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Buying real estate in Russia

08.01.2022
Кигинько Дмитрий Валентинович
Author:
KIGINKO DMITRY
Генеральный директор
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In order to avoid unskilled actions when buying real estate and to reduce the risks of buying an unreliable real estate, it is necessary to follow the procedure of legal clearance and the purchase and sale of real estate clearly and step by step.

In this article, we will answer the following questions: how does a real estate transaction take place and how can the transaction and contract for the sale of real estate be executed without a realtor, and we will also analyze the nuances of the home buying procedure and the registration of the purchased property as a property.

Step by step instruction “Buying real estate on the secondary market”

Step 1: Selecting the property and verifying the legal compliance

This is the most important step in buying a property. By thoroughly inspecting the property, you reduce the risk of challenging the real estate transaction and claiming the property from your possession. Only after a thorough inspection of the property, it is advisable to proceed to the following points in these instructions.

Step 2: Choose: advance payment or deposit. Draw up preliminary agreements with the seller

When the buyer and seller agree on the basic terms of the transaction, it is necessary to formalize the preliminary agreements and then proceed to further actions on the transaction. For this purpose, the parties enter into a preliminary sales contract. The essence of the contract is that the parties are bound by the contract of sale and the contract must contain the essential terms of the future contract: the subject matter of the contract (individual characteristics of the real estate: address, cadastral number) and the price of the real estate. An important condition of the preliminary contract is the time limit. If it is not agreed by the parties, then by law, it is one year from the date of conclusion of the contract. If the buyer and the seller do not conclude the contract within the stipulated time and neither party offers to conclude the contract by submitting a written proposal to conclude the contract, the obligations under the preliminary contract cease. In the preliminary contract, the buyer and the seller may provide a deposit by the buyer as security for the performance of the obligation under the main contract.

It is important to be aware of the basic rules regarding the deposit:

  • If the contract is not concluded due to the fault of the buyer who has paid the deposit, the deposit will not be returned to him.
  • If the contract is not concluded due to the fault of the seller, the seller will return the double amount of the deposit.
  • If the contract can’t be concluded or if the parties agree to terminate the preliminary contract, the deposit will be returned.

A “simpler” option for securing preliminary agreements is to pay an advance. An advance payment is an amount of money to be paid against future payments. That is, the entire amount of the advance should be counted towards the payment of the value of the property under the contract. If, however, the contract of sale is not concluded, the advance payment must be fully refunded (regardless of whose fault the contract was not concluded).  

Step 3. Submission of real estate documents to the bank (if you need bank loan)

After checking the real estate documents, and most importantly, checking the documents which characterize the buyer-borrower, the bank decides whether to approve or disapprove the loan. If the loan is approved, the bank sends a proposal for the terms of the loan.

Step 4. Preparation of a contract for the sale of real estate

Prior to the transaction, the buyer requests from the seller the following documents:
  • An extract from a house register indicating the persons registered in the apartment or dwelling house for residential real estate;
  • A certificate of financial statements that confirms the absence of arrears in utility bills, and a certificate of no outstanding payments for capital repairs (the issue of debt repayment is also resolved before the transaction);
  • Certificates from the psycho-neurological and drug-addiction clinic confirming that the seller is not registered in these institutions;
  • Proof of compliance with the right of first refusal in case of joint ownership;
  • Notarial consent of a spouse to a transaction involving the alienation of joint property or a marriage contract establishing a different ownership regime for the spouses.

Before the transaction, the parties must agree on the terms of the contract, make changes and prepare the documents for signing.

What conditions must be included in the contract for the sale of real estate?
  • Description of the real estate object;
  • Grounds of acquisition of property rights by the seller;
  • Warranties of the seller regarding the absence of pledges, other encumbrances, limitations on property rights, absence of a contract of sale with any other person, etc.;
  • Price of the real estate, procedure and terms of payment, distribution of registration costs;
  • Procedure for transfer of the real estate by the delivery-acceptance act, transfer of risk of accidental loss;
  • The residential premises sale and purchase contract specifies the persons retaining the right of residence, the procedure of vacating the residential premises (or specifies that there are no registered persons as of the moment of signing the contract);
  • Responsibilities of the parties.

A contract for the sale of real estate must be concluded in writing and signed by both parties. The law does not require a notarial form for such a contract. 

The exceptions are, in particular, those subject to notarization:
  • Transactions on alienation of real estate belonging to a minor or a citizen who has been recognized as having limited legal capacity;
  • Transactions on alienation of shares in the right of common ownership of real estate, except for transactions on alienation by all participants of common ownership of their shares in one transaction;
  • Transactions involving alienation of residential real estate if the application and documents for registration of the transaction are submitted to the title registration authority by mail.
In addition, the parties have the right to notarize the transaction if they wish.

