5 steps to ensure better protection of the seller’s interests when selling real estate
- Always seek legal counsel prior to initiating the offering of the real estate. Whether the seller has all the necessary documentation needed for this transaction at hand can only be determined by a specialist from this particular field. Following the signature of the preliminary contract the seller has little time to acquire the missing documentation whilst the sanction for any delay in the execution amounts to twice the value of the deposit.
- Be aware that what you agree with the Buyer must be achievable. The engagements and obligations which are admitted in the preliminary contract must be executed in the respective schedules, keeping in mind that if their deadlines are missed, the Buyer has the right to request their execution via legal actions.
- When the Buyer agrees to transfer the price using funds received through a bank loan you can at least take precautionary steps like ensuring that the loan has been granted.
- Always agree an indemnity or penalty provision aimed at sanctioning delayed execution.
- Don’t forget that under the Taxes on profits of natural persons Act a tax on the transfer of real estate is payable if the period between the moment of purchase and the moment of sale of the real estate is less than three years (for reference see art. 13, 1, 1 from the abovementioned Act). This could affect the final price of the real estate.
If you have any doubts or need additional professional counsel it might be best if you address a lawyer with any relevant queries.
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5 steps to ensure better protection of the seller’s interests when buying real estate
- Don’t have too much trust in the issued Certificate for encumbrances and always seek to supply yourself with copies of each entered and registered document and act. This way you prevent the possibility of being misled. (Bad experience with the Registry Agency: in all registries and certificates the entered circumstance is “nullification of mortgage”, whilst in reality the registered document is for a request for a mortgage renewal!)
- Request as many documents from the Seller prior to the execution of the preliminary agreement as possible as well as the payment of a deposit. Have the documents reviewed by a lawyer before executing any payments.
- Always insist that all Buyer’s obligations have a comprehensive description in the preliminary contract. The provisions which haven’t been affected by the notary deed or haven’t been renegotiated are still in effect following the final execution of the deed. (e.g. pertinent to the purchasing of a real estate: when purchasing real estate before being completely built, the builder/contractor promises that there will also be a pool, an installation for water heating using solar collectors, green areas and so on, the Buyer can hold him responsible for any short from good performance even following the execution of the notary deed and even when not everything has been included in it).
- Be aware that certain risks exist in purchasing real estate with a mortgage, i.e. to not acquire it and even lose your money at the same time. When there are more than 1 formally enacted mortgages or foreclosures you should definitely seek legal counsel before executing any financial transactions. (e.g.: a real estate agent has managed to convince a potential Client that there is no issue with paying a 40% deposit with the execution of the preliminary contract of a real estate which has 3 mortgages and 1 foreclosure. After receiving the commission, the agent has ceased any activity in the execution of the notary deed which normally follows while during the same time additional 3-4 foreclosures have been issued on the same real estate. The Client hasn’t sought legal counsel and has ended up not acquiring ownership over this property and not receiving the transferred deposit back.)
- Always envision an indemnity or penalty provision aimed at sanctioning delayed execution of the Seller’s obligations – as well as a deadline or a period for the placing of the property into service or the transfer of the tenure.
