility and conditions of such a transaction will depend on the position of the bank.

In the first case, the procedure for purchasing a mortgaged apartment and re-issuing a mortgage to a new borrower will be much simpler.

Here, the mortgage bank has complete control over the entire process and creates transaction conditions that are beneficial to it. At the same time, the mortgaged apartment itself remains as collateral in the same bank, and the encumbrance on it is not removed .

The new borrower (Buyer) is approved for a new loan, and the apartment already mortgaged to the bank is approved.

Such transactions are carried out by many banks, including Sberbank. All of them are supervised by lawyers and the bank’s security service. The risk of purchasing a mortgaged apartment under such conditions for the Buyer is minimal.

In the second case, everything is more complicated. To obtain a mortgage for an apartment in another bank, you need to agree on the conditions and interests of two different credit institutions.

At the same time, the conditions of Rosreestr for re-registration of a registered mortgage encumbrance on an apartment in favor of a new mortgagee must also be met.

As a result, if the Buyer decides to buy an already mortgaged apartment with a mortgage , then it is better for him to apply for his loan in the same bank in which the apartment is mortgaged.

What you need to know about taxes and tax deductions when making a transaction for the purchase and sale of an apartment - see here.

Buyer's risks when purchasing a mortgaged apartment 

If the Buyer acts in one of the ways described above, then he does not bear any serious, uncontrollable risks of purchasing an apartment that is mortgaged (pledged) from the bank . But still, when preparing a deal, he should keep the following points in mind:

• If the Buyer transfers a significant amount in the form of an advance/deposit to the Seller to repay his mortgage debt, then there is a risk that the Seller, after removing the encumbrance, will change his mind and refuse to sell the apartment. And repayment of the advance may take years.
• If the Buyer is counting on a mortgage loan from his bank and makes an advance payment for the mortgaged apartment he likes, then his bank may not approve an apartment mortgaged to another bank. Then there is a risk of losing the advance payment.
• The mortgage bank, for example, may give permission to sell a mortgaged apartment only if the Seller fulfills certain conditions. For example, a bank may require the mortgagor to pay 80% of the debt before the transaction. There is also a risk that the bank will generally refuse to sell the mortgaged apartment and re-register the mortgage to the new owner.
• The bank may not refuse to sell a mortgaged apartment, but will not approve a loan to a specific Buyer.
• The time frame for receiving a mortgage from the bank after repaying the mortgage and removing the encumbrance from Rosreestr may be delayed. Then there is a risk that the terms of the transaction may no longer be relevant for the Buyer.

But still, the main risk for the Buyer when buying an apartment for which the mortgage loan has not been paid is an attempt to transfer to the Seller too much money to pay off his mortgage debt. After all, such a transfer of money is not secured by anything other than the terms of the Advance Agreement or the Preliminary Sale and Purchase Agreement.

Of course, if the Seller pays off his mortgage with this money, breathes a sigh of relief and refuses to sell the apartment, then the Buyer will be able to sue for his money back. And he may even demand compensation for losses through the court. But it is unlikely that anyone will be satisfied with the deal being disrupted and a large loss of time on legal proceedings.

Therefore, in order to reduce your risk , the Buyer should, when purchasing a mortgaged apartment, act in one of the ways listed above.

minor children among the owners of the apartment , then in addition to the bank we will also have to involve the Guardianship and Trusteeship Authorities. About the rights of children in housing transactions - read a separate note in the Glossary at the link.

Apartment purchase and sale transaction. For the list of documents for registration with Rosreestr , see the Glossary at the link.

Just in case, we remind the Buyer that before the transaction he should receive an Extract from the Unified State Register of Real Estate (for example, on our website - here), and make sure that in the column “Restrictions and encumbrances” it is indicated - “mortgage” . And after the encumbrance is removed, accordingly, this column should be empty.

From the same extract, the Buyer will learn the composition of all owners of the apartment, including minors (if there are any).

Speaking of buying mortgaged apartments . There is another way to purchase an apartment that is pledged to the bank and for which the mortgage loan has not been paid. This is an auction of mortgaged property .

But this is a completely different story, and the rules of the game and the Buyer’s risks there are completely different.

