The terms "advance" or "deposit" are often heard when discussing transactions related to the purchase, sale or rental of real estate. These words are often given an erroneous meaning, perceiving them as synonyms. However, they have completely different concepts that characterize the financial relations of the agreed parties. An advance is an elementary prepayment, it can be partial or full, as well as sealed by written or oral agreement. However, if the transaction has not been completed, the advance payment must be returned to the payer.
Deposit: what is it and what does it eat with
Such a measure as making a deposit is provided to guarantee the fulfillment of obligations. According to the definition given by the Civil Code of the Russian Federation, the deposit imposes liability on all participants in financial relations. As a rule, they resort to this measure when concluding a contract for a large supply or in the process of transferring ownership of real estate.
The essence of the deposit is that the agreed amount of money is transferred to the disposal of one of the parties to the agreement on account of future receipts, subject to the transaction. If the agreement cannot be fulfilled due to the fault of the payer, the deposit is not returned and remains with the owner of the property or with the supplier as compensation for possible losses incurred. However, upon termination of the contract by the party that accepted the deposit, the amount must be returned to the payer in double size. The payer can receive his money back in the original amount without making a transaction only if there are objective reasons that do not depend on the will of the parties and do not allow them to fulfill the terms of the agreement.
Documenting
Regardless of the subject matter of the agreement, the payment of the amount of money, which is considered as a deposit, must be drawn up accordingly, exclusively in writing. To avoid misunderstandings, the parties are obliged to draw up and sign a document describing the procedure and amount of depositing funds.
The main distinguishing feature of such documents is the obligatory naming of the deposited funds as a deposit. Otherwise, in the event of a dispute, the court has the right to recognize the amount deposited in advance and to make judgments in the future based on this determination. Such cases are not uncommon due to errors made in the preparation of the document or incorrect use of the term “deposit”.
What is the “paperwork” of the deposit? This is the preparation of a contract or receipt confirming the transfer of material assets and the obligations of the parties in connection with the agreement between them. The deposit document acts as an addition to the written agreement between the parties, which indicates the subject of sale, circumstances surrounding the transaction, date of deposit of the remaining funds, as well as the conduct of the parties in case of force majeure situations.
Deposit: what is a deposit agreement
An agreement on depositing funds against the value of a future purchase can be executed as an independent document or appear as one of the clauses of a preliminary contract of sale. In any case, the deposit agreement (the sample can be downloaded from the network or provided by a notary) must have legal force.
This means that such a document is drawn up in accordance with a certain procedure and signed in the presence of a lawyer. Money can be transferred only after the contract is signed by all parties.
Does the receipt of deposit have legal force
The Civil Code does not say which document should confirm the transfer of the deposit, only the mandatory written execution of such an agreement is indicated. If participants in financial relations cannot or do not want to use a standard contract, they are entitled to write a receipt on their own. Properly drawn up, this type of document has legal force even without notarization and witness signatures. However, many practicing lawyers recommend taking care of the presence of a seal on the deposit receipt as an additional guarantee of fulfillment of obligations.
Basic information to be specified in the receipt
The law does not insist on what form the receipt on receipt of the deposit should have, but it lists the information that must be included in the document. Thus, in writing a free-form written agreement certifying the transfer of the deposit, it is necessary to provide for the following points:
- Title: title of the document.
- Indication of time and place of compilation.
- Designation of all parties to the agreement. It is mandatory to provide the full name, patronymic and surname of each of the participants, as well as a transcript of the concepts of “buyer” and “seller”.
- Description of the subject of the agreement: the numerical value of the transferred deposit amount, prescribed using numbers and words. It is also necessary to indicate obligations undertaken by the parties.
- The following section describes the conditions under which the parties undertake to carry out the agreed actions. The list of conditions includes the deadlines for the transaction, the buyer's obligation to pay a certain amount and the seller’s promise to transfer the agreed object or item to the buyer.
- Description of the actions of the parties in case of default. Based on the fact that the receipt confirms receipt of the deposit, compensation for expenses incurred due to non-compliance with the agreed obligations lies with the culprit: if the buyer refuses the transaction, he loses the deposit amount, and if the seller violates the terms of the transaction, he pays the buyer the double equivalent of the deposit.
Additional Information
After listing the basic information about the subject and terms of the agreement, it is necessary to describe the details of the participants, the time frame during which this agreement is valid, and the remaining additional conditions (if any).
Details include name, passport data, address of the buyer and seller.
In the last paragraph indicate the amount to be paid. The obligatory form of the buyer’s record is considered to be “Sent: signature, full name, full name”, also in relation to the seller (“Received: signature, name”).
What you should pay special attention to
To guarantee the honest fulfillment of all obligations when drawing up a written agreement on the transfer of the deposit, it should be indicated that it exists in two copies, as well as list the documents that give the seller the right to make a transaction.
The same applies to the data on the object of the agreement, its main characteristics and location.
The emphasis is on the fact that the transferred amount will be included in the cost of the acquired property. In addition, do not forget about the reservation regarding the change of price: the value of the object may change only after discussion and agreement of all interested parties.
Why keep your eyes open
As a rule, the use of a system including a prepayment or a deposit is used when making large transactions. This is true for operations with real estate, vehicles, as well as when purchasing lots of any goods. A variety of fraudulent transactions become frequent satellites of the process of transferring big money.
In order not to end up with empty pockets and a damaged reputation, you should be aware of the most common types of fraud, how to detect and circumvent them.
Things to watch out for when making a deposit
The most common cheating schemes include:
- Multiple receipt by the seller of funds for one object. As a rule, the buyer finds out, making a deposit, that the same action was carried out not only by him.
- The presence of interested parties, without whose consent the transaction cannot be completed (heirs, children, pensioners, co-owners).
- Promises of intermediaries related to the expedited and simplified execution of the necessary documentation. Having transferred the originals and the amount of the deposit, the seller remains without any guarantees.
- Getting a deposit for an apartment that does not have legal purity, that is, there are certain contentious issues regarding the seller’s rights to dispose of this property.
The complexity of such situations is that their resolution requires considerable time costs associated with lengthy litigation. Often, the buyer prefers to abandon claims to the seller, even while losing the money deposited and not hoping for a deposit back.
Law and order
In many ways, the preservation of equity and nerve cells depends on the prudence and prudence of a person. There are several universal tips that you can protect against the main types of fraud:
- Collaboration with large agencies. Their capabilities and reputation allow employees to conduct thorough checks and screen out dysfunctional customers.
- Independent study of certain aspects of the scope of the future transaction.
- Drawing up an official document: a deposit agreement (it is better to agree with a notary public on the sample and procedure for filling out)
- Indication in the contract or receipt only of the real amount of the paid deposit.
- Checking the seller’s documents, as well as the presence at the signing of the agreement of the agreement of all interested parties (co-owners, guardians, spouses).
- Checking the seller’s legal capacity in the relevant authorities.
- Increased caution when conducting financial transactions by proxy. You should check not only the identity of the owner of the object, but also the office that issued the document. It will also be useful to study the legislation on the rules for issuing and the procedure for terminating the power of attorney.
Information on all previous transactions that were made with real estate can be obtained at BTI upon request, and the current status of the seller is available at a neuropsychiatric or drug dispensary.
What is the cost savings
Taking up the study of the legislation and the rules for registering sales transactions, many buyers and sellers understand that it is much easier to enlist the support of professionals. This approach can significantly reduce the amount of work that should be done directly to the party to the agreement, since most of the responsibilities are assumed by the intermediary.
However, in the pursuit of saving money or time resources, you should not lose vigilance and show excessive credulity. Mindfulness and basic common sense help to avoid many troubles.