Is it possible to buy an apartment from a relative with a mortgage, a house?

Buying and selling real estate is a complex type of transaction, especially when it involves mortgage lending. Banks do not always issue mortgages: the borrower must meet a number of conditions, and must also have a good rating and credit history. And if the transaction takes place between relatives, the difficulties become even greater. There are legal nuances that come into play that should be considered before taking out a mortgage. In some cases, the transaction is completely impossible under the law - or is permitted by law, but does not meet the criteria of banks. So, before taking out a mortgage on an apartment from a relative, you need to “test the waters” in advance.

Close and interdependent relatives

The first thing to remember is how the law interprets relationships between family members.

Parents and children, grandparents, brothers and sisters, grandchildren - these people are considered close relatives. Adopted children and parents are treated as relatives by law - they are full-fledged members of the family.
There is another category - interdependent relatives. This includes parents and children, guardians and people under guardianship, as well as brothers and sisters - both full-blooded and half-blooded. This category also includes spouses and caregivers. Adoptive parents and adopted children, as in the previous case, are equated to natural family members.

These concepts are worth knowing so as not to get confused in banking definitions and legal formulations. Some organizations separately specify the conditions for transactions between close and interdependent relatives.

The difference between buying an apartment from a relative and a deed of gift and a will

If the owner of the property draws up a deed of gift for real estate to close relatives, or registers an inheritance for it, he has the right to preferential taxation and payment for notary services.

In this case, the degree of relationship is indicated in the agreement, and title documentation is provided to confirm it. In terms of legal consequences, the procedures for donating and selling to relatives are practically the same. It is impossible to say with certainty which option is preferable.

A deed of gift to close family members is issued on a preferential basis, due to which the cost of services for drawing up and certifying a standard contract by a notary is reduced from 1% to 0.3% of the amount of the value of the object.

This costs more than an apartment purchase and sale agreement, which the parties will be able to draw up themselves, print and sign.

But a deed of gift in favor of a family member is often drawn up bypassing the notary’s office. After all, the parties to a property transaction, in this case, are not included in the risk group. There is no reason for them to play it safe by overpaying for security guarantees provided by a notary.

Unlike sale or donation, the legal consequences of a executed will remain hidden from the testator and heirs. During the life of the testator, it is permissible for the heirs to remain in the dark regarding the posthumous disposition of the property.

It is unacceptable to deprive a citizen of his free will in relation to an order, and it is also unacceptable to show incorrect curiosity and give advice about this.

When the will is opened and the persons enter into inheritance rights, the testator will no longer be able to make sure that his last will is executed as he wished. Therefore, many citizens find it appropriate to dispose of real estate during their lifetime, without tempting loved ones to enter into inheritance litigation that is contrary to the will of the deceased. For this reason, other owners prefer to sell the apartment or donate it.

The only issue that makes fundamental differences between types of property transactions is the payment of taxes.

Features of buying real estate from a relative

As a rule, payments between buyer and seller are carried out without the use of cash. This may be a requirement of the lender - this is how the bank makes sure that the transaction is not fictitious.
Minors cannot participate in real estate purchase and sale transactions. If the apartment belongs to a child, it is impossible to purchase it with a mortgage or sell it. This is one of the reasons why people sometimes have difficulty selling housing purchased with maternity capital.
The property of the spouses is considered common: you cannot buy real estate from a husband and wife. But ex-spouses can make purchase and sale transactions between themselves.
It is almost impossible to obtain a tax deduction for the purchase of real estate from a related party. Most often, this opportunity is limited by law, but in a specific situation it is better to contact the tax service to clarify the situation.
As a rule, preferential mortgage lending programs with government support do not apply to the purchase of housing from relatives.

Official website Public Chamber of the Ulyanovsk Region

January 27, 2020

Minor citizens are special subjects of civil legal relations. Features of the legal status of minors are determined by the family, civil and housing legislation of the Russian Federation.

Real estate transactions involving a minor child are complex. Not everyone knows the specifics of the legal status of minors, and failure to comply with the law in real estate transactions entails the invalidity of the transaction. In accordance with the norms of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation), minors are divided into two categories - minors under 14 years of age (minors), and minors aged 14 to 18 years.

