The war in Ukraine caused many citizens to move to safer places. The Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine provided data according to which 4.6 million people in Ukraine have the status of IDPs, and this number, unfortunately, is constantly increasing. At the same time, some of the IDPs will not be able to return home for a long time, because their homes are under occupation, and others have nowhere to return at all, because not only individual houses have been destroyed in the country, but also entire villages and cities have been wiped from the face of the earth. That is why for a significant number of such citizens, the issue of purchasing a new home is extremely urgent. So, even in war conditions, the housing market in Ukraine is actively developing, especially in some regions.
Lawyers of the “Repeshko and Partners” Bar Association commented on the current legislation and provided advice on how to properly prepare for a real estate transaction, what to pay attention to when concluding contracts, and what steps will help protect your interests.
Buying or selling a home is a responsible step that can hide many legal risks. Incorrectly executed documents, hidden defects of the object or outstanding obligations of the previous owner can become a source of serious problems for the buyer or seller. To avoid unpleasant situations, it is important to follow certain rules and take into account all the nuances that will help minimize risks.
When it comes to real estate, the first thing that comes to mind is wow, there are realtors! They will do everything and check everything, and I will only transfer or receive funds. The main thing to remember is that in our country, the activities of realtors (they are real estate agents) are not regulated in any way and are not regulated at the legislative level. Everyone who has free time, a desire to change jobs or earn a lot of money goes to realtors. A realtor can be yesterday’s teacher, cashier, hairdresser or driver. Entrusting his fate to a real estate agent, a citizen hopes that such a person is a guarantor of the correctness and “purity” of the transaction and is responsible for ensuring that there are no complications in the future. We don’t want to disappoint you, but the realtor is never responsible for anything! If you have any problems after concluding a real estate agreement, then these will be exclusively your personal problems. You will not achieve anything from the agent and you will not be able to find him guilty of anything, as well as collect any compensation.
There have been situations when we were approached by realtors who wanted to purchase real estate for themselves and did so in such a way that they caused great harm to themselves. What can we say about the qualifications of such persons and helping others, especially for crazy money. Yes, according to the current legislation, there is no deposit on the receipt that existed before. Now the funds deposited as a deposit will be considered only as if they were executed in the form of a preliminary contract. The fact is that the preliminary contract must be drawn up in the same form as the main one, i.e. notarized. Only in this case, the amount paid for the real estate as a deposit will be considered a deposit, and may be charged in double amount. Funds transferred by a simple receipt are an advance payment, in which case they are returned exactly in the amount in which they were received. In this story, the realtor gave one deposit just for the receipt, moved into the house, started to clean and repair it, then gave several more amounts of deposits for the receipts, in total somewhere around five thousand US dollars. After that, real estate prices skyrocketed, and the owners of the house said that they would return only the five thousand US dollars, and not ten thousand, which was the case with the deposit. Unfortunately, they were right, because there was no deposit – there was an advance payment, because the relationship was not properly formalized, as required by law.
Regarding the payment of services for such work, it is usually a percentage of the value of the real estate – up to 5%, it depends on the value of the real estate, the more expensive it is, the lower the percentage. There are cities where the same real estate object is sold by all realtors of the city, there are objects that are sold by only one realtor. In any case, if you want to buy real estate with minimal costs, look for offers directly from the owner or look for the owner’s contacts. Usually, an ad from the owner for the sale of real estate is copied by all realtors and offered on their own behalf, so in this case no one is bound by any agreement and in the event that you came to see the apartment with an agent and then found the owner’s contacts, then the agent you are not guilty of anything.
You should not expect the selection of the best real estate option from the agent. Here, the rule: “If you want to do it well, do it yourself!” is quite appropriate. After all, in this case, your interests do not coincide with the interests of the agent. You want to buy the best quality real estate for the lowest price, and the realtor wants to sell you something more expensive faster, because this depends on his percentage of the deal and the time spent on you.
Of course, we don’t want to row all realtors into a heap. There are real qualified professionals and experts in their field in the real estate market, but this is more the exception than the rule. A real court case where a woman decided to buy an apartment in a big city is quite telling about how none of the agents guarantees anything. The price of the transaction was 1-2 thousand dollars less than the average, but the seller, an elderly person, was in a hurry to sell the apartment, because she was moving to live with her grandchildren in another city. The notary was present at the signing of the contract: a realtor from the seller’s side (the grandmother), two realtors from the buyer’s side (one of whom was the director of a real estate agency).
A year after the conclusion of the agreement, the buyer received a summons to the court regarding the case, according to which the apartment purchase agreement was declared invalid by a third party. As it turned out later, when studying all the documents, the owner of the apartment died in the hospital in March. She had no close relatives and people who were not clean on their hands found out about it. While the owner of the apartment was lying in the morgue, the apartment was sold on the basis of a forged passport (the passport was probably original, a photo card was pasted over). The notary checked the documents and did not notice anything, because the forged passport was of the highest quality. A couple of days after the sale of the apartments, one man took the owner’s body from the morgue, and the burial was carried out by another. A few months later, a distant relative, who could legally inherit the property, found out about the death of the owner of the apartment and filed a lawsuit. In this situation, the new owner of the apartment was saved by the fact that the relative could not prove the family relationship, no matter how hard he tried (the documents were missing), and the police (where the corresponding statement was also written) did not actively do anything about the case, in fact, they stood still. As we remember, three realtors were present at the transaction.
