When a deal is prepared and completed, realtors often use terms such as collateral, advance payment, deposit. They are combined in that they precede the final calculations, but in terms of their content and functioning they have differences. In this article, we consider the pledge and the deposit. What is the difference? Let's get it right. 
What is a deposit?
Despite the fact that the legislation pays a small deposit to the deposit, this type of guarantee of obligations is quite common. A deposit is a specific amount of money that is provided against future payments on the basis of an agreement from one side to the other. In addition, it includes a certificate of the transaction and ensuring its proper implementation.
Deposit Functions
What is the difference between a deposit and a deposit? First of all, in the tasks of each of the monetary amounts. The deposit performs the following functions:
- payment - this type of security is characterized as payment and acts as one of the payment methods;
- security - prevents the possibility of the non-fulfillment by the other party of the obligations undertaken, including also their improper performance;
- evidence-based - indicates that the parties did indeed conclude this transaction, as a result of which they had certain obligations secured by a deposit.
The presence of these functions provides the basis for determining the deposit as an independent type of security and allows you to distinguish it from other types.
Penalty function
Moreover, the procedure for his return is not too difficult. Since the deposit has a penalty function, it is it that guarantees the interests of both parties, which consists in the following:
- If the party that issues the money as a deposit departs from the accepted agreements, then he will lose them, since in such a situation the other party has every right to keep them.
- If one of the parties that received the money in the form of a deposit does not fulfill the obligations established by the contract, it must not only return the full amount of the deposit, but also exactly the same as a fine, that is, double. Most often, the difference in collateral or deposit is noticeable when buying an apartment.
In the first option, penalties are applied through the non-return of financial resources, in the second, the money will have to be collected and, most likely, it will have to be done through the court.
In addition to a fine equal to the amount of the deposit, the counterparty who violated its obligations must compensate the other party for its losses by subtracting the size of the deposit.
If the contract was terminated due to any force majeure circumstances, then the parties may agree among themselves on other methods of compensation. What is the difference between collateral and deposit, consider below.
Some nuances of using a deposit
There are several groups of agreements that are considered concluded from the moment when they pass state registration. These include all transactions that are concluded with real estate intended for housing. Those contracts, the object of which are land and non-residential premises, are concluded from the moment they were signed. As a result, a situation arises that introducing a provision on a deposit into an agreement that becomes effective from the moment of state registration and paying its amount before registration will not cause sanctions, which are provided for in the case of a deposit.True, most often, in the event of such situations, the courts still recognize this amount as an advance, and it is returned to the owner, but you must forget about its double amount in this case. What is the difference between collateral and deposit when buying real estate, now it’s clear.
This rule also applies to lease agreements that are concluded for more than one year, since agreements with a shorter period are not subject to state registration. When working with such amounts, realtors usually draw up a separate document regulating the deposit.
Contract
In order to exclude these situations, in principle, such relations are fixed in a separate agreement (preliminary, for example), which is not registered by the state and is valid after its signing. He will help determine the difference between collateral and deposit when selling a house, for example.
It is clear that the advance does not bring the buyer benefits, because in the event of a transaction break, he will simply be refunded, although time was lost and the property was not acquired, as well as the percentage of the seller’s use of his financial resources. Sometimes unscrupulous sellers take an advance intentionally so that there is an opportunity to use someone else's money on an interest-free basis, moreover, belonging not to one, but to several potential buyers.
Deposit agreement
In order to ensure the execution of the transaction, it is best to conclude a deposit agreement. Even if something breaks due to the other side, the person who transferred the deposit will receive compensation for all losses. But this is also the reason for the unwillingness of the deposit recipients to act as responsible persons. To eliminate this contradiction, you can simply use an advance that does not perform the collateral function useful for the payer. The difference of a deposit, a deposit, an advance is of interest to many.
Advance as a share of the main payment
At the legislative level, the concept of “advance” has not been precisely defined. But in practice, it is understood as the payment of a specifically set amount of money on account of the provision of a service or the performance of any work. This term is best used to nominate payments that are previously made by one of the parties to the contract as a confirmation of the seriousness of intent regarding the transaction. It should be noted that the advance does not apply to types of interim measures. It is widespread in the legal relations of citizens, but many confuse this concept with a pledge or a deposit. What is the difference? When selling a summer cottage, this also works. The deposit agreement when buying a land plot is signed between the seller and the buyer to confirm the buyer's intentions to acquire this plot and the seller to sell.
