Mortgage Loan – Buying an apartment with a burden on the mortgage

Often it happens that a person is dealing with a mortgage, not being a direct client of the bank. For example, when it implies buying an apartment with a burden on the mortgage.Mortgage is a type of burden that can be imposed on any real estate: residential or industrial. What is a burden? This imposes restrictions on the part of a third party on financial transactions with the object of encumbrance. In this article, the apartment will automatically be considered such an object. The apartment may be imposed several types of burdens. This article focuses on mortgage, but there are a few more options. For a complete understanding of the differences worth listing them all.

Mortgage is a type of burden that can be imposed on any real estate

Mortgage is a type of burden that can be imposed on any real estate

It is possible to find out whether the apartment is in burden, in a simple and reliable way – by collecting documents. The seller must provide the buyer with all the information about the apartment before selling it. Deliberately concealing the fact of encumbrance is an act that can be regarded as fraud.

The seller must submit a paper proving his ownership of the apartment (previous contract for the purchase of real estate, deed of gift, etc.), an extract from the house register, information on the number of persons registered and a mortgage agreement (if the apartment is under this type of encumbrance).

A copy of the contract can be obtained from the bank that issued the loan. But the main document in the matter of identifying any burden is an extract from the USRR (Unified State Register of Rights), which is received in any branch of the Federal Registration Service. Of course, that all operations with documents should be carried out under the supervision of a notary, who will be able to control the correctness of the acts and carry out documentation certification.

Positive and negative aspects of the deal with the encumbered property, the hidden danger

Positive and negative aspects of the deal with the encumbered property, the hidden danger

Everyone acknowledges that the purchase of an apartment with a mortgage burden has a higher degree of risk than the standard transaction, the object of which is a “clean” apartment. But the burdened housing would not have been bought if such a sale did not have its advantageous sides.

pros

Minuses

Prices for apartments with a burden are always lower. Usually, if the owner decides to sell the mortgage real estate, it means that he does not intend to extinguish the mortgage to the end and is seeking to get rid of the cargo as soon as possible.

The buyer will have to either repay the remaining part of the mortgage at a time or re-register the mortgage on himself. One way or another, the burden goes to the new owner. With all the resulting restrictions on the purchased apartment.

Participation is not only a notary, but the bank increases the transparency and reliability of the transaction. If you make all cash payments through a bank cell (which is highly recommended), then the risks are minimized.

The very process of such transactions is longer, energy consuming, requiring exceptional attentiveness and accuracy. Especially on the part of the buyer.

 

If the mortgage is reissued, then the new owner will have to endure the periodic supervision of the creditor bank (calls, sometimes a bank specialist may visit the apartment). Until the bank receives all its money back with the interest that it lent to the previous owner.

 

And it is quite unpleasant trick. The previous owner had other debts (for example, other banks). However, these legal entities could not arrest an apartment that was already pledged to another bank. But as soon as the new owner extinguishes the mortgage, the bailiffs by court decision can seize the housing. And the new owner will have to deal with debts, to which he generally has nothing to do. However, this is a reason to bring the previous owner to criminal liability for concealing the fact of debt. But all this is done through the courts. All this is very long and expensive, and the cost of the time of litigation falls on the shoulders of the new owner. To avoid this, you must carefully check the documentation for the apartment.

The procedure and details of buying an apartment with the burden, minimizing risks

A deal of this kind must begin with a preliminary contract between the buyer and the seller. At the same time, even before the conclusion of this agreement, the seller is obliged to notify the bank of his intentions, which has lent him money. The bottom line is that a financial institution may not give the green light to sell an apartment. Until a number of his requirements are fulfilled. Most often it is the need to repay the mortgage by the seller at least half. If the bank agrees, then the participants draw up a preliminary agreement.

This document must be certified by a notary. In the contract, in addition to the terms, amounts and documentation regarding the encumbrance, information from the passports and contact details of both parties should be reflected. So, the preliminary contract is concluded. On the collection of all necessary documents already mentioned above. What to do with the second half of the mortgage?

There are two options. The buyer will have to repay the debt at the same time in order to receive the apartment in his full ownership. Or the buyer can agree with the bank and reissue the seller’s mortgage on himself. However, the second option is not always realizable, since the bank may refuse to reissue.

The most common reason is that a new client will seem to the bank less solvent than the previous one. After all, all burdens will fall on the shoulders of the new owner of the apartment. Will he deal with them? When selling an apartment with a burden, many people often have a question: what, exactly, will the seller have with such a deal? The person who first took the housing in the mortgage, and now sells it, and has not reached full ownership? For simplicity, you can imagine such a scheme.

The bank gives the person money in debt for which the client buys residential property

The bank gives the person money in debt for which the client buys residential property

But at the start of the mortgage this property will immediately have to lay the same bank. That is, the client has the right to live in a new apartment, but has no right to conduct any financial operations with her without the permission of the creditor bank. Strictly speaking, the present owner is still a credit institution. However, as mortgages are repaid, property rights gradually flow from the bank to the client.

When the mortgage is paid by 50%, we can say that half of the apartment belongs to the borrower, and the other half to the bank. Although legally the bank retains its restrictive rights until the very end of the housing loan payment. When the buyer pays the second half of the mortgage (including interest), the bank receives all the money due to it and is eliminated. However, the seller has already paid the first half of the mortgage.

He also has the right to part of the money as a partial owner. That is why in the contract the price of an apartment with the burden is always significantly higher than the amount of the mortgage. This difference and the seller receives the borrower in compensation for those payments on the mortgage, which he managed to make.

Finally, the buyer must visit a branch of Rosreestr to fully check the apartment for any other encumbrances. These three points will help to buy an apartment with the burden as simple, clean and fast as possible. The best option is when the buyer purchases an apartment not directly from the seller, but from the lending bank. This will give one hundred percent guarantee of transparency of the transaction. In addition, the institution itself is interested to quickly deal with such a matter.

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