Key issues for a real estate buyer

When acquiring real estate, a buyer should be clear about the purpose for which the property will be used. If he intends to use the property to set up a business, he should take account of a number of provisions set forth in the applicable legislation.

Residential or Non-Residential Premises?

A buyer is well advised to find out whether the premises are residential or not. It should be noted that, in accordance with applicable legislation, a private unitary enterprise can be located on residential premises (a flat or a house) belonging to an individual who is actually the owner of the unitary enterprise in question. However, the enterprise owner should secure the consent of all adult family members.

To use residential premises for manufacturing or the provision of services, these premises should be transferred into non-residential stock, in line with the procedure set forth in the applicable legislation.

If the premises are acquired to house a legal entity which is not a private unitary enterprise, they should be transferred into non-residential stock. Commercial or non-profit entities (except for unitary enterprises run by individual citizens) cannot be set up in residential premises without a permit issued by the local authority; neither new nor re-organized economic entities can gain state registration without such a permit (nor can changes or additions be made to foundation documents or registration certificates). Accordingly, buyers should bear in mind that non-residential premises will be significantly more expensive than residential housing stock.

Any third parties?

A real estate buyer should find out if a third party holds any rights to the property by approaching the Agency for State Registration and Cadastre and the housing maintenance authority.

In accordance with the Law On State Registration of Real Estate, Real Estate Titles and Transactions, national and territorial state registration bodies are obliged to inform individuals about incumbencies levied on any real estate object. This information is provided as an excerpt from the registration logbook.

The local housing maintenance authority can provide a buyer with information on individuals either registered or residing on the purchased premises. The Civil Code of the Republic of Belarus lists those who are entitled to use the premises after its sale and their rights. A buyer can thereby demand that a seller provide a document from the local housing maintenance authority naming the individuals residing on the property. The buyer should include these individuals in the sale/purchase contract.

The contract for purchase or sale of real estate must be made in writing and signed by all involved parties.

Who enjoys the status of a real estate owner?

Only the owner has the right to dispose of property. Buyers should ascertain that the seller is indeed the property owner by asking to see a registration certificate issued by the Agency for State Registration and Cadastre and which should be in the possession of the property owner.
The owner can issue power of attorney to another party, authorizing disposal of the property. This power of attorney should be notarized and set forth the authorized person's remit to conclude a sales/purchase contract for the real estate.

In cases when a real estate object is co-owned by several individuals, these individuals should act as sellers. If a seller is an individual, the buyer should find out if the seller has a spouse, since any property acquired in the course of their marriage is jointly owned. This rule applies even if only one spouse is listed as the property owner. Both spouses must agree to the sale of the property in question.

Who has the right of first refusal?

The applicable legislation sets forth the right of first refusal for certain individuals. Specifically, Article 253 of the Civil Code states that co-owners have the right of first refusal to buy shares in the property held by other owners. Part 6 of Article 36 of the Law of the Republic of Belarus On Local Governance and Self-Governance says that the Councils and executive committees and local administrations authorized by these Councils have the right of first refusal for public buildings, structures and other objects located under their jurisdiction; they may seek to buy properties for local needs. Accordingly, buyers should secure a document confirming that the above-mentioned parties have relinquished their right of first refusal and submit it to the state agency tasked with the registration of real estate, real estate titles and transactions. This should ensure their registration as a buyer.

When does the property title become valid?

The signing of a purchase/sale contract does not confer ownership of property since the transfer of title to real estate is subject to state registration. Only once this transfer has been duly registered, is the buyer declared the owner of the acquired real estate.

Documents which are considered grounds for the registration of a real estate transaction must be notarized or authenticated by a registrar. All signatures as well as the contract itself - must be notarized and forwarded to the Agency for State Registration and Cadastre for the registration of the transfer of title.

Delicate monetary issues ...

When it comes to purchasing real estate, one of the key issues is the transfer of funds. On the one hand, the seller is wary of losing his property and being cheated of his money while the buyer is afraid of parting with his money without receiving ownership of the real estate. If legal entities are involved in the transaction, a wire transfer can be used as a means of payment, which allows a date to be fixed for money transferral.
Individual citizens can use the following scheme. They can conclude a preliminary contract setting forth their intent to sell and acquire real estate. Both preliminary and final contracts share the same format. The preliminary contract states that the parties must sign a final contract following the conditions set out in the preliminary contract. The preliminary contract can include tools to enforce the execution of liabilities assumed by the parties. These tools are listed in Article 23 of the Civil Code. A buyer is often required to place a deposit. In accordance with Article 351 of the Civil Code, a deposit is a sum of money which is transferred by one party to the other to secure contractual obligations. The agreement to pay a deposit must be made in writing. If the parties agree not to conclude the contract, the deposit must be returned. If the party which paid the deposit fails to abide by its contractual obligation, the deposit is not reimbursed. If the party which received the deposit does not comply with the terms, it must repay twice the sum of the deposit.

The contract should specify the period of time within which the buyer must transfer the money to the seller. This period can be relatively short if the parties have not agreed on a deferral. It is advisable to hand over the money in the presence of witnesses. The transfer of money should be documented by a receipt signed by the seller. The contract should also state that the real estate will be transferred to the buyers once an acceptance deed, which is an integral part of the contract, is signed by the parties. This is advantageous to the seller, as they can control the money transferral. A buyer can safeguard his interests by obliging a seller to sign an acceptance deed within a stipulated period of time following the transfer of money. The contract can envisage a fine if a seller refuses to sign an acceptance deed or include a penalty for late signing.

How can the purchase / sale process be facilitated?

The contract should specify which party pays for notarization, drafting of the contract, collection of documents and title registration. These processes are time consuming and laborious. Parties should decide who will be handling them.

Parties can farm out the preparation of required documents to a third party, such as a real estate agency. Ordinance N50/31, dated 1st September 2006, jointly adopted by the Ministry of Justice and the State Property Committee, lists the tasks which can be performed by realtors. A buyer or a seller can hire a realtor by concluding an appropriate contract. In addition to collecting and preparing documents, a real estate agency can also assist in the execution of the transaction and state registration.

What should be done at the final stage?

Once the purchase/sale contract has been concluded and notarized and the transfer deed has been signed, the buyer should turn to the Agency for State Registration and Cadastre. In accordance with Article 7 of the Civil Code, the title to the property is valid once state registration has been finalized. The final stage of the real estate transaction is state registration of the buyers title to the property and issuance of the registration certificate.

Registration is carried out by the local registration authority under whose jurisdiction the real estate object is located.
The Law On State Registration of Real Estate, Real Estate Titles and Transactions N 133-Ç, dated 22nd July 2002, states that registration must be completed within seven days from the date all documents were submitted and the registration fee was paid, unless the Law provides otherwise.

Written by Argument Law Firm