Step 5. Signing the contract for the sale of real estate, payment of real estate value

If the transaction is subject to notarization by law or by the wish of the parties, the draft of the contract for the sale should be approved by the notary, and the documents listed above should be submitted to him. After verifying the documents, the notary appoints the date of the transaction. The contract for the sale of real estate is signed by the notary, who certifies the signatures of the parties with his signature and seal. Next, the notary sends the documents for the registration of ownership. When documents are submitted for registration by a notary electronically, the timeframe for registration is reduced - the registration takes only 1 day. After the procedure of concluding a sale and purchase transaction at the notary, the parties to the transaction the following steps to pay the value of the property. If the transaction is not notarized, the payment and signing of the contract usually take place simultaneously.

Step 6. Registration of the transfer of title to real estate at Rosreestr

The registration of the transfer of the title under the contract for the sale requires

  • An application for registration of the transfer of title to the real estate
  • Contract for the sale and purchase of real estate
  • A notarized declaration of the seller's spouse about the seller's consent to the real estate transaction if the real estate is sold as a common joint property of spouses or a marriage contract
  • For residential real estate – an extract from the house register
  • Passport or other proof of identity of the applicant (applicants); power of attorney, if a representative submits the documents
  • In case the applicant is a legal entity, it is necessary to submit the foundation documents of the legal entity (with all amendments and additions)
  • A receipt for the payment of the state duty

For the state registration of title to real estate individuals pay the state duty in the amount of 2,000 rubles, legal entities - 22,000 rubles.

The term of the state registration of title should not exceed 7 business days from the date of receipt of the application and necessary documents by the Rosreestr (9 business days if the documents are submitted via the MFC (Multi-functional center). The term of the registration based on notarized documents is 3 business days; 1 business day - if the documents are submitted electronically; 5 business days - if the documents are submitted through the MFC with notarized documents.

The performed state registration is certified by an extract from the Unified State Register of Real Estate, and the Rosreestr provides copies of the contracts with a note on the performed registration.

Step 7. Finalization of mutual settlements (depending on the chosen method of payment), handover of keys and documents

After receiving the documents that confirm the registration of ownership rights in the Rosreestr, the parties complete the mutual settlements depending on the chosen method of payment. Payment for the property is an important step for both the buyer and the seller, so we recommend that you consult an experienced lawyer to select a convenient and safe method of payment and the necessary actions to sign the documents.

Buying real estate in Russia

In order to avoid unskilled actions when buying real estate and to reduce the risks of buying an unreliable real estate, it is necessary to follow the procedure of legal clearance and the purchase and sale of real estate clearly and step by step.

In this article, we will answer the following questions: how does a real estate transaction take place and how can the transaction and contract for the sale of real estate be executed without a realtor, and we will also analyze the nuances of the home buying procedure and the registration of the purchased property as a property.

Step by step instruction “Buying real estate on the secondary market”

Step 1: Selecting the property and verifying the legal compliance

This is the most important step in buying a property. By thoroughly inspecting the property, you reduce the risk of challenging the real estate transaction and claiming the property from your possession. Only after a thorough inspection of the property, it is advisable to proceed to the following points in these instructions.

Step 2: Choose: advance payment or deposit. Draw up preliminary agreements with the seller

When the buyer and seller agree on the basic terms of the transaction, it is necessary to formalize the preliminary agreements and then proceed to further actions on the transaction. For this purpose, the parties enter into a preliminary sales contract. The essence of the contract is that the parties are bound by the contract of sale and the contract must contain the essential terms of the future contract: the subject matter of the contract (individual characteristics of the real estate: address, cadastral number) and the price of the real estate. An important condition of the preliminary contract is the time limit. If it is not agreed by the parties, then by law, it is one year from the date of conclusion of the contract. If the buyer and the seller do not conclude the contract within the stipulated time and neither party offers to conclude the contract by submitting a written proposal to conclude the contract, the obligations under the preliminary contract cease. In the preliminary contract, the buyer and the seller may provide a deposit by the buyer as security for the performance of the obligation under the main contract.

It is important to be aware of the basic rules regarding the deposit:

  • If the contract is not concluded due to the fault of the buyer who has paid the deposit, the deposit will not be returned to him.
  • If the contract is not concluded due to the fault of the seller, the seller will return the double amount of the deposit.
  • If the contract can’t be concluded or if the parties agree to terminate the preliminary contract, the deposit will be returned.

A “simpler” option for securing preliminary agreements is to pay an advance. An advance payment is an amount of money to be paid against future payments. That is, the entire amount of the advance should be counted towards the payment of the value of the property under the contract. If, however, the contract of sale is not concluded, the advance payment must be fully refunded (regardless of whose fault the contract was not concluded).  

