An apartment is not a cheap purchase, so when concluding a transaction you should not rely on the honesty and decency of its owner. Judicial practice shows a lot of excitement around this issue - new owners, after paying a large sum, discover the fact of fraud, while the culprit is rarely found. Another common problem is debt for major repairs from the previous owner. The reason for falling for any of the tricks regarding property issues is the buyer’s negligence in checking all the documents. Without examining documents, checking all receipts, or trusting the recommendations of friends, you can irrevocably lose your money.
○ Home inspection before purchase.
In addition to the seller’s passport and his title documents for the subject of the transaction, you also need to check whether he has any utility debts. To do this, you need to request a certificate from the owner stating that there are no such obligations. But even if he presents you with this document, it is worth double-checking it. To do this, simply contact the Management Company, Housing Office or Homeowners Association. Explain why you need this information. As a rule, obtaining them is not difficult and does not take much time.
Are debts transferred when buying an apartment?
It all depends on the situation and the concluded sales agreement. If the seller has debts on utility bills, and he honestly reports this, you can try to negotiate a serious discount that exceeds the amount of the debt. This is beneficial for both the seller and the buyer:
- The seller gets rid of debts and can safely spend the money received from the sale on the purchase of a new home or any other needs.
- The buyer receives an apartment at a good discount.
But all of the above is true only on the condition that the buyer is ready to deal with debts and the seller does not hide them. Otherwise, the problems will mainly be with the seller, since a significant part of the utility debts is associated with the owner of the apartment, and not with the property itself. As a result, despite the sale of housing, the former owner will still, sooner or later, be forced to pay all his debts, including fines, penalties, and so on.
○ Who is responsible for paying debts?
- Citizens and organizations are required to pay rent and utilities on time and in full.
- The obligation to pay for residential premises and utilities arises from the moment the ownership of such premises arises, taking into account the rule established by Part 3 of Article 169 of this Code (Article 153 of the Housing Code of the Russian Federation).
As follows from this law, the responsibility for paying debts lies with the seller. At the same time, the legislator clarifies that the buyer must still repay a certain type of debt - payment of contributions for major repairs (clause 3, p. 169 of the Housing Code of the Russian Federation).
Transfer of debt for major repairs to the new owner
It is legally considered that the debt for major repairs from the previous owner relates to the property and not to the owner. This approach is enshrined in Part 3 of Article 158 of the RF Housing Code[1]. Therefore, when the owner of premises in an apartment building changes, ownership rights are transferred to the new owner, and along with it, the debt to pay this debt is transferred from the previous owner.
Debts for utilities (heating, water, electricity) remain with the old owner. A change of owner refers to the transfer of ownership of real estate through purchase and sale transactions, donation, and inheritance.
In the event of privatization of an apartment, existing debts for major repairs continue to be registered with the municipality and do not pass to the new owner.
The debts of the old owner are presented for payment to the new owner, starting from the beginning of 2013. The amount of debt can be quite significant over such a long period of time.
The new owner of the premises will have to transfer the unpaid fees. Taking into account the limitation period, contributions are awarded for payment for no more than three previous years from the date of registration of ownership.
Major repairs can be carried out several times over a long period of operation of the building. During this period, more than one owner of the apartment may change, but funds for major repairs must be collected.
○ Payment of debts by the new owner.
- The transfer of a debt from a debtor to another person can be made by agreement between the original debtor and the new debtor. In obligations related to the implementation of business activities by their parties, the transfer of debt can be made by agreement between the creditor and the new debtor, according to which the new debtor assumes the obligation of the original debtor.
- The debtor's transfer of his debt to another person is permitted with the consent of the creditor and, in the absence of such consent, is void. If the creditor gives preliminary consent to the transfer of debt, this transfer is considered to have taken place at the moment the creditor receives notification of the transfer of debt (Article 391 of the Civil Code of the Russian Federation).
Thus, the buyer may have an obligation to pay utility debts only if the parties have entered into an agreement to transfer the debt. Otherwise, all demands for payment are unlawful.
It is worth considering here that the buyer can sign an obligation to transfer the debt without noticing this clause in the contract. That is why careful study of all aspects of the agreement is key to reducing the risks of purchasing real estate.
Who pays debts for utilities when buying an apartment
Here everything again depends on what is said in the contract. Perhaps the seller will ask the buyer for a certain amount in advance with an obligation to pay off all outstanding utility bills. In this case, it seems like the seller pays, but the buyer gives him the money for this.
If the parties have not agreed on anything and the issue of paying utility bills was not raised in the purchase and sale agreement, then the seller will pay, regardless of whether he wants it or not.
○ How can the seller and buyer reach an agreement?
The parties may agree to repay the debt during the purchase and sale transaction. This can be done in different ways:
- Agree on making an advance, which will be used to pay for utilities (this fact must be reflected in the advance agreement, specifying the purposes for using the money received).
- Reduce the cost of the apartment by the amount of the utility debt (in this case, it is worth considering that the seller has no guarantees that the buyer will actually make the necessary payments).
- The seller must repay the debt before concluding the purchase and sale agreement, having previously found the necessary funds (for example, take out a loan from a bank).
The last method is the most preferable. Because the object of a transaction without debt does not pose any risks for either party.