Minors aged 14 to 18 years have the right to independently carry out transactions: they enter into contracts, sign documents, etc. However, all their actions must be carried out with the written consent of parents or other legal representatives. Minor citizens do not have such rights; transactions are made for them by their parents or other legal representatives.

When making transactions where one of the parties is a minor, first of all, it is necessary to determine who his legal representative is, that is, whose participation is necessary in the transaction, and what documents confirm the representation.

So, the legal representatives of a minor child are his parents or adoptive parents. In the absence of parents, adoptive parents, as well as in cases where minors are left without parental care for other reasons, for example: when a court deprives parents of parental rights or when parents evade their upbringing, the legal representatives are a guardian (for minor citizens) or a trustee ( for minors from 14 to 18 years old). These representatives perform on behalf of minors and in their interests all legally significant actions, and also give consent to transactions by minors aged 14 to 18 years.

Legal representatives confirm their authority with the relevant documents: parents - with a passport and birth certificate of the child, adoptive parents - with an adoption certificate, guardians and trustees - with documents issued to them by local government bodies. If a child is being raised in a foster family, then a document is submitted on the transfer of the child to a foster family, issued by the guardianship and trusteeship authorities. If a child is in a state institution for orphans and children left without parental care, then this institution, based on the decision of the authorized body to place the child in the institution, is his guardian, and the head of the institution or another person acts on behalf and in the interests of the child on the basis powers of attorney of the head of the institution.

When concluding transactions with the participation of minors, the question arises in what form should these transactions be made - in simple written form or in notarial form? In order to protect the property rights of minors, the legislator provided that transactions related to the disposal of real estate under guardianship conditions, as well as transactions for the alienation of real estate belonging to a minor citizen, are subject to notarization. These provisions are enshrined in Part 2 of Article 54 of the Federal Law of July 13, 2015 No. 218-FZ “On State Registration of Real Estate”.

Thus, all transactions for the alienation of real estate belonging to a minor (sale, exchange), as well as transactions for the disposal of minors’ property (transfer of property for rent, for free use, etc.) must be carried out in notarial form.

When applying for state registration of rights and transactions with real estate objects, an application and other necessary documents on behalf of minors under the age of 14 are submitted by their legal representatives, and they also sign contracts. If the child is between 14 and 18 years old, then he signs an agreement, submits an application for state registration of rights and documents for registration independently.

In addition to the application and the documents required for the state registration of rights to real estate and transactions with it provided for by the legislation on state registration of rights, other documents established by the legislation of the Russian Federation are also provided for state registration of rights, including:

— a document confirming the powers of the minor’s legal representatives;

- a document confirming the right of a minor aged 14 to 18 years to dispose of property independently, without the consent of legal representatives: a decision of the guardianship and trusteeship authority or a court recognizing a minor who has reached 16 years of age as fully capable (emancipated), a certificate of marriage of a minor (in cases established by Article 21 and Article 27 of the Civil Code of the Russian Federation);

— written consent of legal representatives to carry out a transaction by minors aged 14 to 18 years (Article 26 of the Civil Code of the Russian Federation, paragraph 3 of Article 60 of the Family Code of the Russian Federation - hereinafter referred to as the IC);

— permission from the guardianship and trusteeship authority to dispose by legal representatives of the property of persons under fourteen years of age (clause 1 of article 28, clause 2 of article 37 of the Civil Code of the Russian Federation, clause 3 of article 60 of the IC);

— permission from the guardianship and trusteeship authority for legal representatives to give consent to minors aged 14 to 18 years to dispose of property (clause 1 of article 26, clause 2 of article 37 of the Civil Code, clause 3 of article 60 of the Civil Code).

Failure to submit the above documents for state registration of rights will result in refusal of state registration of the transaction.