Step 3. Submission of real estate documents to the bank (if you need bank loan)

After checking the real estate documents, and most importantly, checking the documents which characterize the buyer-borrower, the bank decides whether to approve or disapprove the loan. If the loan is approved, the bank sends a proposal for the terms of the loan.

Step 4. Preparation of a contract for the sale of real estate

Prior to the transaction, the buyer requests from the seller the following documents:
  • An extract from a house register indicating the persons registered in the apartment or dwelling house for residential real estate;
  • A certificate of financial statements that confirms the absence of arrears in utility bills, and a certificate of no outstanding payments for capital repairs (the issue of debt repayment is also resolved before the transaction);
  • Certificates from the psycho-neurological and drug-addiction clinic confirming that the seller is not registered in these institutions;
  • Proof of compliance with the right of first refusal in case of joint ownership;
  • Notarial consent of a spouse to a transaction involving the alienation of joint property or a marriage contract establishing a different ownership regime for the spouses.

Before the transaction, the parties must agree on the terms of the contract, make changes and prepare the documents for signing.

What conditions must be included in the contract for the sale of real estate?
  • Description of the real estate object;
  • Grounds of acquisition of property rights by the seller;
  • Warranties of the seller regarding the absence of pledges, other encumbrances, limitations on property rights, absence of a contract of sale with any other person, etc.;
  • Price of the real estate, procedure and terms of payment, distribution of registration costs;
  • Procedure for transfer of the real estate by the delivery-acceptance act, transfer of risk of accidental loss;
  • The residential premises sale and purchase contract specifies the persons retaining the right of residence, the procedure of vacating the residential premises (or specifies that there are no registered persons as of the moment of signing the contract);
  • Responsibilities of the parties.

A contract for the sale of real estate must be concluded in writing and signed by both parties. The law does not require a notarial form for such a contract. 

The exceptions are, in particular, those subject to notarization:
  • Transactions on alienation of real estate belonging to a minor or a citizen who has been recognized as having limited legal capacity;
  • Transactions on alienation of shares in the right of common ownership of real estate, except for transactions on alienation by all participants of common ownership of their shares in one transaction;
  • Transactions involving alienation of residential real estate if the application and documents for registration of the transaction are submitted to the title registration authority by mail.
In addition, the parties have the right to notarize the transaction if they wish.

Step 5. Signing the contract for the sale of real estate, payment of real estate value

If the transaction is subject to notarization by law or by the wish of the parties, the draft of the contract for the sale should be approved by the notary, and the documents listed above should be submitted to him. After verifying the documents, the notary appoints the date of the transaction. The contract for the sale of real estate is signed by the notary, who certifies the signatures of the parties with his signature and seal. Next, the notary sends the documents for the registration of ownership. When documents are submitted for registration by a notary electronically, the timeframe for registration is reduced - the registration takes only 1 day. After the procedure of concluding a sale and purchase transaction at the notary, the parties to the transaction the following steps to pay the value of the property. If the transaction is not notarized, the payment and signing of the contract usually take place simultaneously.

Step 6. Registration of the transfer of title to real estate at Rosreestr

The registration of the transfer of the title under the contract for the sale requires

  • An application for registration of the transfer of title to the real estate
  • Contract for the sale and purchase of real estate
  • A notarized declaration of the seller's spouse about the seller's consent to the real estate transaction if the real estate is sold as a common joint property of spouses or a marriage contract
  • For residential real estate – an extract from the house register
  • Passport or other proof of identity of the applicant (applicants); power of attorney, if a representative submits the documents
  • In case the applicant is a legal entity, it is necessary to submit the foundation documents of the legal entity (with all amendments and additions)
  • A receipt for the payment of the state duty

For the state registration of title to real estate individuals pay the state duty in the amount of 2,000 rubles, legal entities - 22,000 rubles.

The term of the state registration of title should not exceed 7 business days from the date of receipt of the application and necessary documents by the Rosreestr (9 business days if the documents are submitted via the MFC (Multi-functional center). The term of the registration based on notarized documents is 3 business days; 1 business day - if the documents are submitted electronically; 5 business days - if the documents are submitted through the MFC with notarized documents.

The performed state registration is certified by an extract from the Unified State Register of Real Estate, and the Rosreestr provides copies of the contracts with a note on the performed registration.

Step 7. Finalization of mutual settlements (depending on the chosen method of payment), handover of keys and documents

After receiving the documents that confirm the registration of ownership rights in the Rosreestr, the parties complete the mutual settlements depending on the chosen method of payment. Payment for the property is an important step for both the buyer and the seller, so we recommend that you consult an experienced lawyer to select a convenient and safe method of payment and the necessary actions to sign the documents.

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Buying real estate in Russia
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