In general, in a real estate sale agreement, it is important for the seller to receive unadulterated funds, and for the buyer – legally “clean” and problem-free real estate. If the issue of funds is solved simply – for a fee, a teller in a bank or in a currency exchange can check banknotes and identify counterfeit ones, but with the real estate itself, everything is much more complicated.
The main person in the agreement who checks everything is the notary. Realtors mainly rely on him when they say that they will inspect the property. It is the notary who checks:
- the identity of the seller and checks whether the identity documents are legally valid;
- the right to establish documents for real estate (whether the backgrounds are correctly drawn up, whether they are drawn up for the real estate seller);
- are there any nuances when concluding a contract (for example, when selling a share in real estate, the seller must first offer in writing for the same amount to purchase his share, not to other co-owners of movable property, but only later, as the latter did not want to exercise their right, real estate can be sold to a third party;
- presence or absence of real estate encumbrances according to state registers (arrest, mortgage, etc.);
- other aspects of the agreement (observance of children’s rights – availability of a decision of the body for children’s affairs, registration of persons at the real estate address, etc.).
However, even a notary does not need to be relied on one hundred percent. On site judicial authorities – it is possible to check by last name, first name and patronymic of the owner of the real estate in recent years whether there have been court cases in relation to this real estate and, if so, what their nature was (one case of debt collection for communal services, a completely different case – invalidation of title documents of the real estate owner). It is necessary to carefully study if such court cases have taken place, in connection with what, when and make a decision for yourself – whether this real estate is worth such risks or not.
As a general rule, the older the real estate title document, the better. Real estate that was purchased yesterday and sold today raises many questions. Of course, you can find a thousand and one explanations for why this happens, but if there is a problem, then no one will tell you the truth. One of these problems, for example, can be dampness in the home and, as a consequence, fungus in the home. Builders note that such a scourge is almost never completely removed, because it eats deep into the concrete. Therefore, a fresh repair (if it is not a new building) should also prompt certain reflections. You can ask to tear off a little wallpaper in the wall somewhere in the corner. The main thing is to inspect the property in good lighting.
The most valuable source of information about real estate is the neighbors. This is almost the only case when their presence is a great happiness. After all, they can tell everything about the real estate they are selling: who was born, baptized, married, gave birth and died there when. About the fact that today only one son accepted the inheritance and drew up the documents, and there is another one who is not mentioned anywhere in the documents, about the fact that the daughter-in-law with the child was forcibly evicted from the apartment and told that she is not here for anything has the right, and then she was quietly deregistered through the court. So, it is possible to get a lot of different information. There will be something to analyze.
It would be very good to receive information about who exactly has been registered in the house or apartment for at least the last three years. This information will depend on whether someone can want something from the owner of real estate.
It is necessary to obtain certificates from the owner of the property that there are no debts for utilities on the property. This is almost the only point that realtors always do and do well – run around and collect these references.
Should I buy real estate if the seller is absent, but there is a person with a power of attorney from him? Legally, yes, it is possible and should be. But practical advice is not needed, especially in this time of war. The power of attorney is canceled with the person’s death, but it does not happen at the same time – minute by minute. Today you can sell real estate on behalf of the owner who died abroad yesterday. You will find out about it already when the heirs file a lawsuit against you.
The cost of signing the real estate purchase agreement itself is:
- personal income tax (abbreviated as “PIT”) – 5%. It may or may not be – it depends on many factors;
- military levy – 1.5%;
- state duty – 1%;
- contribution to the Pension Fund – 1%;
- notary services are by agreement, and the cost of the service is determined by the notary. At a public notary, the registration fee will be lower;
- payment for certificates and extracts from relevant state registers;
The specified costs are distributed as follows:
- Personal income tax, military duty, state duty usually pays seller,
- buyer – collection to the Pension Fund, notary services.
The value of residential real estate is not subject to tax, if during the year a person makes only one purchase and sale agreement of residential real estate, which he has owned for more than three years. Then the seller and the buyer pay only the state duty (1%) and the fee to the Pension Fund (1%).
If a person inherited a real estate object, the condition regarding the possession of the property for more than three years does not apply in this case, and the property can be safely sold immediately.
The distribution of costs in this way is not mandatory, the parties can agree on another variant of the distribution of costs.
According to the legislation, there are benefits for the payment of state duty in the amount of 1% (Article 4 of the Decree of the CMU “On State Duty”). Yes, the following are exempt from paying this tax:
- victims of the Chernobyl disaster,
- invalids of war and families of soldiers,
- disabled people of groups 1 and 2.
But there is a nuance – if one party is exempt, then the notary will demand the payment of such tax from the other party to the agreement, that is, full exemption is possible only when both parties to the agreement belong to these categories.
The following persons are exempt from paying the state tax in the amount of 1% of the total value of real estate paid to the Pension Fund:
- persons entering into an agreement for the first time;
- persons who are on the apartment register.
We note that according to the requirements of the law, all transactions worth more than UAH 50,000 must be carried out only in cashless form. It is regulated by Resolution No. 148 of the National Bank of Ukraine (NBU) “On approval of the Regulation on conducting cash operations in the national currency in Ukraine“. Settlements must be made by transferring funds from an account issued to an individual – the buyer to another account issued to an individual – the seller. However, just here agents can help bypass the specified point, but not always. It is better to ask the notary who will certify the transaction whether it is possible to execute it without visiting the bank. By the way, the notary is chosen by the parties by mutual agreement.
