Deposit or advance: a difference of double the amount
It all comes down to what the money is called on paper. If it's an advance, the seller simply returns the same amount and you part ways. If it's a deposit, the law works differently: if the buyer is at fault, the money stays with the seller; if the seller is at fault, they return double.
But for a deposit to work, it has to be made in writing and tied to a contract for the deal itself. A handwritten receipt without such a contract usually turns into an ordinary debt that still has to be proven in court.
What's included
- A quick check of the flat before you hand over money.
- Preliminary agreement: the amount, the deadline for the main agreement, the price of the flat.
- Deposit wording that protects you specifically.
- Consequences of the deal falling through for both sides.
- Support at the notary.
Deposit or advance
| Advance | Deposit | |
|---|---|---|
| Buyer at fault | The money is returned | The money stays with the seller |
| Seller at fault | Returns the same amount | Returns double |
| Form | Any written form | In writing, together with a contract for the deal |
| Who it suits | Both sides, if the deal is uncertain | Whoever definitely wants to complete the deal |
More in the article deposit or advance: how not to lose your money.
Preliminary agreement
A preliminary agreement records that the parties will sign the main sale agreement by a certain date and on certain terms. If the main agreement for buying a flat is notarised, the preliminary one must be notarised too. Otherwise it's void, and with it the deposit's protection.
In it we set out what exactly is the deposit, the amount, the deadline for the main deal and what happens if someone backs out.
How it works
Your part: what you've agreed with the seller. The rest of the arrows are mine.
Civil Code of Ukraine: Articles 570–571 (deposit), Art. 635 (preliminary agreement), Art. 657 (form of a real estate sale agreement), Art. 220 (consequences of failing to observe notarial form).
Frequently asked questions about deposits and preliminary agreements
How much does documenting a deposit cost?
From €150 for my work. The notary is paid separately.
Can I pay a deposit against a receipt?
You can, but without a contract for the deal the receipt protects you poorly. A preliminary agreement is better.
What's a usual deposit amount?
The law sets no limit. Usually a few percent of the flat's price.
What if the bank doesn't approve the mortgage?
That situation is worth providing for separately in the agreement, so you don't lose the deposit.
Before paying a deposit, check the flat: on the secondary market or in a new build. After that, purchase support will take you through to registration of ownership.