In what cases is the permission (consent) of the guardianship and trusteeship authority mandatory? This:

— renting out property owned by a minor;

— alienation of property belonging to a minor;

— transfer of property of a minor for free use;

— transfer of a minor’s property as collateral;

- renunciation of rights belonging to a minor, including renunciation of the right of pre-emption to purchase a share in property rights, refusal to participate in privatization, renunciation of inheritance;

— division of the minor’s property;

— transactions entailing a decrease in the property of a minor;

- alienation of residential premises in which family members of the owner of this residential premises who are under guardianship or trusteeship live, or minor members of the owner’s family left without parental care (which is known to the guardianship and trusteeship authority), if this affects the rights or interests protected by law of these persons.

It should be borne in mind that the permission (consent) of the guardianship and trusteeship authority will be required not only when alienating the property of a minor. For example: a child may receive money as an inheritance or gift, and therefore may be able to pay the costs associated with acquiring real estate in his or her name. If real estate is purchased at the expense of a minor, and thus his funds as a type of property are reduced, then in this case it is also necessary to obtain permission (consent) from the guardianship and trusteeship authority to carry out such a transaction.

As for the specifics of transactions involving minors, Russian legislation provides for prohibitions on some of them. In accordance with paragraph 3 of Art. 37 of the Civil Code of the Russian Federation, a guardian, trustee, their spouses and close relatives do not have the right to enter into transactions with wards, with the exception of transferring property to the ward as a gift or for free use, as well as to represent the ward when concluding transactions or conducting court cases between the ward and the spouse of the guardian or trustee and their close relatives. Taking into account Art. 28 of the Civil Code of the Russian Federation, as well as Art. 60 of the Family Code, this legal requirement also applies to cases where parents of minor children participate in a transaction as their legal representatives.

According to this norm, it is impossible, for example, to sell an apartment belonging to a minor citizen, for whom his mother acts, to the mother’s parents or her other close relatives. Thus, transactions for compensation between minors and their legal representatives are prohibited, regardless of whether children are the acquirers or alienators of property. Therefore, legal representatives (or their relatives) can only give the child their real estate (or a share in the right of common ownership), that is, they can enter into gratuitous agreements that entail an increase in the property of the minor.

Another prohibition is in accordance with Art. 575 of the Civil Code of the Russian Federation, donations on behalf of minors by their legal representatives are not allowed, and the gratuitous assignment of a child’s property rights is also prohibited.

When concluding certain agreements, it should be remembered that the legislation establishes the following grounds for declaring transactions involving minors invalid :

— making a transaction by minors under 14 years of age;

- making a transaction by a minor aged 14 to 18 years without the written consent of his parents or adoptive parents.

And in conclusion, I would like to note that when performing real estate transactions, you must protect yourself as much as possible from risks and carefully check all documents. There are certain restrictions in transactions involving minors; this should always be taken into account. If, in accordance with the law, the written consent of the legal representative or the permission of the guardianship and trusteeship authority is required to complete the transaction, then request these documents. If necessary, you can independently visit the guardianship and trusteeship authority and find out detailed information about the legal representatives of the minor, thereby protecting yourself from possible forgery of documents.

Remember that a transaction that does not comply with the requirements of the law is void and its registration will be refused.
Information provided by the press service of the Rosreestr Office for the Ulyanovsk region

Can a bank refuse to issue a mortgage?

Yes maybe. There are situations when lenders stipulate in advance restrictions on the issuance of a mortgage, and among them are transactions between close and interdependent relatives. But even if there is no such restriction, the banking organization still has the right to refuse - this usually happens if the creditor has suspicions:

the transaction amount is too small, and the price of the apartment is stated to be significantly lower than the market price;
the relative selling the property does not own any other home and does not provide evidence that he has a place to live after the transaction;
the transaction is made using cash.

For reinsurance, the bank may require the borrower to provide evidence of a down payment: in a bank account or in cash. This is done to avoid wasting mortgage funds. The lender's suspicion of family transactions is a factor due to which purchase and sale must be planned especially carefully.

