Legal subtleties of property rights when buying an apartment with a mortgage

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Ownership of a housing loan begins from the moment the loan agreement is signed and the property is registered with Rosreestr. This is the most profitable option for buyers compared to other methods of purchasing a home, for example, leasing. And in this case, the borrower is protected from unfair actions of the lender.

So you should avoid financial institutions that offer to issue a loan, but the time for transferring home ownership is postponed to the date of closing the loan, and not when all the paperwork is completed. Such schemes are unprofitable for the client, since it will be very difficult to prove something in court. As a result, you can lose not only your apartment, but also the money you paid for.

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Is the buyer the full owner if the property is purchased with a mortgage?

Is a home owned if it was purchased on credit? A mortgaged apartment is property, regardless of whether the loan is repaid or not.

The owner of an apartment purchased with a mortgage becomes the buyer who made the down payment and who signed the contract.

In addition to the right to own an apartment, the owner has responsibilities:

• keep your living space in proper order, do not allow independent redevelopment;
• pay utilities;
• pay property taxes annually.

When does ownership transfer?

When purchasing an apartment with a mortgage, it immediately becomes the property of the borrower after concluding the contract. This means that after signing the mortgage loan agreement, you can immediately begin to prepare documents and register with Rosreestr.

Only after state registration of real estate is ownership finally established and a document is issued confirming this fact. Of course, there is some nuance: until the entire loan is paid in full, an encumbrance will remain on this object.

Ownership will be subject to certain conditions:

1. Usually, all credit organizations prescribe a clause according to which a ban is imposed on registration in the apartment of anyone other than the owner himself. Permission is given for registration of family members, but no distant relatives (not to mention just friends) can be registered.
2. It is not allowed to exchange this apartment.
3. You cannot sell it (unless a situation arises that the borrower is unable to repay the loan, then the bank gives permission to sell, but this process is very difficult).
4. It is prohibited to rent out this property.
5. A mortgaged apartment cannot be given as a gift.
6. It is not possible to remodel the apartment; only renovations are allowed.

A number of restrictions for the borrower

It is clear that the Russian takes possession of the home, but he will not be able to dispose of it to his full potential. There are restrictions that you should know about in advance:

• Registration on square meters is most often allowed only to the payer; all other individuals must be approved through the bank.
• You cannot sell your home without the approval of the lender.
• It is not permitted to exchange or rent out the premises.

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• Carry out repairs, redevelopment and other activities that will entail changes in the assessed value of housing.

It is unlikely that the head of the department will want to sign an agreement for a major renovation of the premises, which will reduce the liquidity of the facility at first.

How to apply through the MFC?

In general, registering a mortgaged apartment as a property is not much different from the usual one, the only difference is the presence of an encumbrance.

Simultaneously with the registration of ownership rights, the registration of a mortgage is also carried out, as a result, in Rosreestr two rights will be recorded for one object (a mortgaged apartment): property and mortgage of the bank.

What documents should I provide?

The first step is to collect documents . You will need to prepare all title documents and some from the creditor bank:

1. Applications from both parties to the transaction (filled out and signed at the place where documents are submitted to the MFC).
2. Passports of all participants.
3. A concluded agreement between the seller and the buyer.
4. The seller must provide title and title documents for this apartment.
5. Technical documentation for housing.
6. Documents confirming the absence of arrears in payment of taxes and utilities, payment of state duties.
7. The mortgage agreement that was concluded with the bank, on its basis, the encumbrance on the apartment is registered.

Of course, this is a general package of documents. It is best to first check with the registrar about what other documents may be required. Depending on the specific situation, the list may be more extended.

In order to submit a set of documents for registration at the MFC, you do not need to register in advance; an electronic queue is used.

Payment of state duty

The state duty is 2 thousand rubles (Article 333.33 of the Tax Code of the Russian Federation) . It must be paid before the documents are submitted to the MFC. This can be done through Sberbank ATMs, through a terminal at the MFC, or through the State Services portal. The buyer pays the state fee.

Making an entry in the Unified State Register of Real Estate

A record of the transfer of ownership is entered into the Unified State Register of Real Estate simultaneously with a record of the presence of an encumbrance in the form of a pledge. An extract is issued containing detailed information about the new owner of the property.

Registration deadlines

According to the Federal Law “On State Registration of Real Estate” (No. 218-FZ dated July 13, 2015), specific deadlines are established for the preparation of documents. It takes 7 days to register a mortgaged apartment in the MFC, of ​​course, provided that a complete set of documents is submitted. The date of entering data into the Unified State Register of Real Estate will be considered the date of registration of the right to real estate (Clause 12 of Article 16 of Federal Law No. 218-FZ).

Remote services and services

VTB clients with the 1st and subsequent children born between 01/01/2018 and 12/31/2022, or with a disabled child born no later than 12/31/2022 (even if he is an only child) can reduce the lending rate to 5% through a conclusion additional agreement to the loan agreement1:

• If you previously received a mortgage under the Mortgage with state support program, but on the “old” conditions, or received a mortgage under the Ready Housing, Housing Under Construction and Refinancing programs.
• Meets the requirements of the state program.
• We took out personal and property insurance.

