How to check an apartment for encumbrances

Property buyers should exercise caution. Buying an apartment with encumbrances can lead to financial losses and problems that will then have to be resolved for a long time with the participation of law enforcement agencies. We'll tell you the risks of buying an apartment with encumbrances and how to check it before buying.

What is an encumbrance

An encumbrance is a restriction placed on the rights to dispose of property. For example, the owner can live in an apartment or rent it out, but not as a gift. An encumbrance arises by law or contract and means that there is a third party who has imposed a restriction and has rights to the apartment. His consent must be obtained when conducting transactions.

However, the encumbrance does not prohibit the purchase and sale of an apartment. The main danger for the buyer is that sellers do not like to report such problems, and in the future this can bring a lot of worries to the new owner.

Types of encumbrances

There is a forced encumbrance, when your apartment is taken away for debts secured by security. And the burden is voluntary. When a person himself agrees to such conditions, for example, takes out a mortgage. We are interested in the latter.

So, you take out a mortgage on an apartment. As soon as a line appears in the Unified State Register of Real Estate stating that you are the owner, at the same time a note is made that there is an encumbrance on the property.

What encumbrances can be placed on an apartment?

The old owner transfers the encumbrance to the new buyer “as a gift.” Therefore, the price of apartments with restrictions is lower than the price of similar “clean” real estate.

There are five main encumbrances on an apartment:

A mortgage involves the bank lending money to the buyer of an apartment for a long period of time to cover the cost of the purchase. To guarantee the payment of the debt, the bank, according to the agreement, takes away part of the rights to the apartment until the mortgage is repaid. During this entire period, the borrower cannot carry out legal transactions with the apartment without the consent of the bank.
Rent involves concluding an agreement on the transfer of an apartment for temporary use to another person for a certain fee. The tenant can only use the apartment during the term of the contract, but does not have any rights to it. During the validity of the lease agreement, the tenant can only be evicted through the court. But even a change of owner is not grounds for termination of the contract.
Arrest means that the court has limited the owner’s rights to dispose of the apartment. This may be caused by late payments on a mortgage or housing and communal services, division of property of former spouses, or legal proceedings. The sale of a seized object is impossible until the restriction is lifted by the authorized body.
Rent implies that there is a person who makes regular payments to the owner of the apartment so that he can live in it. The difference from renting is that the renter will receive ownership of the apartment in the future. The rent payer is the formal owner of the property, who cannot dispose of the apartment without the consent of the rent recipient.
Trust management means that the apartment owner transfers certain rights to the property to a third party. For example, during the owner’s long-term treatment, the manager can rent out the apartment and pay the bills. While the trust management agreement is in force, the apartment cannot be sold.

Bad apartment: how to detect encumbrances on real estate

The Cadastral Chamber explained what types of encumbrances on apartments are and how to detect them

Most apartments have their own special “history”. For some it is clear, but there are “stories” with “aggravating circumstances” - encumbrances. This concept can equally be encountered both when purchasing an apartment in a new building and on the secondary market. What is an encumbrance? And is it worth buying an apartment with “load”? Experts from the Cadastral Chamber spoke.

Encumbrance

- This is a type of restriction of ownership rights to a real estate property. In other words, the owner of the apartment cannot sell it without the consent of third parties or the state. Encumbrances on real estate can cause problems for both the buyer and the seller. When buying an apartment, it is important to understand: if there are any prohibitions - encumbrances - other persons who are not the registered owners of the property may lay claim to it.

What are the types of encumbrances?

Today the most popular encumbrance is a mortgage. The owner of the property cannot put the apartment up for sale and carry out the transaction without the permission of the bank. In fact, until the end of the mortgage payment, the property is pledged to the bank. In other words, the bank is the owner of the property.

The second most popular encumbrance is registered minor children. If citizens under 18 years of age are registered in the apartment, at the time of purchase you should check whether the purchase and sale transaction violates the rights of the child. Especially if the apartment was purchased with maternity capital. When using a government subsidy to purchase real estate, each family member receives a share of the property, including children. If the transaction is incorrectly executed, adult citizens subsequently have the right to claim a share in the apartment.

Arrest is no less common encumbrance. There are many reasons for the seizure of real estate: debt obligations to a bank or private lender, division of property during a divorce, delays in housing and communal services. In these cases, the apartment may be seized by a bailiff by court decision.

An infrequent encumbrance for our country is rent. There have been situations where an apartment was sold when tenants lived in it and had officially entered into an agreement with the owner of the property. Basically, this is a common practice in European countries when a person buys a home for investment purposes. In addition to the apartment, the new owner gets tenants who continue to pay for housing, only to the new owner.

Another rare type of encumbrance on the Russian real estate market is rent. Often, older people sell their apartments with the condition of living in them for life. If ownership is transferred to the new owner of the property, the rent recipient cannot be evicted.

