Many are confused in such concepts as “guarantee”, “deposit” and “advance”. Meanwhile, it is very important to know how a pledge differs from a deposit, or an advance from these concepts. These terms are often used by realtors when it comes to buying and selling real estate. A common feature of this type of transactions is that they precede the final calculations. But what is their content? We will consider all these points in this article.
Deposit
The legislation pays little attention to this type of guarantee of the obligations of the buyer of real estate, however, it is used quite often in transactions. According to an article of the Civil Code of the Russian Federation, a deposit is defined in an agreement (or preliminary agreement) between a buyer and a seller, for example, when buying an apartment, a certain amount, which is presented as the main payment for the cost of real estate (or other goods-services). Also, the deposit is a statement of the fact of the transaction and obligations for its implementation. What is the difference between a deposit and a deposit upon purchase? To begin, let us dwell on the very concept of the latter.
Why do I need a deposit?
You need to know that the deposit, first of all, performs the payment function, then - the security, that is, obliges the parties to fulfill the terms of the contract and obligations, including also the option of non-fulfillment and, finally, evidence-based - indicates the fact of the conclusion of the transaction, which imposed on each party has its own obligations. That is, the deposit provides these obligations of the buyer and seller in relation to each other. The difference between a pledge and a deposit is based on all the above conceptual aspects.
All of the above makes the deposit an independent, functioning in practice and convenient type of security that differs from all other types.
What happens if the parties have not fulfilled their obligations?
This issue is regulated by the penalty function of this type of security. If the party that contributed the money in the form of a deposit decided to withdraw from the contract, then it loses it, and the other side, accordingly, receives this amount. If the terms of the contract are not fulfilled by the party that received the deposit, then it not only refunds this amount, but also bears a fine in the amount of the deposit, that is, it actually reimburses the depositor for the money in double size.
The question of how the pledge differs from the deposit can be reliably answered by studying the material to the end.
The difference between advance and deposit
The simplest way to explain the difference between a deposit and an advance is by the example of buying a property. In case of a down payment, a fine will follow in the form of a non-refund of the amount of money, and in the case of an advance, recovery is usually done through a lawsuit. In addition to the fine itself, which is equal to the deposit, the counterparty who violated the obligations will also indemnify for losses (minus the amount of the deposit). It happens that the contract is terminated due to unexpected circumstances of force majeure (force majeure). In this case, there is a chance that the parties will agree among themselves on any other options for reimbursing violated obligations.
There are groups of agreements that come into force from the moment of state registration. Real estate transactions intended for housing relate specifically to this type of agreement. And those contracts, which are about land and non-residential premises, are considered concluded from the moment of signing. And in connection with the foregoing, a situation may arise when the deposit was made before the registration of the agreement, and this payment, in fact, is not protected by law. However, most often the courts recognize the fact of the transaction if a dispute arises, and the deposit is returned to the person who made it.But in this case you will have to forget about the double amount. Thus, the pledge in this case will be regarded as an advance.
The same rule applies to a lease if it is concluded for a period of more than one year (shorter lease terms are not registered by the state).
Contract
Working with situations of deposits, advances and deposits, realtors and lawyers usually draw them up as a separate document. For example, in the form of a preliminary contract. It is not subject to state registration and takes effect after its signing. An advance in the event of such a transaction is not beneficial to the buyer, because in the event of termination of the contract no one will reimburse him for the lost time, costs of realtor services and other efforts, and the property will not be acquired. So if, by offering to conclude a preliminary contract, the seller insists on drawing up the deposited amount as an advance, and not as a deposit, then this is a clear sign of his dishonesty.
So, a deposit agreement is an option that ensures the interests of the buyer and seller. However, in a number of cases, the conditions for a deposit cause its recipients to be reluctant to bear such obligations. And if it suits the parties, then you can secure the transaction in advance. True, in this case, there will no longer be a useful function for the party giving it.
Advance - what is it?
What is the difference between a deposit and a deposit? About it further.
There is no precise wording in the legislation for this type of obligation of the parties. But everyone has an understanding of this term: payment of a certain amount of money on account of something: goods, services, or any work. The easiest way to interpret the advance as confirmation, enshrined in the terms of the contract, on the fact that the transaction will take place and the parties take this seriously.
It is important to know that this type of partial payment does not apply to measures to ensure obligations, although it is widely used by the population. The main features that characterize the advance are as follows:
- the advance form can be any - not only money, but also property;
- in case of cancellation of the transaction, the advance is transferred to the buyer without any penalties (unlike a deposit, where there is a fine in the amount of the deposit itself or a deposit, where any property and rights are transferred to the affected party);
- the advance can be paid to the counterparty even without an agreement (the deposit and deposit must be made in writing, and in some cases registered by the state).
Thus, an advance is the most flexible and easiest way to pay in advance. It is often used in oral agreements between citizens, it is used in the provision of any services. Upon his return, not a single party who concluded a deal materially suffers.
What are the features of the pledge?
How the deposit differs from the pledge, it will become clear after reading the characteristic features of the latter.
In the case of a pledge, the security of obligations is any property of the buyer. It can be a matter of either a thing or real estate, or even of the money itself, but in this case they are regarded as property. If the obligations of the pledge are not fulfilled (or are only partially fulfilled), the issuing loan has the right to realize its object in order to satisfy its requirements. He also has the right to receive payment from the value of the property, which is pledged (with special exceptions prescribed by law). The deposit is not an advance payment, it is just a serious indication of intent in the form, as a rule, of property obligations.
Is the deposit typical for rent?
The form of the pledge mainly appears in long-term leases, rather than buying and selling. Individuals can also use it, concluding transactions in the real estate market, as a rule, again - on lease. This is exactly the case when financial assets act as collateral. The owner of the property may demand from the tenant a certain amount, which will remain with him in case of damage to any thing.Based on the foregoing, it is clear that collateral is the most effective form of material security of property interests.
How the pledge differs from the deposit and from the advance, it became clear during the study of the article. Now it is worth mentioning some formalities associated with the design.
How to make transactions with a deposit and advance?
If we talk about the deposit, the agreement is drawn up in any form. It must be written on the letterhead of a real estate agency or other organization responsible for the transaction. The contract must indicate the amount of money contributed by the buyer and the conditions for the obligations of both parties, as well as the name and passport data of the counterparties to the transaction. You also need to specify the terms of the contract and indicate the object of the transaction (if we are talking about an apartment, then its exact address).
If the advance is documented, then the rules will be the same. But you can make a one-way receipt from the recipient of the advance. Another option is an oral agreement. True, in his case, if something goes wrong as the parties agreed, it will be impossible to refer to the testimonies of witnesses.
So, what is the difference between a deposit and a deposit? Now, everyone who studies the material will answer this. The main thing is to possess reliable information, and then you will be fully equipped.