Real Estate Guide 2016: Real estate purchase in Estonia / Part 2
Concluding a real estate pre-purchase agreement
A pre-purchase agreement is usually concluded when a reason restricting the immediate conclusion of the purchase agreement exists. It is contracted between the seller and the buyer in the presence of a notary, and it must be notarized in order to become a legally binding document.
A pre-purchase agreement shall set out all the terms and conditions of sale, including the amount of deposit and the price due upon the completion. A deposit of around 10-20% of the purchase price (less than the Reservation Fee) is payable upon concluding a pre-purchase agreement. In the case where the buyer or seller withdraws from the sale and a pre-purchase agreement has duly been concluded, financial compensation shall be mandatory.
Concluding a purchase agreement
A purchase agreement as the main contract for the purchase of an apartment is concluded between the seller and the buyer in the presence of a notary, and it must thereby be notarized to become effective. This contract contains all the relevant terms and conditions, and the rights and obligations of the contracting parties as agreed. Furthermore, the notary shall ensure that the transfer of ownership occurs duly and fully in accordance with the Estonian law.
Once approved by the notary, the documents are signed in the notary's office. As notary's role is merely neutral, the parties at this point shall be provided with advises in relation to the title, searches or burdens that their property may incur. The conclusion of the contract does not, however, equal to the transfer of the ownership over the apartment, which is effected through a respective entry in the Land Register.
Paying the state fee for an application in the Land Register
After the conclusion of a purchase agreement, the state fee must be paid at a commercial bank prior applying for further registration. After paying the state fee a notarized application is made to the Land Register to transfer the ownership of the property to the buyer in the Land Register Book. After ownership registration on Estonian Land Register Book the title of ownership is legally effective.
In Estonia, property deeds are not required and not in use in common practice.
To be continued.
If you want to read the articles first part, please click here.
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