Still have questions? Are you plagued by vague doubts? A lawyer can help you! You can order a consultation with a specialized real estate lawyer or complete transaction support HERE.

• "SECRETS OF A REALTOR":
• A detailed algorithm of actions when buying and selling an apartment is presented in the interactive map STEP-BY-STEP INSTRUCTIONS (will open in a pop-up window).

How to buy a mortgaged apartment from a bank?

A collateral apartment is an apartment of a “mortgagee” who was unable to pay off his loan. Unfortunately, this situation is not uncommon lately. In this case, the seller can be either an unlucky debtor who is forced to get out of a debt hole, or a bank that received the property through the court.

Purchasing a mortgaged apartment from a debtor

In this case, if the loan is outstanding, the seller will need the bank's permission to sell the mortgaged apartment (you can find out that the apartment is pledged from the certificate of ownership or from the Unified State Register extract).

In most situations, the bank gives such permission.

The motive here is clear - the transfer of the mortgaged apartment into the ownership of the bank can only take place through a court, which will most likely drag on for many months, after which the property will still have to be sold at a discount.

Ownership here is registered with an encumbrance, which the new owner will have to remove.

 In order for a bona fide buyer to insure against possible claims of a third party (after all, the apartment is pledged to the bank), the transaction can be carried out through a safe deposit box.

In this case, the money will be credited to the seller’s account only after a certificate of ownership is issued without encumbrance in the form of a loan.

Buying an apartment through mortgage renewal

There is a scheme in which the apartment is not sold, but the loan itself is transferred. In this case, you will also need the bank's permission. The decision is made individually. If the new borrower’s creditworthiness is better than the old one, then getting permission is quite possible.

The amount of debt paid by the original borrower to the bank is compensated by the new lender, and the mortgage agreement is reissued to a new person.

It is worth considering that in any case, such transactions, although they cost the buyer less, require much more effort to complete them.

Buying a mortgaged apartment from a bank

Pledged apartments go to banks through the court and are their property at the time of sale. Due to the fact that apartments are not a core asset for the bank, such property is subject to sale. The majority of credit organizations focused on mortgages are engaged in the sale of mortgaged apartments: Sberbank, VTB 24, Delta-Credit, AHML, etc.

Due to the fact that the “judicial trail” of an apartment cannot be called an advantage, the price of such apartments is usually lower than the market price. The size of the discount depends on how long this mortgaged apartment has been on sale. The evaluation commission within the court can put the object up for sale with a 5-10% discount.

Where to look for collateral apartments?

Mortgage apartments are sold both through regular advertisements or through special sections of banks’ websites (for example, “Showcase of pledged apartments” at VTB 24), and through open auctions. These auctions are conducted by the Federal Bailiff Service, publicly announcing them in local media no less than 30 days before their start. Website of the Federal Bailiff Service – http://fssprus.ru/.

How to get to the auction?

To participate in the auction, you must submit an application and make an advance payment. If the auction does not take place, which happens if less than 2 participants showed up for the auction or the starting price was not offered, then the price is reduced by 15% and the next auction is held in a month.

How safe is it to buy a mortgaged apartment?

Any transaction is safe if you receive a certificate of ownership, and the full amount of the transaction is indicated in the payment documents. In any controversial issues, even if they emerge over time, you will be able to confirm your good faith and get your money back, although not soon.

When purchasing a mortgaged apartment from a bank, you are dealing with a legal entity that is checked by many regulatory authorities, which means, with a high degree of probability, you are protecting your transaction from fraud and recognition as void. So such a purchase is quite safe. You just need to remember the general rules for purchasing ordinary real estate. On the list of things to check are:

• No utility debts;
• Lack of registered people;
• No open litigation;
• Extract from the Unified State Register.

Although transactions for the purchase of mortgaged apartments cannot be called high-risk, if in any doubt, use the help of specialists - professional lawyers or realtors.

Is it profitable to buy a mortgaged apartment?

A good property is unlikely to have a large discount, and vice versa, if the discount is large, it means the property itself is not very attractive. However, it is quite possible to count on a discount of 10-15% (for example, at the second stage of the competition) relative to the market, which is a good option for saving for such an expensive investment category as real estate.

