Taking counsel: Legal aspects of buying newly-built flats

  • 2006-10-11
  • by Dalia Zalalyte
When choosing a place to live in Vilnius or elsewhere, people usually consider price and quality. In Lithuania, there are various ways of buying a flat in a building under construction. It is important in which way the company (apartment house owner or builder) is proposing to sell the flats. Entering into a preliminary contract and purchase and sale agreement is a good idea when buying into a new development.

The purchase and sale contract protects your rights to the acquired property, offering the ability to inspect the flat and evaluate its quality before the deal is done. When preparing such a contract, the seller must present a certificate from the State Enterprise Center of Registers, confirming that they are the owners of the flat. This provides some assurance to the buyer that it is acquiring ownership rights from the real owner.

By signing a preliminary contract, the seller-developer agrees to build the flat and make a sale-purchase contract with a buyer, and the buyer agrees to buy the flat for a set price. In most cases, the structure is not yet built and there are no documents confirming that the ownership rights have been registered in the Property Registry. In order to make sure the owner is really the owner of the building, they need to produce certain building documents, including building permits. This is to prevent the owner (builder) of a flat from signing a preliminary contract, and then later refusing to make a purchase and sale contract.

It is important to describe the flat in the preliminary contract as precisely as possible. The exact location, floor, and plans of the whole building and flat must be added to the contract. If the area of a flat cannot be precisely stated then write into the contract that the area will be confirmed in the future. Provide a formula for the adjustment of the purchase price if the space differs from the area agreed upon in the contract.

Additional things are often sold with a flat: balconies, terraces, parking lots, garages, etc. These are considered appurtenance of a flat. An appurtenance acquired must be clearly stated in the purchase and sale contract. It should also be written in a file of cadastral measurement of the building and in the case of a flat, in a database of a real property register. The definition of acquired things can be descriptive, that is to say, inclusive of name, place of appurtenance, graphical description (place of an appurtenance within the plan of a flat, project of a building or other document). It is important to spell out the ownership of common items. Are they to be separate estates or is there to be shared ownership? The legal status of the owner has relevance in this context. For example, whether he/she will be a partial owner of the whole underground parking garage or an owner of a single parking space is relevant.

An accurate and specific description of your perspective home in both a purchase and sale agreement and preliminary contract helps to ensure the protection of your ownership rights and prevent unfounded claims to ownership or compensation by third-parties.

Dalia Zalalyte, lawyer of Jurevicius, Balciunas & Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Teder Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.