Apartment shopping published05.11.2021
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What is a deposit for the apartment purchase and how is its amount determined?

The most common practice when concluding a legal deal related to the sale of any type of real estate is to conclude a pre-agreement between the seller and the buyer.

This “pre-contract” implies giving a down payment for the purchase of an apartment, as a form of assuring the seller (often an investor) that the main contract of sale will be concluded within the agreed deadline.

In this text, we bring you the answers to the most important questions you need to know about when it is necessary to leave a deposit to buy an apartment. Among the most important ones, expect:

  • What is a deposit for buying an apartment?
  • How much should the deposit for buying an apartment be (how to calculate the deposit for buying an apartment)?
  • What does the down payment for buying an apartment mean in practice?

What is a deposit for the purchase of an apartment

The first big step in the realization of buying (or selling) real estate is the down payment, except in situations when the payment is e.g., apartment, performed at once (cash buyer).

The Law on Obligations says that “down payment”, i.e., the contract on the deposit for the purchase of the apartment obliges the buyer to purchase the apartment within the stipulated period.

If this does not happen, the seller can claim the contract or compensation in three forms:

  • Deposit for the apartment included in the compensation (in this case the court decides compensation for damage caused by non-performance of the contractual obligation)
  • Return the deposit for the purchase of the apartment
  • Take the received down payment

The down payment for the apartment is a type of psychological pressure on the fulfillment of the contractual obligation by the seller. In other words – there is no giving up. Any change of mind after the verification of the Pre-agreement and the submission of the deposit for the purchase of the apartment has its consequences.

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Division of guilt regarding the fulfillment of the contractual obligation

What if the seller of the apartment or the investor is “to blame” for the delay in fulfilling the conditions of the sales contract?

If the conclusion of the main contract does not occur for reasons attributable to the seller, the buyer has the right to demand that the seller pay him twice the amount of the received down payment.

Anyway, what if the conclusion of the sales contract was not due to the fault of the buyer?

In that case, the seller has the right to keep the deposit for the apartment, but also to seek compensation for the damage caused by the termination of the legal transaction.

What does a deposit agreement for the purchase of an apartment look like in practice

 is best to start with the lawyer and/or banking advisor on the deadline for signing the pre-agreement on real estate capitation.

The lawyer has the most knowledge and abilities to interpret and understand the documentation possessed by the seller – first of all, the Ownership Certificate (Real Estate List), and the Building Permit and Application Form.

Both documents are available in the Cadastre and are taken over by the owner, i.e., the seller. The Preliminary Purchase Agreement is done up by the Seller, and it should specify the essential items of the main Contract, as well as how to resolve the potential return or retention of the amount given as a deposit for the apartment.

* It is especially important to specify the rules on the return of the down payment for the purchase of an apartment, in case the bank does not approve the housing loan. The most common agreements are:

  • The return of the entire down payment to the buyer or only one part of the deposit, if the bank does not approve the loan. In that case, the costs of terminating the contract shall be carried by the buyer.
  • The seller keeps the submitted deposit for the purchase of the apartment

When both parties agree on the content of the Pre-contract, that document, as well as all the documentation on the basis of which it was made and the identity cards of the buyer and seller are scanned and forwarded to the e-mail of the Notary.

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Do I need to certify the Pre-contract?

If all the important articles of the pre-contract are defined in advance (method of payment, exact loan amount …), we recommend that the pre-contract be notarized. Certified Pre-contract means that it is confirmed and approved by the authorities, and as such has the power to protect your interests. An uncertified pre-contract is also a valid document, and its advantage is that changes can be made more easily without additional costs.

Going to a notary

The notary will review all the documentation again and check whether there is an already certified Pre-contract or Contract for the real estate in question by the same seller. This prevents the so-called double sale, and if everything is in order, the arrival is confirmed on time for verification.

If you want to find out more about who notaries are and what they actually do, that is, for what legal matters notaries are competent, and not the court – we advise you to read the information we have collected for you in the following text: Who are notaries and what do they do?

What is the (usual) amount for a deposit while buying an apartment

How is the down payment for buying an apartment calculated?

The usual amount of the down payment for the purchase of an apartment is 10% of the agreed purchase price. The amount of the deposit must be stated in the Pre-contract and is usually between 20–30%. When paying the purchase price, the given down payment is included in the fulfillment of the obligation.

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Making a deposit for the purchase of an apartment from a loan

What happens when a buyer provides funds for the purchase of an apartment from a bank loan?

If you already give a deposit for the purchase of an apartment to the seller, then it is treated as a share in part. For larger amounts of deposits, it is advisable to have the pre-contracts certified by a Notary.

The reason for this is that the transfer of funds to the seller’s account over 15,000 euros requires a certified contract/pre-contract – as a legal basis for the transfer of funds.

This is another situation in which it is very important to start buying an apartment with a lawyer and/or financial/banking advisor.

With their help, it is easiest to define which model of housing loan is recommended for you.

Of course, all decisions are made in accordance with your creditworthiness: the amount of income, the value of the object on which the mortgage is placed, etc.

Buying an apartment safely with Grading

Buying an apartment is not a small undertaking, and that is why we are ready to be your support on the path to creating an ideal home. Contact us for advice on buying, trading or real estate advice that you have in mind.