Oleg Kozhevnikov, “Investor School”.

Buying a mortgaged apartment: main points

The real estate market is sensitive to all changes in the current environment. A noticeable trend in recent years has been the purchase of mortgaged apartments. A transaction on housing with an encumbrance has become common due to the widespread development of mortgage lending, when cases of sale of collateral real estate are not uncommon.

When purchasing real estate of this type, the buyer needs to pay attention to the special terms of the transaction. The interested person is advised to first familiarize himself with the existing risks, pros and cons of purchasing collateral.

What is a collateral apartment?

A property pledged to a credit institution is called a collateral apartment. This could be mortgage lending, when the bank holds the apartment as collateral until the loan is fully paid off. Participation in another lending program, in which the borrower backs up his obligations with collateral in the form of real estate, also places an encumbrance on the apartment.

If the borrower does not fulfill his obligations, he loses the apartment, which becomes the property of the bank. The credit institution sells the property at auction and repays its costs.

The procedure is carried out according to established legal standards. According to Article 334 of the Civil Code of the Russian Federation and Art.

Important! The decision on forced collection of mortgage obligations is carried out exclusively in court.

The bank has the opportunity to prove its point of view and return the invested funds along with all interest, penalties and penalties. If the borrower realizes that he will not be able to continue making payments on the mortgage, then he can voluntarily, without a lawsuit, transfer the property for sale and final payment.

A typical situation is when a young family takes out a mortgage on a one-room apartment for a long period of time. When a child is born, the borrowers decide to sell the apartment and buy a larger one. This cannot be done without the permission of the bank management, therefore, by mutual agreement, the contract is terminated, and the apartment is put up for sale directly by the owner or the bank.

You can purchase an apartment with an encumbrance using various schemes, but a mandatory condition is the participation of the collateral holder, that is, the lending bank, in the transaction. The involvement of a third party makes the procedure somewhat more cumbersome than a standard real estate purchase. But if we take into account the material benefit expressed in a lower price of the lot, then the risks can be considered justified.

The opportunity to purchase collateral housing at a discount attracts many buyers. In addition, the bank’s participation in the transaction increases reliability and reduces the risks of purchase and sale.

Buying a mortgaged apartment from a bank

In practice, there are two possibilities to become the owner of an apartment with an encumbrance.

You can buy real estate from the borrower, with the notification and consent of the bank, or buy back the lot that was given to the bank as collateral upon termination of the mortgage agreement.

The second option is the most preferable because it eliminates fraudulent schemes. For example, the borrower obtaining collateral from several applicants, which will require a lengthy trial.

When the bank has already acquired the rights to sell the apartment, the buyer can count on a transparent and legally sound transaction. Purchasing an apartment directly from the bank is possible at a 5-10% reduction in the market value of the property.

Prices are set by the evaluation commission as part of legal proceedings, and the time frame for bidding is determined.

It is this condition that allows you to express your desire to acquire collateral property, the owner of which is the creditor.

First of all, the interested person should clarify with the bank the issue of further actions regarding the apartment with an encumbrance. If the buyer pays the bank in full and does not take out a mortgage, then the transaction is completed as quickly as possible and is not aggravated by controversial issues. For example, there is no question about the interest rate, which can be changed compared to the primary contract.

By repaying the loan with personal funds, the buyer does not bear any further obligations to the bank.

The sequence of steps when buying an apartment with full repayment of the mortgage:

• the buyer closes the loan by placing in a safe deposit box an amount equal to the owner’s debt under the mortgage agreement;
• the creditor represented by the bank documents the closure of obligations and issues a standard certificate;
• Based on the bank’s certificate of no claims, the notary removes the property from encumbrance. In other words, an adjustment is made to the state register of debtors, which can be verified by taking an extract from the Unified State Register of Real Estate in Rosreestr;
• a purchase and sale agreement is concluded, which is registered in Rosreestr. There is a change of ownership, while the obligations to the bank are considered completely closed, the buyer has paid in full under the problematic mortgage agreement.

The bank has the right to put forward special requirements for participants in the purchase and sale of the collateral object. For example, you will need to contact the specified notary office.

