Deposit (zadatek) or advance payment (zaliczka) under a preliminary agreement to buy a property

Signing a preliminary agreement (umowa przedwstępna) when buying a property is an important step that often involves paying a certain sum of money. This amount may be classed as a "zadatek" (deposit) or a "zaliczka" (advance payment). Although the two terms are often used interchangeably, their legal and financial meaning is completely different. Understanding the differences between a "zadatek" and a "zaliczka" helps avoid misunderstandings and better protect the interests of the parties to the transaction. Read on to find out more about these concepts.

What is a "zadatek"?

A "zadatek" (deposit) is a form of security for the performance of a contract, and it is governed by Article 394 of the Civil Code. When the preliminary agreement is signed, it is handed to the other party as confirmation of readiness to conclude the contract. If the transaction goes through, the amount paid is deducted from the price of the property. However, a "zadatek" also has other important legal consequences where the contract is not performed.

A "zadatek" secures the interests of both parties to the transaction. If the buyer withdraws, the seller keeps the money paid. If, on the other hand, it is the seller who backs out of the contract, they must return to the buyer twice the amount of the "zadatek" received. Only the sum originally paid is returned when the contract is not performed for reasons beyond the parties' control, for example because of changes in the law or unforeseen circumstances.

A "zadatek" cannot always be kept by one of the parties. There are situations in which the sum paid must be returned:

1. The parties mutually agree to terminate the contract.
2. Non-performance of the contract results from negligence on both sides.
3. The contract is not carried out for reasons beyond the parties' control, for example because of force majeure.

In each of these situations, neither party bears sole responsibility for failing to meet its obligations, which results in the "zadatek" being returned.

What is a "zaliczka"?

A "zaliczka" (advance payment) is part of the price paid in advance towards performance of the contract, but its function differs from that of a "zadatek". It is not security for performance of the contract and is not strictly regulated in the Civil Code. This means that if the contract is not carried out, the "zaliczka" is returned, regardless of who was to blame for withdrawing from the contract.

Unlike a "zadatek", a "zaliczka" does not act as compensation. If one of the parties withdraws from the contract, the amount paid is simply returned. An exception may be where the performance has been partly carried out. In that case the "zaliczka" may cover part of the payment for the work done.

Summary

The choice between a "zadatek" and a "zaliczka" when concluding a preliminary agreement to buy a property is of key importance for protecting the interests of the parties. A "zadatek", as a form of security for the contract, protects both the buyer and the seller from unfair conduct by the other party, offering clear consequences if the contract is not kept. A "zaliczka", on the other hand, is only a prepayment and does not provide such security. For this reason, in agreements relating to the purchase of a property, a "zadatek" is the more practical solution. Are you looking for an estate agency in Katowice that will take care of all the formalities involved in buying a flat? Get in touch with me to benefit from professional advice and comprehensive service.