How to check an apartment before buying on the secondary market?

If you want to ensure a smooth and trouble-free purchase of your dream apartment, it's crucial to approach the process with care and preparation. 

Checking the property and its owner before buying can help you avoid deal-breaking surprises, such as fraudulent schemes or hidden issues, that can cost you a lot of money.

Today, we're going to discuss the risks involved in purchasing real estate on the secondary market - where the property is sold by a private owner rather than a developer. This can be a tricky process since the property may have changed hands several times before, and its history could contain unpleasant surprises that are hard to detect without proper guidance.

To help you navigate this process, we'll go over the types of checks that we believe are essential when buying a second-hand property. We will think about your risks in advance. If the purchase of real estate will be unprofitable or risky for you, we will honestly say so. All types of real estate. All regions of Ukraine. We work with both individuals and legal entities. There is a solution to your problem, and we know it.

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Verifying Property Ownership in Ukraine

To ensure that the property in Ukraine is legally owned by the seller, we need to obtain the original documents that establish their legal right to the property. These documents may include a purchase agreement, gift agreement, exchange agreement, inheritance certificate, property ownership certificate, court decision, or privatization document. 

It's essential to verify that the information in the legal document matches the data in the owner's passport and tax registration number. Even a small mistake in spelling or registration number can prevent the notary from completing the purchase agreement. 

You should also check the age of the parties involved when the ownership right was obtained. If minors were involved, we need to ensure that the guardianship and trusteeship authorities gave their consent.

Finally, you need to verify the authenticity of the notarial document and ensure that it is registered correctly in accordance with the notarial act for which it was used. 

There have been cases where a notarial form used for the sale of a private house was registered in the notary form registry as a form for the transfer of movable property, such as a car. The notary who made this mistake acknowledged the error and corrected it, confirming that the form was indeed used for the sale of the private house. The transaction was completed, but it caused some stress for the parties involved. 

If the seller inherited the apartment, it's important to check the date of the certificate of inheritance. If it was issued recently, other heirs may go to court to have the deadline for accepting the inheritance reinstated. In this case, the transaction will be deemed invalid.

It's also important to check the date of the court decision if it's a document that establishes the right to the apartment. Court proceedings can be ongoing and at the appeal or cassation stage. To check this information and the date when the court decision becomes legally binding, you can access the Unified State Register of Court Decisions.

According to the current legislation, ownership of real estate arises after it is registered. To check the registration of ownership of a flat, you can obtain an extract from the electronic state register if the flat was obtained (purchased) after 2013, or an information certificate from the Bureau of Technical Inventory. 

The legislation does not require all real estate owners who owned property prior to the introduction of the electronic registry (before 2013) to register their rights in the new registry. 

What should raise a red flag: property documents were issued before 2013, but there is a record in the electronic register after 2013. For instance, there was a case where the ownership of an apartment was registered in the electronic register in 2018 based on a sales contract from 2010. Upon analyzing the original contract, which was issued on a special notarial form with a wet stamp and notary signature, and communicating with the notary, it was found that the registration number and date indicated in the contract corresponded to a completely different contract between entirely different parties in the notary's registry. 

Upon discovering this, the information was passed on to law enforcement agencies, and a criminal case was initiated. As a result, the potential buyer of this apartment was able to avoid future troubles and keep their money safe.     

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Checking for any liens, restrictions, or mortgages on an apartment

To check this information, you can obtain an extract from the state register of real estate rights. You can use this method to verify the following: 

• For apartments where ownership rights were obtained after 2013 and are registered in the electronic register (the extract will only show information about the apartment and its owner if there are no encumbrances).
• For apartments owned before 2013 (the extract will be empty if there are no encumbrances on the apartment).

If there are any encumbrances on the apartment, the extract will show when, by whom, and on what basis the lien, restriction, or mortgage was placed on the apartment.

Verifying registered individuals in an apartment

The seller is required to provide the notary with a certificate of individuals registered in the apartment before the transaction. You can also verify this information by accessing the demographic registry. 

If there are minors or individuals with limited capacity registered in the apartment, the sale transaction can only be conducted with the consent of guardianship authorities. 