If the seller refuses to sell the land, he returns the buyer the amount of the deposit and pays a fine for a failed transaction. If the buyer refuses the purchase, the deposit is not returned to the buyer.
Advance Features
1. Form of payment:
- the subject of the pledge may be any property and rights to it;
- how advance can be transferred to the other party any property;
- the deposit acts in that capacity only when the money is transferred.
2. The consequences of unfulfilled obligations:
- if the pledgor does not fulfill his obligations, then the sale or transfer of the pledge to the pledge holder occurs;
- if the obligations are secured by a deposit, if they are not fulfilled, the entire amount goes to the party that did not violate anything;
- the advance is not a measure of securing the obligations of the parties, and, accordingly, is returned to the one who paid it.
3. Transaction form:
- a pledge agreement is concluded exclusively in writing, and in some cases it is also registered with the relevant state body;
- the deposit must also be made out by means of a written document;
- the advance can be paid to the other party even if the agreement does not contain conditions on the procedure for its payment.
What is the difference between a deposit and a deposit when buying an apartment? Let's figure it out. Advance payment is a more flexible way of prepayment. The seller, if the sale of the apartment does not take place, simply returns the advance payment to the buyer in full. Materially, none of the parties will suffer. An advance and a deposit are taken into account as part of the means of the value of the property. The collateral has a slightly different character. The buyer pledged property with a subsequent unconditional obligation to repay the debt.
What is a guarantee?
What is the difference between a deposit and a deposit when buying an apartment? This is a common question asked by realtors. Very often the collateral and the deposit are confused, although there are significant differences between them.
The specificity of the pledge is that the fulfillment of the obligation is ensured only by means of the property form, and money acts only as property. If the obligations are not fulfilled at all or are not fulfilled in the manner provided for, then the creditor has the right to realize the object of the pledge, satisfying his own requirements in this way. Moreover, the lender has the property right to receive payment from the value of the pledged property (except for those cases that are described in legislative acts). If the client took a loan to buy something on the security of real estate, then in case of non-return of money in due time, the bank will take away from him that property that was provided in the form of a pledge. What is the difference between a deposit and a deposit when renting a room, we examined above.
The term “pledge” is used primarily in the rental sector, and not in the sale.
Individuals use collateral in the real estate market primarily for rental housing. The owner of the apartment has the right to demand from the tenants not only payment every month, but also any amount if the property is suddenly or damaged. In this case, the repair of a broken thing, for example, will be paid by the owner from the amount of the deposit.
Thus, in terms of the effectiveness of material security, collateral is in the first place. But in terms of ease of use, design and maintenance, a deposit stands out in general.
We answered the question of what is the difference between a deposit and a deposit when renting.
Do I need to deposit money without paperwork?
Since in real estate transactions the deposits are always higher than these amounts, an agreement on them must be drawn up in writing. This norm is governed by Article 380 of the Civil Code of the Russian Federation, Thus, the parties can confirm the fact of cash payment. In this case, an agreement can be drawn up arbitrarily on the form of a real estate agency or organization, etc. The main requirements: the correct preparation and maintenance in it of the amount of the deposit and such details:
- Name of counterparties or the name of the organization;
- the place where the parties live, or the legal address;
- passport data or company details;
- terms during which obligations must be fulfilled;
- subject of the agreement, that is, the real estate object itself, and the address and its characteristic features must be indicated;
- signatures of the parties.
Rules of this kind also apply to the advance payment agreement. Although with the latter, you can also draw up a one-way type receipt from its recipient.
Verbal agreement
If the deposit agreement is concluded orally, then the parties cannot refer to the testimonies of witnesses, although they have the right to provide written evidence. If an agreement has been drawn up in order to receive an advance or a deposit, then this indicates the existence of a contract. If there are doubts about the purpose of the amounts paid according to the contract, they will be considered an advance, not a deposit, that is, without a collateral function, but only as a share of the payment that was supposed to be made in the future. If the forms of the deposit agreement have been violated, the consequences will be the same, unless otherwise proven.
What is the difference between collateral and deposit, is now known.