The question of whether the deposit is returned or not is of interest to everyone who is directly related to this concept. In this article we will try to give a detailed answer.
The deposit at the conclusion of any type of transaction (this may be the acquisition of real estate) is an optional, voluntary payment. It is considered a certain guarantee for the parties and shows the seriousness of their intentions. A potential buyer pays a deposit to the seller, which forms certain obligations and rights of the parties until the moment when the registration and signing of the contract occurs.
Advance, deposit and security are two different things.
Many are interested in what comes back - an advance or a deposit, often confusing these essentially different concepts. Although both involve a portion of the transaction amount, an advance and a deposit have different objectives. An advance involves the execution of exclusively a payment function, while the deposit also has a security. In this case, some features should be taken into account, namely:
- Under the payment function refers to the introduction of part of the payment of any type of property.
- The security function is understood as a guarantee of further transaction by both parties.
Another significant difference between the two concepts is that the advance can be taken back, and whether the deposit is returned cannot be accurately predicted. So that in the future there would be no problems with whether the deposit was made or an advance, it is better not to negotiate verbally, but to draw up all the conditions of cooperation in writing. By the way, the question of what is being returned - a deposit or a pledge, also cannot be answered unequivocally. As with advance payments, we are talking about conceptually different things.
Deposit and refund
Naturally, no matter what the subject of the contract (real estate, transport or other property), neither of the parties wants to waste time and risk taking a deal. Most often, a deposit is made so that the seller no longer searches for potential buyers and does not sell the property that the buyer likes to someone else.
If one of the parties has doubts that the transaction will take place, one should not rush to draw up an official document, as this obliges the parties to fulfill certain conditions. In addition, a signed document may enable fraudsters to make one of the parties lose their finances. How much the deposit is returned depends on the situation.
Under certain conditions, the deposit is reimbursed in double volume. Imagine a situation where both parties agreed, entered into a contract and the buyer made a deposit, but there is a new client who is ready to offer even more money. If the seller accepts the offer of the new buyer, he is obliged to return the full amount of the deposit, multiplied by two. This happens because the transaction was not completed due to the fault of the seller. If the transaction is terminated at the buyer's initiative, the seller has the full right not to return the deposit, leaving it to himself.
To know whether the deposit is being returned or not, it is necessary to take into account some nuances, which will be discussed below.
Return Features
When considering the issue of returning the deposit made, it is necessary to take into account that in specific cases certain features and conditions of this procedure are provided. Most often, the deposit is currently used in transactions with real estate. So in what cases is the deposit returned?
In theory, making a deposit should guarantee the buyer's intention to purchase the property, as well as the seller’s intention not to engage in any further searches for potential customers. In practice, however, things are somewhat different. The guarantee is rather conditional and entirely depends on the human factor.
The conditions for the return of the deposit in case of failure to fulfill obligations under the contract are regulated by the Civil Law. In this case, the law provides for the registration of a deposit not only with a full-fledged agreement, but also with a receipt with the relevant details. When issuing a receipt, you should carefully check all of the specified data, as any errors may become a reason for invalidating the paper.
Necessary conditions for a receipt
The following data shall be considered obligatory for indicating on the receipt:
- Name of the parties.
- Subject of the contract with its details.
- The amount of the deposit, including in words.
- Date of signing the contract (approximate).
- Signatures of the parties with decryption.
Auction law
It happens that the deposit is made, but the auction did not take place. Then the law will come to the rescue and will fully answer the question of whether the deposit is returned at the auction, Decree of the Government of the Russian Federation dated 12.01.2006 No. 8 (as amended on 05/02/2012) "On approval of the Rules for bidding (auction, tender) for obtaining a license for the provision of communication services "(as amended and additional, effective from 01.01.2013).
Preliminary agreement
The contract or receipt on making a deposit is considered an annex to the future main contract. In the preliminary agreement, in addition to data on the parties, the main conditions, the approximate date of signing, the amount of the future agreement and the method of making a deposit are prescribed. The conditions for the return of the deposited funds are also indicated there.
The preliminary contract also contains data on the value of the acquired transaction object. The law provides for a change in the value of the subject of the contract. The seller has the right to reduce or increase the price, however, this issue is resolved individually, and in some cases in the courtroom. The deposit is not returned in case of violation of the conditions specified in the agreement, or vice versa, there is a chance to take back all the money.
To enhance the reliability of the contract, you should contact a legally competent specialist for its preparation. If the conditions provided for the return of the deposit, and the seller, in violation of the contract, refuses to give the deposit, a lawsuit should be sent to the court. The trial can not only help to return the deposit, but also the interest that is accrued for the period of use of funds. This is due to the fact that the court qualifies this situation as a delay in repayment of the debt. How the law answers the question of whether the deposit is returned or not, we analyze below.
The legislative framework
381 of the Civil Law article describes in detail situations in which a deposit must be returned to the buyer or left to the seller. Summarizing everything prescribed in the law, we see that if the seller has violated the terms of the contract, the money should be returned in double volume. If the transaction did not take place due to the fault of the buyer, the deposit is not returned by the seller.
As in any law, this one has its own exceptions. Sometimes the situation can be ambiguous and contradictory. Previously, the judicial system came into conflict between the Supreme Court and the Arbitration Court. The latter did not recognize the deposit without the main contract, considering it an advance, which, if returned, was by no means double.
However, at the moment, the legislation is the same for all types of courts. And the relevant paragraphs were introduced into the Civil Law, which describe in detail the features of depositing and refunding money as a deposit. In order to finally understand whether a deposit is being returned or not, it is necessary to take into account some more points.
Reason for return
The grounds for returning or not returning the deposit, as follows from the foregoing, are relevant only in a few cases:
- The buyer changed the decision to purchase the object. As a rule, in this case, there is no question of returning the deposit, and this is confirmed by the Civil Code. However, exceptions are possible here. For example, if the transaction did not take place because the seller conducted fraudulent actions or the agreement turned out to be unclean from a legal point of view. In this case, the buyer has the right to return the deposit.
- The seller changed the decision and refused the transaction. Such a situation is subject to consideration in the event that a preliminary agreement was signed in which the amount of money deposited is specified and they are designated as a deposit. In this situation, when a transaction is canceled due to the seller’s fault, the deposit is returned in double size.
Otherwise, you can safely go to court, which is likely to take the side of the buyer.