November 14, 2021 DIVISION OF LAND UNDER A HOUSE IN COMMON SHARE OWNERSHIP

Despite the fact that the law does not directly establish the rule that the division of a plot is possible only simultaneously or after the division of a house (allocation of a share in the right of common ownership of a house), nevertheless, based on the norms of paragraph 4 of subparagraph 3 of paragraph 4 of Article 35 The Land Code of the Russian Federation and paragraph 1 of Article 273 of the Civil Code of the Russian Federation, we can conclude that the allocation in kind of a share in the right of common ownership or the division of a land plot with the leaving of a residential building located on it in the common shared ownership of the participants contradicts the requirements of existing legislation, since in this case there is no allocation to each of the co-owners of a separate land plot, free from the rights of third parties.

November 7, 2021 TERMINATION OF STATE CADASTRAL REGISTRATION AND STATE REGISTRATION OF RIGHTS

Prior to the implementation of state cadastral registration and (or) state registration of rights or refusal of state cadastral registration and (or) state registration of rights, consideration of applications and (or) documents submitted for state cadastral registration and (or) state registration of rights may be terminated on the basis joint application of persons who submitted an application and (or) documents for state cadastral registration and (or) state registration of rights.

November 1, 2021 HOW TO FIND OUT THE BORDERS OF YOUR LOT?

Sooner or later, every owner faces the need to clarify the boundaries of his land plot. And this is really necessary information. There are several ways to find out the boundaries of your land plot. The most obvious and simple option is to find out the boundaries using the cadastral number of the object.

October 26, 2021 REGISTRATION OF OWNERSHIP OF AN APARTMENT

Dear applicants! We remind you that registration of ownership of an apartment is an important procedure that is necessary to formalize the transfer of ownership of this residential premises. In order for registration to proceed quickly, without any difficulties, you need to immediately collect a complete set of documents required for registration.

October 17, 2021 MARRIAGE CONTRACT – DETERMINATION OF PROPERTY RIGHTS

A prenuptial agreement, or prenuptial agreement as it is often called, is an agreement between persons planning to marry or an agreement between spouses. A prenuptial agreement is aimed at defining the property rights and obligations of each spouse, both during marriage and after its dissolution. The rules and procedure for concluding a marriage contract are regulated by articles of the Family Code of the Russian Federation (Chapter 8). Since a marriage contract is a bilateral transaction, the completion of which requires the expression of the will of both parties, the rules of Chapter 9 of the Civil Code of the Russian Federation (“Transactions”) apply to it.

October 9, 2021 CONFIGURATION OF A LAND WHEN LANDING

The configuration of a land plot is determined by the location of its boundaries. At the same time, Part 10 of Article 22 of the Federal Law of July 13, 2015 No. 218-FZ “On State Registration of Real Estate” establishes the procedure for determining the location of the boundaries of a land plot when they are clarified, which is determined based on the information contained in the document confirming the right to the land plot, or in the absence of such a document, based on the information contained in the documents that determined the location of the boundaries of the land plot when it was formed.

October 3, 2021 CADASTRAL NUMBER OF THE OBJECT

According to Article 5 of the Federal Law of July 13, 2015 No. 218-FZ “On State Registration of Real Estate”, each property, information about which is included in the Unified State Register of Real Estate, has an unchangeable cadastral number that is not repeated over time and on the territory of the Russian Federation, assigned rights registration authority (Rosreestr). It is assigned to each object in the Riobet real estate casino after the procedure for entering it into the state real estate cadastre.

What to consider before buying real estate from a relative

Despite all the restrictions, buying a home from a relative with a mortgage is possible - although such a deal may turn out to be less profitable than purchasing real estate from a stranger. Banks are suspicious of such purchases and sales; a number of conditions must be met:

prepare a down payment in advance and show the lender evidence of its existence;
make sure that the price of housing corresponds to the market price, and that there are no minors among its owners;
find out about the possibility or impossibility of obtaining a tax deduction;
document that the seller has a place to live after the sale of the home;
indicate the full cost of the apartment in the purchase and sale agreement;
carry out all transactions exclusively in non-cash form.

EOS reminds you: you need to take your mortgage seriously. This is a long-term loan, where real estate acts as collateral, and the risks of non-payment are more significant than when a consumer loan is overdue. We advise you to be careful and clarify in advance the specifics of transactions between relatives in the bank’s credit department.