Required documents:

• Statement
• Identification document of the borrower and other persons who are the owners of the collateral, as well as guarantors (if any)
• SNILS of the borrower and other persons who are the owners of the collateral, as well as children
• Marriage certificate
• Certificate of change of name (if available)
• Documents confirming the birth of children and the citizenship of children: 1) birth certificate of children, 2) if the child’s birth certificate does not contain information about the child’s citizenship of the Russian Federation, one of the following documents is additionally provided: a foreign passport of the child - a citizen of the Russian Federation
• passport of a citizen of the Russian Federation of the parent, including a foreign one, which contains information about the child
• a child’s birth certificate, which contains information about: a) Russian citizenship of both parents or the only parent (regardless of the child’s place of birth); b) about the Russian Federation citizenship of one of the parents, if the other parent is stateless or declared missing, or if his location is unknown (regardless of the child’s place of birth); c) about the citizenship of the Russian Federation of one of the parents and the citizenship of a foreign state of the other parent (if the birth certificate was issued on the territory of the Russian Federation);
• a mark on the translation into Russian of a document issued by a competent authority of a foreign state to certify the act of registration of the birth of a child, affixed by the migration service, consulate
• a mark on the birth certificate issued by the authorized body of the Russian Federation, the migration service, the consulate
• insert to a document issued by a competent authority of a foreign state to certify the act of registration of the birth of a child, or to a birth certificate confirming Russian citizenship, issued in the prescribed manner before February 6, 2007.
• a certificate confirming the fact that the child has been classified as a “disabled child”, issued by the federal state institution of medical and social examination in a form approved by the authorized federal executive body (to confirm the category of “disabled child”).

The application review period is 30 calendar days upon provision of the specified package of documents.

To reduce the processing time for an application to 7 calendar days, you must provide:

• Loan agreement,
• Documents providing the basis for the emergence of ownership rights/rights of claim on the subject of pledge (Equity Participation Agreement/Agreement of Assignment of Rights of Claim/Purchase and Sale Agreement) with all amendments and additions.

The specified documents (scans/photos) must be sent in one letter

For cities included in:

• Southern and Northwestern Federal Districts
• Central Federal District
• Siberian and Far Eastern Federal Districts
• Volga and Ural Federal Districts

The subject of the letter must be indicated in the following format: city of loan issuance_full name of the borrower_date of birth. Scans of documents must be sent in good quality only in .pdf format. If it is not possible to send all the documents in one letter, you can send several letters; in the subject line of the letter you must indicate: city of loan issuance_full name of the borrower_date of birth_letter number. You will be notified of the receipt of documents via email.

Or you can contact the loan support office.

If additional information or time is needed to make a decision on the application, a bank employee will contact you and inform you about this.

The bank will send you an SMS about the decision made. If the decision is positive, you will need to come to the bank’s office to sign an additional agreement to the loan agreement.

Please note that when signing additional agreements to the loan agreement, you must provide the originals of the specified list of documents.

1The program is implemented in accordance with Decree of the Government of the Russian Federation dated December 30, 2017 No. 1711 “On approval of the Rules for the provision of subsidies from the federal budget to Russian credit organizations and the joint-stock company “Housing Mortgage Lending Agency” for compensation of lost income on issued (purchased) housing (mortgage) loans (loans) provided to citizens of the Russian Federation with children.”

Do banks allow rentals?

Banks have different attitudes towards the borrower’s desire to rent out an apartment purchased with a mortgage . As for the legislation, on the one hand, renting out an apartment for the purpose of generating income is allowed, but on the other hand (Article 209 of the Civil Code of the Russian Federation) it is impossible to violate the interests of third parties. The third party in this situation is the bank.

First of all, you need to get permission from the lender. Quite often banks refuse and this is explained by fears that further sales will be necessary (due to the borrower’s debts).

Possible concerns when selling an apartment:

1. As a result, you will receive an apartment that does not correspond at all to the presentation in which it was registered as collateral. After all, some tenants behave completely unceremoniously in their rented living space, spoiling something, breaking it, and causing significant damage. Accordingly, the cost of housing becomes lower.
2. In general, losing the collateral itself, that is, an apartment, for example, may burn down due to the fault of the tenants.

There is also a compelling argument for the ban - the mortgage loan was issued for the personal needs of citizens, and renting out an apartment is already a business. For entrepreneurs, loans are issued on different terms and with different interest rates.

Another part of the creditors is more loyal to this issue and gives their consent.

What to do with a facility under construction

A distinctive feature of a loan for an object under construction is the fact that the apartment becomes the property of the mortgage only after the completion of construction activities. This is required by Russian legislation, this is how bank procedures have been developed, but at the same time insurance for the investor’s financial risk appears. The benefit is that if the facility is never put into operation, the company will cover the costs of the money already paid.

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The bank client will have to pay higher interest rates at the foundation stage, compared to classic loans for the purchase of “secondary” housing. This approach attempts to compensate for the lack of collateral when lending an apartment in a new building. Although some financial organizations request additional security during the construction stage.

The procedure for registering ownership of a new home is similar to the process of registering an object on the secondary market; generally accepted norms of state registration of real estate apply everywhere.

4 banks that are happy to issue mortgage loans

You should first request a number of papers from the developer, which will allow you to obtain ownership of the purchased living space after the new building is put into operation.

The list included a technical passport for the construction, an additional act from the architectural and construction department of the municipality, permission to put the building into operation, title documents from Rosreestr indicating the postal address of the residential complex. It is impossible to obtain the right to an apartment until construction is completed.

How to rent out correctly?

• Obtaining permission from the bank - you need to contact the bank with a written application (free form), in which you provide convincing arguments in favor of your intentions, justifying that it is thanks to additional rental income that loan payments will be repaid on time.
• Obtaining permission from the insurance company - usually the bank obliges the borrower to notify the insurance company that insured the living space about its intentions to rent out the apartment to third parties.
• Conclusion of a lease agreement - after receiving all permissions, an agreement is concluded between the apartment owner and the tenant (usually for 11 months), a copy of which is provided to the bank.

To avoid troubles and not be left homeless, you must strictly comply with the terms of the loan agreement and be sure to notify the bank of your intentions and changed circumstances.

According to statistics, approximately 25% of mortgaged housing is purchased for investment purposes. That is, an apartment is bought and then rented out, and the loan is repaid with the money received.