Buying a flat with a debt to the housing cooperative

People looking for properties at an attractive price should consider flats burdened with unpaid charges. This may sound unbelievable, but experience shows that such flats are relatively easy to find and considerably cheaper. In addition, buying a flat with a debt to the housing cooperative is not nearly as complicated as it might seem. What should you remember when deciding to take this step? We have some tips.

• Buying a flat with a debt to the cooperative – formalities
• No land and mortgage register? What next?
• Let's check for arrears
• What if legal defects come to light?
• Financing the purchase

Buying a flat with a debt to the cooperative – formalities

When we plan to approach a housing cooperative and buy a flat burdened with the previous occupant's debt, we must remember what needs to be checked. First of all, we should look into ownership matters. For this purpose it is necessary to examine the land and mortgage register (księga wieczysta) of the flat that is in debt to the cooperative.

Section II contains entries on the ownership of the flat. It shows whether there are any other persons with rights to it. In section III we will find information on whether the flat is encumbered with the rights of third parties. What does this mean? We will find out whether the flat is subject to a tenancy, a lease or a right of pre-emption. Section IV contains information on mortgages. All of these entries are also available online at ekw.ms.gov.pl (a government service containing data from the Electronic Land and Mortgage Registers).

No land and mortgage register? What next?

It is good when we can read all the necessary information in the land and mortgage register, but in practice some cooperative flats do not have one. What should we do then? We have to ask the cooperative to issue a certificate stating how much is owed on the flat.

Let's check for arrears

We should also be sure to check whether the previous occupant met their obligations to the homeowners' association, the cooperative and the utility suppliers. On request, the cooperative should issue a certificate confirming any arrears (although this is sometimes a problem). It is also important to ask the municipal office for a certificate confirming that no one is registered as resident in the flat and that property tax has been paid.

READ ALSO – CHARACTERISTICS OF COOPERATIVE FLATS

What if legal defects come to light?

There are many formalities to take care of. What happens if, during this process or even some time later, hidden legal defects come to light in the flat we have acquired? If the seller of the property deliberately misled us, we need not worry. Under Polish law, we are entitled to a 5-year statutory warranty (rękojmia) covering legal defects. Thanks to it, in the event of formal and legal problems, we can withdraw from the agreement.

Financing the purchase

Assuming that we have successfully passed the formal and legal checks, we still have another problem to solve. This concerns the complex issue of financing the purchase. We must remember that the first party we pay money to for the flat is the housing cooperative. The debt is owed to the cooperative, and its claims must be satisfied first. Only then do we pay the owner. We must therefore first settle, for example, service charge arrears or arrears from unpaid utility bills. If the original owner owes money to a bank, we also pay a specified sum to the bank. The lender may well be entered in the land and mortgage register as a mortgage creditor. Once the debt is paid off, the entry on the encumbrance will be removed from the register. We must obtain a document from the bank confirming payment of the amount due.

It is worth buying a flat with a debt to the cooperative, because the price is attractive. You must, however, be prepared to fulfil the most important obligations towards various institutions. The specialists at the REMAX Gold estate agency will help you make sense of this intricate subject.

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