Features of buying an apartment by assignment of rights
Buying an apartment by assignment is not uncommon. It is one of the ways to buy a home in a new building at a bargain price. Despite its simplicity and benefit, the assignment of an apartment has not only pluses, but also risks. What you need to know about assignment, what its advantages are, how to prepare documents and how much it costs, tell us below.
What is an assignment of an apartment
The sale of apartments in a building under construction can start already at the stage of the foundation pit. Many investors invest their money at this stage, as the prices of real estate are the most favorable. Before the house is commissioned, the purchased objects begin to be sold to make a profit.
When an investor, not a developer, sells a dwelling in a still unfinished new building, it is called an assignment sale. The seller assigns ownership of the future home. The reason for the sale can be more than just making a profit on the price difference between the purchase and resale. The seller may need money urgently or may have simply found a more interesting property option.
There are three parties involved in the procedure of assigning an apartment: not only the seller and the buyer, but also the developer, who strictly controls the entire process. In this case, the first investor (seller) can offer the object even cheaper than the construction company would do at the current stage of readiness of the new building.
The assignment agreement does not yet give the buyer the right to the apartment. The second investor is the party that will receive the real estate in the residential complex under construction in the future under the main contract signed between the investor and the developer.
What are the advantages of buying an apartment by assignment
It is also possible to buy an apartment at a bargain price directly from the builder. But you can not always get time to do it at the early stages of construction: low-cost objects are sold out very quickly, especially with reliable construction companies. Then it remains to buy housing by assignment. It is more expensive than at the stage of the foundation stage, but still very profitable.
What are the advantages of buying an apartment by assignment:
more favorable price than the construction company - the first investor can sell the object by 5-20% cheaper than the sales department of the developer;
The ability to move into a new house faster - apartments on the assignment of the most often sold in the LCD, which soon put into operation, that is, do not have to wait for several years to complete construction;
Interesting suggestions - apartments that buy at the stage of the foundation, most often have advantages such as the average floor, a beautiful view from the window, a good layout, that is to find an interesting option for the assignment is more realistic than directly from the developer at the end of construction;
lower risks of getting into long-term construction - the purchase of housing before the commissioning of the new building always carries less risk than buying at the initial stage.
When buying by assignment, the same advantage as when buying at the initial stage of construction is preserved - an attractive price. In this case, in the first case, other advantages are added, so those wishing to acquire an apartment on the primary market should consider this method of acquiring housing in a new building.
How dangerous it is to buy an apartment by assignment: what are the disadvantages and risks?
The assignment of an apartment has significant advantages, but it is wrong to consider only the pluses. This method of purchasing primary real estate also carries certain risks, of which it is important to be aware.
What are the disadvantages and risks of buying an object by assignment:
Paying 100% of the cost - when buying a home from a developer, you can often get an installment plan and pay it off in 1-2 years, while the purchase of the assignment generally involves 100% payment. In some cases, it is still possible to find an option with an installment plan, then the buyer simply continues to make payments instead of the first investor;
Additional payment - when executing an assignment agreement, some developers have a condition of paying a commission of 1-5% of the value of the residential property. This can offset the benefit of buying from an investor at a lower price than from a construction company;
Obligations - along with the rights the buyer can get and not very pleasant obligations, for example, to pay for registered investor mortgage, while its conditions to choose or change it will not be possible;
no possibility to make claims - the money for the property is transferred to the investor-seller, while disputes about the quality of housing should be resolved with the developer;
double sale - an assignment agreement is not entered in the registers, so there is a risk that an unscrupulous investor will enter into several identical agreements with different buyers. Risks are mitigated by the fact that the developer is also involved in the transaction;
delay in construction - although new buildings are almost always commissioned at the finishing stage of construction, there is still a risk that the process will stop or be delayed for a longer period of time;
Poor quality of housing - there is a risk that the primary investor decided to sell the apartment because of its poor quality or defects found, so it is important to check everything carefully.
Before deciding whether to buy primary real estate by assignment, it is necessary to weigh the pros and cons. If the advantages of buying a home in a particular new building are more compelling than the disadvantages and risks, then you can proceed to the arrangements and execution of the transaction.
You can reduce the risks of buying an apartment by assignment with the help of an experienced realtor. A specialist will advise on all issues, analyze the risks of the transaction with a particular seller, check the object, documents and construction company.
How an assignment apartment is made out
Before proceeding with an assignment purchase procedure, it is important to check a few things with the developer and the investor. The buyer should make sure that the construction company has the documents for the land plot and the construction permit. Also, the developer should adhere to the stated deadlines for the construction of the house and allow the resale of the rights to the residential property.