About misconceptions, risks and the procedure for donating real estate

agreements for the donation of real estate owned by several owners on the basis of common shared ownership, regardless of whether a share or the entire object will be donated (exceptions are transactions with land shares and transactions involving a mutual investment fund);
transactions in which the donor is a minor, incompetent or partially capable person.

All other gift agreements not specifically provided for in the law do not need to be certified by a notary.
This will not give you anything except additional costs. To successfully pass state registration, a well-drafted gift agreement in simple written form is sufficient. Misconception No. 2 - about transferring an apartment as a gift after the death of the donor. A gift agreement providing for the transfer of an apartment to the donee after the death of the donor has no legal force (void). This condition involves the transfer of the apartment by inheritance under a will. Donation and inheritance by will are two different legal procedures, each of which has its own pros and cons.

The main benefits of donation:

no need to wait six months, you can immediately move into the apartment or sell it, no need to pay utilities for 6 months of waiting;
lower costs for notary services and paperwork;
allows the donor to disinherit persons he does not like, who are legally entitled to an obligatory share in the inheritance.

The main advantages of inheritance by will:

the right of ownership passes to the heir only after the death of the testator; accordingly, the option is excluded in which, due to a soured relationship, the donor is deprived of the right to live in an apartment that no longer belongs to him. This often happens in the case when the donee sells the apartment received as a gift to a third party who is not at all interested in having a stranger live in his new apartment;
You can change your mind, change or cancel a will as many times as you like.

Misconception No. 3 - about reciprocal obligations on the part of the donee. The gift agreement cannot contain any conditions on reciprocal obligations on the part of the donee, including periodic payment of money, care for the donor, provision of food, medicine, clothing, etc. The listed conditions imply the conclusion of a rent agreement.

Misconception No. 4 - about the right to a property tax deduction. A person who received an apartment as a gift does not have the right to a property tax deduction, which a home buyer has the right to use once.

Risks

Risk No. 1—suspension or refusal of state registration of the transaction. Possible reasons:

low qualifications of the lawyer drawing up the gift agreement and executing the transaction;
lack of elaboration, inconsistency and imperfection of legislation, which may manifest itself in different interpretations of its provisions by the lawyer executing the transaction, the state registrar, notary, or judge.

In non-standard situations, if there are errors in the documents, their “respectable age” and incorrect registration typical of the early 1990s, or if there is a complete or partial absence of documents for real estate, the right decision would be to contact lawyers with extensive experience in the field of registration of rights to real estate property, because their experience will help you solve the problem with minimal costs.

Risk No. 2 - the court deems the transaction invalid due to the incapacity of the donor at the time of conclusion of the contract. A fairly common situation is when, after the death of the donor, the heirs challenge the gift agreement in court, present the medical history of the deceased as evidence of incapacity, pay for independent examinations, etc. During the consultation, we offer an additional service that almost completely eliminates this risk.

Risk No. 3 - the court deems the transaction invalid due to its fictitiousness. A gift is a gratuitous transaction that can be recognized by the court as feigned if the fact of transfer of money is proven. That is, if you accompany a donation transaction with “unofficial mutual settlements,” there is always a risk for the recipient of losing both the apartment and the money paid for it. Other grounds for declaring a transaction invalid:

the donee commits an attempt on the life of the donor, members of his family or close relatives, causing bodily harm to the donor;
inappropriate treatment of the donated apartment by the recipient from the point of view of the donor and the court, creating the threat of its irretrievable loss;
conclusion of an agreement under the influence of deception, delusion, violence, threat or due to a combination of difficult circumstances;
a number of other grounds provided by law.

Risk No. 4 - drawing up a gift agreement in cases where, according to the law, it is necessary to conclude an agreement on the division of property. Such agreements can be registered by Rosreestr, but subsequently, when interested parties go to court, they are easily declared invalid.

Risk No. 5 - violation of the rights of third parties when transferring an apartment as a gift. This happens, for example, when a jointly owned apartment is donated by one spouse without the correctly executed consent of the other spouse, as well as in a number of other cases.

Risk No. 6 - eviction of the donor from the apartment previously donated by him. Unfortunately, judicial practice inexorably shows that adding a condition to the gift agreement that the donor retains the right to lifelong use of the apartment does not solve the problem. During your consultation, we will offer you an option that completely eliminates this risk.