Collection of debt for major repairs from the previous owner
When buying an apartment, you need to check whether the previous owner has any debts for major repairs. At the negotiation stage, the seller should request receipts for payment of fees, and if they are not available, an extract from the personal account for major repairs of the apartment.
In the real estate purchase and sale agreement, it is necessary to add a clause stating that the seller must provide documents confirming payment of fees for the entire period of ownership of the property.
Debts associated with an apartment are an encumbrance that extends to the property. If there is such an encumbrance, this must be reflected in the purchase and sale agreement.
If you have debts, the amount of which is confirmed by a personal account statement, you can request a discount on the cost of the apartment. In this case, the contract must indicate that the buyer undertakes to pay an amount equal to the cost of the apartment minus the debt for major repairs and to repay the debt after registering ownership.
Having acquired ownership of an apartment in an apartment building, you need to know how you can check the presence of debts for major repairs. The easiest way is to look at the receipt. It reflects the date of the last recorded payment and the debt as of the date of its formation. There are other ways:
- Contact the branch of the regional Capital Repair Fund. You must present a passport and a certificate of ownership of the apartment. Employees will issue a certificate confirming the presence or absence of debts.
- If for some reason the owner does not receive receipts or they have been lost, you should contact the management company. This can be done in person or over the phone. The management company will provide copies of invoices.
- Through the Internet. In your personal account on the website of the regional operator FKR.
Is it possible to collect debts for major repairs if the new owner did not check their existence, and the previous owner did not report them, and the debts became an “inheritance”?
After state registration of ownership, the new owner is obliged to pay off debts for major repairs. Having paid the debts, the new owner of the premises can offer the former owner to voluntarily reimburse the debt for major repairs.
In case of refusal, demand compensation through the court. Here it is necessary to correlate the amount of debt with the monetary costs of the trial and the time it will take. Since the transfer of debt to the new owner occurs by force of law, its rights are not violated by the old owner. There may be nuances, but it’s better to sort them out with a lawyer.
○ Drawing up a purchase and sale agreement.
The agreement is drawn up according to the standard scheme, indicating:
- Details of the parties.
- Subject of the transaction.
- Cost of living space.
- Method and terms of payment.
- Rights and obligations of the parties.
- Responsibility for their failure to comply.
- Additional conditions.
The last paragraph describes the option for paying off debts. Here you need to indicate whether the buyer assumes obligations to make payments. Otherwise, the text of the agreement must include the details of the appliances, which will prove that the apartment was purchased with debts. Information from the meters must also be indicated in the transfer and acceptance certificate, which will record the fact of successful completion of the transaction.
How to check an apartment when buying for debts
There are several main ways to check for debts in an apartment before concluding a purchase and sale agreement. Let's take a closer look at each of them.
Certificate of debt
The simplest, and therefore the most popular, way is to request a certificate of debt from the management company or housing office. It is recommended to require such a document from the real estate seller. Even if he refuses, this will indirectly indicate possible problems.
In theory, you can try to personally contact the management company or housing office, emphasizing that the buyer will be purchasing this property and should be aware of all possible problems. They may refuse, or they may agree to a meeting. It is almost impossible to predict in advance what exactly the housing office will say.
Online services
Also in many cities there are special online information services. On these portals, information about debts on utility bills is publicly available. Alternatively, you can search for the same data on the management company’s website or even request it electronically.
○ Relations with the management company.
After completing the purchase and sale transaction and taking ownership, you need to visit the Management Company to write an application for the provision of utility services and open your personal account. Most likely, at this moment you will be reminded of the debts of the previous owner. Despite the fact that by law you are not obligated to repay the debts of the previous owner, the Management Company may not agree with this. They may insist on making the necessary payments, which can be quite annoying. To avoid such claims, you need to write a written statement to stop making claims, attaching the purchase and sale agreement. If the Criminal Code does not stop insisting on payment, you can safely contact the prosecutor’s office or judicial authorities, because such demands are illegal. Thus, if the apartment you decide to buy ends up with utility debts, this is not a reason to cancel the deal. It should be remembered that the new owner is obliged to pay for utilities only after passing state registration and obtaining ownership rights. Any attempts to demand repayment of the previous owner's debts are unlawful.
How to buy an apartment with debts
Next, you should find out whether it is possible to sell an apartment with a debt for major repairs. It is relevant both for unscrupulous sellers and for buyers who are careless in checking all documents and receipts. The question is clear - such a possibility exists, and the debts are transferred to the new owner of the apartment along with the property.
A properly drafted purchase and sale agreement will help protect yourself
In order to somehow protect yourself and be able to legally recover the appropriate amount from the seller, you must:
- In the purchase and sale agreement, include a clause obliging the seller to provide receipts confirming the fact of payment for major repair services for the entire period of ownership of the property.
- Request receipts. Even if the seller provides fake documents, it will be easier for the buyer to prove his case in court.
Having bought an apartment with debt for major repairs, you should know how not to incur additional expenses after purchasing the property. Having the above documents in hand, you can safely go to court. In this case, it is advisable to pre-pay off the debts and demand full compensation from the previous owner.
Note: if we are talking about a small amount of debt, and the previous owner refused to pay it voluntarily, it is not always advisable to go to court. You will have to spend a lot of time and effort, as well as pay legal fees.