In order to notarize an object from collateral, you will need to pay the services of an authorized notary and a state fee. If the terms of the agreement indicate a clause on penalties for early or full repayment of the mortgage, then you will have to pay this amount. As a rule, all costs are covered by the buyer of the property.

The most common in practice is the second option, when the buyer of the apartment himself draws up a mortgage agreement with the bank that holds the collateral.

The bank is always reluctant to change the borrower, but in this situation both parties are interested in the transaction.

The bank studies the application submitted by the applicant and considers its financial capabilities to service the loan. If the citizen is satisfied with the lender in all respects, then a new mortgage agreement is drawn up. Often, due to force majeure circumstances, the bank makes some concessions to the new borrower.

The down payment may be reduced, a more favorable interest rate may be offered, and the package of documents will be reviewed in a shorter period of time compared to the standard situation. The new borrower may put forward his own additional conditions, for example, a slight reduction in the appraised value of the apartment due to the deterioration of its condition and the need for cosmetic or major repairs.

The riskiest option is purchasing an apartment directly from the borrower. If you decide to take such a step, remember that without the official consent of the bank, the operation will be considered an invalid transaction.

The optimal solution when purchasing a mortgaged apartment would be to sign a preliminary agreement drawn up by a notary. The preliminary agreement must contain information that the seller, represented by the borrower, will not subsequently make claims to the new owner and the bank.

There are often cases when, in the event of a conflict termination of a contract, the borrower tries to appeal the court decision. For example, point out unfavorable or previously impossible terms of the transaction and other reasons. To ensure that the third party, the buyer of the mortgaged apartment, does not suffer in the relationship between the parties to the mortgage agreement, he is recommended to sign a preliminary agreement with the seller.

Expert advice: take out title insurance for the upcoming transaction. This step will significantly reduce risks and controversial issues. For example, if there is a registration of a minor on the alienated area.

Where to look and how to buy?

Finding an option that suits the buyer is not so difficult, because about 10% of offers on the real estate market are mortgaged apartments.

The main ways to obtain information include:

• banking programs published on official websites;
• real estate companies that have repeatedly participated in such transactions;
• at public auctions and Internet sites specializing in such auctions.

It should be noted that the acquisition of an apartment is possible with the voluntary consent of the borrower or through a court ruling. Among all the acceptable ways to obtain information about collateral, it is recommended to use publicly available banking information.

Is buying a mortgaged apartment beneficial for all parties to the transaction? Undoubtedly, such a financial enterprise is of general interest:

• the bank returns the invested funds, often with considerable interest, and gets rid of the dubious asset;
• the seller is freed from debts and impossible obligations, significant debts;
• the buyer becomes the owner of the chosen living space, and often enters into a mortgage agreement on attractive terms.

The bank is a legal entity that is controlled by many executive structures. Therefore, participants in the transaction can count on the legality and validity of actions when buying/selling collateral.

Risks of buying an apartment that is pledged

Everyone knows that any real estate transaction carries its own risks. Cases of purchasing a mortgaged apartment are no exception.

The buyer should definitely pay attention to the following points:

• You shouldn’t take the risk and buy an apartment with a child registered in the area. Sometimes the court has to discharge a minor, which is a clear complication of the transaction;
• the buyer must have indisputable information that both parties (the bank and the seller) are notified of the upcoming procedure and agree to its implementation;
• You should not make a deposit to the seller unless you have a direct agreement with the bank and use a safe deposit box.

If there is no conflict between the lender and the borrower, and the amounts and terms are agreed upon, then this serves as a guarantee that the buyer of the problem home will not lose out.

The buyer must protect his interests as much as possible, weigh the risks and real benefits of purchasing an apartment with an encumbrance. If you feel that there are serious disagreements between the seller and the bank, and there is a possibility of appealing the court decision, then try to choose a different option.

Thematic video answering the question: Is it worth buying a mortgaged apartment?

The real estate market now has quite decent and interesting offers of mortgage apartments put up for secondary auction. It is never superfluous to have a preliminary consultation with a lawyer who will look at the situation from an unbiased perspective and give up-to-date recommendations.

Author and editor of the portal Rukazakon Mikhail Korolev All articles by the author →

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