It's worth keeping in mind:

a real estate gift transaction concluded between close relatives is not taxed;
in cases where the donation of an apartment is NOT between close relatives, the recipient is obliged to pay a tax of 13% of the cadastral value of the apartment;
to donate a share of an apartment that is in shared ownership, the consent of the owners of other shares is not required;
To donate an apartment that is in common joint ownership, the consent of all owners is required;
the donation of an apartment in a new building for which ownership has not yet been registered is formalized by an agreement on the assignment of rights of claim;
a donation can be formalized and registered in the form of a written promise by the donor to donate an apartment to the donee upon the occurrence of certain conditions or after a certain time has passed;
The gift agreement may provide for the right of the donor to cancel the gift if he survives the donee.

Still have questions? Take advantage of a free consultation by phone +7(495)9999-012, ask a question or come to our office for a consultation (by appointment). We will tell you in detail about all the pitfalls of the donation procedure, the pros and cons of alternative options for transferring real estate (sale and purchase agreement, rent, will) and recommend the optimal solution for your situation.

Taxes and deductions when buying and selling from a relative

If the deed of gift implies the abolition of the tax provided for 13% of the value of the property for persons who are closely related (see Tax upon receipt of an inheritance and registration of a deed of gift), then alienation within the family by purchase does not provide such advantages.

In addition, if real estate worth more than a million was owned for less than 3 years, the person alienating the apartment will pay the tax required by law, amounting to 13% on the amount exceeding 1 million rubles (see Sale of an apartment owned for less than three years).

In this case, the former owner does not receive any benefits. In this case, the buyer will not acquire the right to take advantage of the tax deduction.

Based on Part 1, Clause 2, Article 220 of the Tax Code of the Russian Federation, close relatives do not have the right to request a property deduction.

This is not surprising, since unscrupulous citizens thus gain access to unauthorized income by colluding and executing sham real estate transactions.

Such a transaction does not guarantee the actual transfer of funds, which may or may not have actually occurred when a receipt was written for the type of receipt of the amount of money.

The legislation of the Russian Federation, while respecting the rights of individuals to the legal disposal of property, does not prohibit the sale of housing between family members, but does not encourage access to illegal income.

The number of citizens whose relationships are defined as closely related on the basis of Art. 105.1 of the Tax Code of the Russian Federation, includes:

parents and children;
adoptive parents and adopted children;
full and half-blood brothers, sisters;
grandchildren and grandparents.

Between an uncle and a nephew, the alienation of an apartment will occur on a general basis, without provided benefits, but also without restrictions.

It is permissible for the buyer to claim a property deduction if there are no other reasons for refusal. The same conditions apply between cousins.

As for the relationship between stepfathers, stepmothers and stepdaughters with stepsons, they are considered as third parties. Accordingly, they are entitled to a deduction upon purchase. The relationship between these persons is quite conditional; if they wish, they can establish kinship based on a court decision (Articles 1144, 1145 of the Civil Code of the Russian Federation).

It is required to pay attention to the precedent of property relations. These include indirect connections. That is, two closely related connections are connected, giving rise to property relations.

They arise:

between mother-in-law, father-in-law and daughter-in-law;
between mother-in-law, father-in-law and son-in-law.

This list also applies to brothers and sisters of a husband or wife. Such cases prohibited receiving a property deduction on the basis of the Letter of the Ministry of Finance, approved on August 4, 2011, No. 03-02-08/86.

This documentation dictated the conditions of the Federal Tax Service until 2012, when the Law of the Russian Federation was issued, dated July 18, 2011, No. 227-FZ, which, in paragraph 6, article 4, makes adjustments to such real estate transactions.

It lifts the ban on property deductions for persons in this category, allowing them to receive funds returned by the state. But they apply only to property legal relations that have arisen since 2012.

Let’s say that an apartment sold by the mother-in-law to her son-in-law in 2011 will not allow him to receive a refund of the money spent on the purchase of housing. And the daughter-in-law who purchased her mother-in-law’s apartment in 2012 will receive a deduction.