We recommend purchasing a "clean" apartment, without any individuals registered in it, even if they are of legal age. 

Current legislation provides for the possibility of removing individuals from registration through registration authorities, who are no longer owners of the apartment or relatives of the apartment owners. However, in practice, the registration service does not want to take responsibility and refuses to remove individuals from registration on formal grounds. As a result, a legal dispute falls on the shoulders of the buyer.

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Verifying the absence of arrears for utility services when buying an apartment

When buying a property, it's important to ensure that there are no outstanding debts for utilities, such as electricity, water, gas, and heating. You should request documentation from the seller confirming that they have paid all outstanding bills and provide the current meter readings as of the date of issuing such certificates. 

Yes, according to legal practice, debts for utility services should be paid by the previous consumer, and the responsibility of the new consumer (owner) begins from the moment of purchasing the apartment. 

However, without an official record of meter readings at the time of purchase, it is extremely difficult to determine the moment when the responsibility of the new consumer begins. 

Additionally, the entire process of proving to the utility services which debts the previous owner must pay falls directly on the shoulders of the new owner, and often goes to court. 

Verifying a real estate seller in Ukraine

It’s essential to check the authenticity of the seller's passport and tax identification number to ensure they haven't been lost or stolen.

You should also check the seller's name against the list of debtors. If they have any outstanding debts, the transaction cannot proceed.

Additionally, we search for the seller in the database of unresolved legal disputes related to the property. In the past, there have been cases where legal disputes were ongoing, and the property in question was subject to dispute. If the transaction had gone ahead, and the seller ultimately lost the dispute, the transaction would have been invalidated.

We check the seller in the register of enforcement proceedings. There may be a situation where an enforcement proceeding has been opened as part of the enforcement of a court decision that has no direct relation to the apartment. During negotiations and the preparation of documents for the transaction, an enforcement officer may impose a lien on the apartment, and the transaction will not take place 

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Checking the technical condition of the apartment and its compliance with state norms and standards

We check if the technical passport of the apartment matches its actual layout. 

If the apartment has been significantly modified/reconstructed/replanned with intervention in load-bearing structures of the building, relocation of wet points, and the seller cannot provide permission documents for the work done, then you should be wary. Living in such an apartment is dangerous. 

Moreover, in the case of further sale of an illegally re-planned/reconstructed apartment, all responsibility for its technical condition and lack of permit documentation will fall on you.

Additional property checks in the secondary market

In addition to the aforementioned checks, we recommend conducting the following: 

• Examining the ownership history of the property and any encumbrances (prohibitions, arrests, mortgages) placed on it. This type of check allows you to understand the full history of the property, including who owned it, the basis of their ownership, and when and by whom any prohibitions, arrests, or mortgages were placed or lifted. You may even be able to obtain ownership documents for previous owners.
• Checking the seller for involvement in legal entities and their influence on them, as well as verifying the presence of other real estate, vehicles, affiliation with public figures, notaries, lawyers, judges, terrorists, etc. This will help you fully evaluate the seller and the risks associated with purchasing the property.
• Checking if the seller is in a registered marriage, and if so, obtaining the spouse's consent to the sale of the property in a timely manner.

It is possible to check an apartment yourself, and a notary will verify some of the information directly before certifying the agreement. Additionally, a real estate agent will likely accompany the transaction. However, the notary only checks facts that may prevent the deal from being completed at the time of certification and doesn't go deep into the details. On the other hand, a real estate agent may not be knowledgeable about where to look and could miss a crucial detail that may cause you trouble later on. 

Therefore, we recommend entrusting the apartment's verification before purchasing it to lawyers. They will analyze all the documents provided for authenticity and compliance with the current legislation. If necessary, they will obtain missing documents, check all the nuances related to the apartment's purchase, and provide you with their reasoned opinion. You can then make the right decision based on their advice.   

Our company offers not only a comprehensive real estate check on both the primary and secondary markets, but also full support throughout the property acquisition process.

You can find the cost of our lawyer's services for property verification here or contact our specialists to create a personalized service package.

Don't risk your money and time, purchase real estate safely with our help.

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