As for the investor, it is important to check that the seller has not violated the terms of the main contract concluded with the developer. If the conditions described above are met, it is a guarantee of the legality and safety of the transaction.
Buying an apartment under an assignment agreement consists of the following steps:
Obtaining permission from the construction company.
Verification of permits from the builder and the timing of construction of the house.
Analysis of the company for the absence of lawsuits.
Check the other facilities of the developer (whether there are no problematic construction).
Verification of the investor-seller.
Drawing up an assignment agreement specifying penalties or other special conditions.
Notary certification of the contract.
When all the stages are passed, the rights and obligations of the first investor are transferred to the buyer. After the new building is put into operation, the owner accepts the apartment by an acceptance certificate.
Important nuances in processing real estate by assignment agreement
The developer may authorize the assignment of the rights of claim to the property if the first investor has paid 100% of the value of the property. If the entire amount is not paid, the contract contains a condition under which the second purchaser pays the balance. It is therefore important to clarify with a representative of the construction company, under what conditions the developer will give permission to assign the contract. Some companies require the payment of a fine for the resale of the object.
When checking a new building for compliance with construction deadlines it is also worth making sure that the property is not pledged to the bank. Here you can go to a lawyer or a qualified realtor who will check whether the investor hid the fact of registration of the mortgage. If the seller did not disclose this, the transaction is terminated. If the buyer knows about the mortgage, then the bank is also involved in the transaction. Along with the right to the property, the buyer also takes over the obligation to pay the mortgage.
Only after a thorough check of the documents can you move on to the conclusion of the contract. For the safety and validity of the transaction, the document should be certified by a notary.
What documents should be required when buying an apartment by assignment
To execute the assignment contract, the buyer must have the original passport, identification code and consent of the spouse.
The primary investor, that is, the seller, must provide a more extensive package of documents:
passport and identification code;
Marriage certificate and consent of spouse or divorce certificate;
the investment agreement that was signed with the developer;
document confirming payment for the property (original), or receipts of payments;
the investor's consent to the transaction in writing;
the developer's consent to the assignment of the object.
When the transaction is executed, an assignment agreement is signed, which confirms the buyer's right of claim to the apartment in the new house. But this is not the only document that the new owner receives during the procedure.
The buyer must be given the following:
a contract of assignment of rights to the living area;
original copy of the main investment agreement;
The developer's written consent to the assignment (if not specified in the contract);
confirmation of settlements between the primary investor, the developer and the buyer.
It is important to get a complete package of documents to protect your rights from possible disputes with the seller or builder. The list of documents that the buyer receives may vary. It all depends on the type of transaction and its conditions.
How much does it cost to make an assignment of an apartment
The terms of assignment of primary real estate vary depending on the builder. In some cases, the buyer does not have to pay anything. The buyer and seller simply go to the developer and sign the necessary documents. If the assignment is free, the buyer should check to see if there are any other required fees for the procedure.
But it also happens that the construction company takes a commission on the assignment agreement. Their amount can vary from 1 to 5% of the value of the house. To find out the exact costs, you must read the contract carefully. The sales manager can also tell you how much it costs to execute the assignment of an apartment, but it is better to check everything in the document in person.
In addition to the costs of assignment, taxes for the seller and the buyer must not be forgotten. Whether and how much tax must be paid depends on the investment scheme and the seller's profit. If the assignment is made for a residential property purchased through the Construction Financing Fund, the buyer does not pay taxes.
If within the procedure of assignment the preliminary contract of purchase and sale of rights is used and re-registered, the buyer must pay 1% of the cost of housing to the Pension Fund of Ukraine. One must also pay for notary's services - from 4,000 UAH.
Who pays for the assignment of an apartment
The assignment fee of 1-5%, depending on the company, is usually paid by the new buyer. But the seller can also pay it if the parties agree in advance.
Conclusions
Buying real estate in a new building by assignment is a good way to become the owner of an almost finished apartment in a new house at a better price than the construction company. In addition to attractive price conditions, the buyer does not have to wait long for the commissioning of the housing estate and can choose an excellent option of housing, which you will not find directly from the builder.
The main disadvantage of buying an apartment by assignment is the full payment. But there are other risks in this procedure. To reduce them and, most importantly, not to fall into the hands of fraudsters, it is worth using the services of an experienced realtor. So the transaction will take place safely and legally, and the buyer will receive a quality home at a good price.
