When carrying out the alienation of a property, quite often the parties use an advance payment as a preliminary arrangement. However, you should take into account certain nuances of drawing up an advance agreement when buying an apartment and do it right. This is what will be discussed below.
The need for an advance contract
Many people have a question: "Is an advance contract really needed when buying an apartment?" The answer is simple: it is necessary, and there are several reasons for this: with its help, the buyer’s intention to acquire this particular property is fixed and the seller’s intention to no longer search for potential future owners. After a preliminary agreement and advance payment, the parties may begin preparations for the main transaction. Thus, the advance confirms the seriousness of the intentions of both parties.
Advance transfer is especially relevant in cases where it is impossible to conclude a transaction within a few days from the moment of reaching an agreement on the acquisition of a particular property. There can be quite a lot of reasons for such a delay, for example, the absence at the current time of the necessary amount, documents, etc. Other, more banal reasons, for example, the lack of a notary public, can also play a role.
In order for the parties to the transaction to be calmer and not have to worry during the time allotted for preparing for the transaction, the buyer transfers the advance payment to the seller, and the latter, in turn, stops further showing of the apartment. An advance agreement when buying an apartment is important primarily to the buyer.
Advance Features
Civil law relations do not provide a clearly defined definition of the concept of "advance". Civil law and other codes that govern the process of alienation of property do not cover this term. An advance can be understood and defined only after studying the essence of this phenomenon from an economic point of view. Only after that it will be possible to confidently reflect on the mechanisms of legal regulation of this phenomenon.
Advance - how much?
An advance can be called making a partial prepayment, that is, the amount of money transferred to the seller before signing the agreement. Most often, the amount of the advance is 10 percent of the total value of the object. The rest of the amount is paid after signing the contract of sale, unless it requires otherwise.
An example of an advance contract for the purchase of an apartment is presented below.
Advance and deposit
In the field of sale of property, advance payment is found in article 380 of the Civil Code, which describes such a thing as a deposit. The article says that if there are doubts about whether to consider partially deposited funds as a deposit, especially without observing the written form of the agreement, then this amount automatically becomes an advance. As a result, in this case appropriate sanctions are applied if the conditions of the signed contract are not fulfilled.
It should be noted that there are significant differences between an advance and a deposit. They perform different functions, despite being used in identical situations. The consequences of violating the terms of the advance agreement when buying an apartment and a deposit will be different.
Consequences of failure to comply with the terms of the agreement
So, as mentioned above, between the deposit and the advance there are certain differences.The main thing is that the deposit ensures the implementation of the conditions stipulated by the contract. If one of the parties violates its obligations, the deposit will act as a responsible measure. In case of refusal of the transaction, the buyer will not receive the deposit back, and if the seller changes his mind about selling the apartment, he will have to return the funds received in double volume. Among other things, the injured party may try to recover losses incurred as a result of the failure of the transaction.
An advance agreement when buying an apartment in a mortgage is required.
Effects
In the case of an advance, cancellation of the transaction will have slightly different consequences. If the buyer initiates the cancellation, he will bear the consequences according to the Civil Code. In this case, the seller has the right to demand compensation for losses incurred. If the cancellation of the transaction occurred due to the fault of the seller, the buyer has the right to return the advance. There are also situations where the seller delays the process of returning the advance. Under such circumstances, penalties are subject to the loan regulation.
Thus, the seller is preferable to the terms of the advance, rather than the deposit, since in case of adverse circumstances he will only have to return the money received, and not pay twice as much as with the deposit.
Consider an example of an advance payment agreement when buying an apartment in more detail.
Contract
Registration of an advance agreement must take place in writing. Before signing it, the parties must agree on the following points:
1. The amount of the advance. Since the advance is an advance payment, its calculation is based on the value of the subject of the contract. That is, first, the parties must determine the final cost of the contract of sale, and then decide on the amount to be paid in advance. Legislation in advance is not regulated in any way and is determined at the discretion of the parties. The main thing here is to come to a compromise that satisfies the interests of all parties. It is not always possible to do this quickly, since the buyer wants to deposit less money, and the seller, on the contrary, is interested in receiving a larger amount.
2. The method of transferring the advance. In this case, the following should be determined:
- Money will be transferred in cash or by bank transfer.
- Deadline for receipt of money.
- Writing an additional receipt about the receipt of money by the seller.
- All such nuances should be spelled out in the agreement on making an advance payment when buying an apartment, so that in case of a conflict a proof of payment could be presented.
3. The object of the contract of sale. This paragraph indicates not only the actual address of the property, but also a detailed description of the condition at the time of the conclusion of the agreement on the payment of the advance. It is also necessary to indicate the persons registered at this address, the presence of minor children, encumbrance of property rights, etc. All these nuances are usually clarified during a standard apartment check.
4. Responsibility of the parties for failure to fulfill the terms of the contract. Here it is necessary to provide for the maximum number of options that can lead to the cancellation of the transaction, and carefully describe the responsibility of each of the parties.
The advance agreement also indicates the date of the purchase and sale transaction and the passport data of the parties to the agreement are recorded. In some cases, certain amendments can be made to the contract, which must be agreed upon by both parties. After this, the advance agreement is certified by the signatures of the participants.
If the transaction is carried out by a third party represented by a realtor, he offers a standard advance payment contract for the purchase of an apartment, which takes into account the requirements and interests of both parties.
Nuances
By signing the contract of sale, close attention is paid to the legal cleanliness of the apartment.This involves checking the accuracy of the data provided about the property, the authenticity of the documents, the availability of redevelopment and their legality, the identity of the seller, the burden of the apartment and many other factors.
Signing an advance agreement when buying an apartment (a template can be made in advance) does not imply transferring the apartment, however, in this case, it is worth checking all of the above points. After all, the amount of the advance, although not all the cost of real estate, is still rather big, and the buyer is unlikely to want to lose it.
Thorough check
For this reason, even at the stage of payment of the advance payment, a thorough and in-depth verification of the acquired property should be carried out. This can also be done through a realtor. Thus, you can get a list of all former owners of the apartment, as well as various factors that may cause the transaction to be invalidated. If there is a suspicion that the seller may be declared incompetent at the time of the transaction, it should be abandoned even at the stage of advance payment.
It is also necessary to check whether the seller is legally married without a mark in the passport. The consent of the spouse is considered a prerequisite for transactions with real estate. Otherwise, the spouse may challenge the transaction and recognize it as invalid, which will lead to unpleasant consequences for the buyer.