Buying a flat with debt – is it worth it?

Many people see buying their own property as an important goal in life. There are several routes to realising this dream. One of them is buying a flat with debt. It turns out that such a transaction is profitable and worth considering. It is worth remembering a few important tips, however.

• Buying a flat with debt – formalities
• Check the list of debtors
• A much lower price
• Necessary steps
• Buying a flat with debt from… a bank

Buying a flat with debt – formalities

When considering buying a flat with debt, we must remember to see to important formalities. First of all, it is our duty to study its land and mortgage register (księga wieczysta). It contains a great deal of important information. Knowing the register number, we should concentrate on its second, third and fourth sections. The first of those mentioned contains information about the owner of the property. It also describes the details of persons entitled to co-ownership. It is also our duty to look through information about attorneys entitled to dispose of the flat in the course of inheritance proceedings. The second of the sections listed contains notices concerning claims related to the property. There we will find entries on restrictions on disposing of it and on personal rights. This is where it is described whether the flat is subject to a right of lease, tenancy, repurchase or pre-emption. This is also where we should look for data relating to the right of lifetime maintenance or a claim for transfer of ownership. The last of the sections mentioned contains notices about any mortgage encumbrance.

READ ALSO – THE ELECTRONIC LAND AND MORTGAGE REGISTER

Check the list of debtors

When buying a flat with debt, we should check how large the debt is. This seems trivial, but often the debt generated by the previous user is only part of the problem. On top of this come charges for interest accrued as a result of the debt. These sometimes amount to as much as the debt itself. It is also worth checking whether the user of the flat has any obligations towards utility providers (water, electricity and gas) and the municipal office of the town where the property is located.

A much lower price

Is it worth buying a flat with debt? Generally – yes. Most often its price is tens of per cent lower than that of a property without encumbrances. The difference in price equals the amount of the debt itself. You must, however, read the sale contract carefully before signing it. It is worth checking who is burdened with the obligation to repay the debt. As a rule, it is the buyer of the flat.

Necessary steps

The ideal situation is when we learn about the legal status of the flat while reading the land and mortgage register. What should be done if the property does not have one? In that case you should ask the owner of the flat to set one up. This is particularly important when the flat is to be bought with a loan. When we want to find out about the debt on a cooperative flat, a relevant request should be addressed to the housing cooperative's management. There we will obtain information on the debt or any enforcement proceedings by a bailiff.

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Buying a flat with debt from… a bank

It often happens that a flat with debt is owned by a bank. This happens when the purchase of the property was to be made with the help of a loan. In such a situation it is the lender who must consent to the sale of the flat with the debt. The procedures in this case are not complicated. It is important that the notarial deed contains all the necessary provisions. To get rid of the mortgage entry in the land and mortgage register, you must first settle the amount owed to the bank. The mortgage entry can then be removed. The creditor, that is the bank, should issue a certificate of repayment of the mortgage debt. All that remains is to submit the relevant statement to the land and mortgage register division of the court.

Buying a flat encumbered with debt is a profitable move. When deciding on it, however, we must be careful. If you encounter any problems in this regard, you can ask for help from the specialists at the REMAX Gold estate agency, who offer professional advice.