One of the critical situations that may arise when purchasing an apartment is finding tenants with the right to use it free of charge. Most of the real estate built in the 90s was state or municipal property. In the process of selling and transferring real estate into private hands, a citizen could refuse privatization in favor of another person, thereby retaining the right to use the living space indefinitely. The problem is that such a tenant cannot be evicted from the apartment and deprived of his right to live in it. A testamentary refusal - the last will of the deceased - can also become a stumbling block when buying and selling an apartment. According to the will of the home owner, expressed in notarial form, the citizen receives the right to live in the apartment. Even if the owner of real estate changes, a person does not lose his rights (Article 1137 of the Civil Code of the Russian Federation).

How to find out about encumbrances on an apartment?

The main thing is to carefully check all real estate documents. The attached certificates or notarial certificates will be the first “bell”. It wouldn’t hurt to ask the seller the “history” of the apartment: did he buy it, take it on a mortgage, or inherit it. From the story it is easy to understand whether the package of documents for the transaction is correctly formed, and to request the missing papers, if necessary.

Not all apartment sellers are respectable citizens. The buyer can protect himself from the actions of intruders by ordering an extract from the Unified State Register of Real Estate on the official website of the Cadastral Chamber. In the extract, which any citizen can receive, you need to pay attention to paragraph No. 4 “Limitation of rights and encumbrances of the property,” which indicates whether third parties have any rights to the purchased housing. If not, this section of the statement will indicate “not registered.”

“Encumbrances on real estate are rare, but they can cause the purchase and sale transaction to be abandoned, lengthy litigation, or, in the worst case, the loss of the buyer’s home and money. Therefore, any purchased object must be checked for legal purity. Today, an extract from the Unified State Register of Real Estate is the only title document with which you can understand what was the basis for the emergence of ownership rights, whether the seller is the legal owner of the property and, of course, find out about the presence of encumbrances on the apartment being purchased.”

,” noted
Oksana Stein, director of the Cadastral Chamber for the Nizhny Novgorod region.
The real estate market is always full of colorful offers for the sale of living space. Some people manage to find a clean apartment, but often they have to choose from apartments with “history”. Encumbrance is not a vice, considering that some types of encumbrances are temporary and are removed immediately after the cause of the imposition is eliminated. The price of the burden is, indeed, very attractive for buyers, and the sellers of such apartments are very compliant for the sake of the deal. The main thing is to carefully study all the documents when buying or selling an apartment. And in order to save time and nerves, the buyer should take care of the security of the transaction and order an extract from the Unified State Register in advance. We recommend ordering an extract as close to the planned date as possible, since the data contained in the Unified State Register is constantly updated.

What threatens the buyer of an apartment with encumbrances?

Buying an apartment with any of the encumbrances will cause the buyer a number of problems.

A transaction to purchase an apartment with a mortgage may be disrupted if the bank does not agree to the sale.
Tenants may refuse to leave the property during the term of the lease or even after it expires. This problem will have to be resolved in court.
The buyer of an apartment with rent will be forced to support the rent recipient for life.
The sale of a seized apartment is prohibited, so such a transaction will not be registered. Check the apartment before transferring money to the seller.

Transfer of money when buying an apartment. How does money transfer happen when buying an apartment?

As you can see, encumbrances significantly complicate the life of apartment buyers. To help them protect themselves, the state maintains a register in which all transactions leading to the formation of encumbrances are recorded. It is an extract from the USRN about the absence of encumbrances that helps to check the apartment.

Restrictions that come after purchasing an apartment with a mortgage

Bank consent . You will have to coordinate all transactions or any actions with real estate with a financial institution. And it’s not a fact that the bank will agree.
Limited renovation. While the apartment is pledged to the bank, all legal redevelopment of your home must also be agreed upon with the lender.
Other restrictions. Each bank, when concluding a loan agreement, can specify its own conditions. For example, if you want to go on a long trip, you will need to notify your financial institution.

How to get a statement of no encumbrance

An extract from the Unified State Register of Encumbrances can be obtained in paper and electronic form. These options have the same legal force. The paper one is certified by the seal and signature of Rosreestr, and the electronic one is certified by its digital signature. The court, bank and government agencies will accept any format.

Leave an online request in the USRN.Register service to receive a certificate. This method is the simplest and most cost-effective. Indicate the address or cadastral number of the property in a special field and pay 200 rubles for a statement of characteristics and rights. If, in addition to information about encumbrances, you need a complete history of the owners, order a full statement for 350 rubles.

Within 6 hours you will receive a pdf file by email, certified by the digital signature of Rosreestr. The extract is official and certified by the digital signature of Rosreestr - it will be accepted by banks, courts and government agencies.

If you learned from the first certificate that the apartment has restrictions, negotiate with the owner to get rid of them. But do not forget to control the result by checking the removal of the encumbrance in the Unified State Register of Real Estate. An extract on the removal of the encumbrance can be obtained in the same way.

Check the apartment for encumbrances right now!