Lawyer Morozova discusses the intricacies of purchasing property with outstanding debts
In the real estate market, it's essential for buyers and tenants to be aware of the potential liabilities that come with purchasing or renting a property. One such liability is unpaid capital repair debts, which can transfer to the new owner or tenant if not properly addressed.
According to real estate lawyer Alena Morozova, these debts often manifest as liens on the property, such as mechanic's liens, and remain attached to the property regardless of ownership changes. This means that when a new tenant or buyer purchases a home, the lien does not disappear—it encumbers the property until satisfied.
To complete a sale, title companies perform a title search that reveals any existing liens. The seller must clear these liens, usually by paying off the debt from the sale proceeds, to ensure the buyer receives the title free and clear. The most common approach is for the seller to use the funds from the property sale to pay off the lien, preventing the buyer from inheriting the debt and protecting their ownership rights.
However, there can be exceptions. If the liens are not cleared, the buyer may assume responsibility, especially if the lien is junior or if the buyer agrees to take the property subject to existing debts. In such cases, buyers should be cautious and seek legal advice to fully understand their obligations.
It's important to note that unpaid utility bills remain with the former owner and do not transfer to the new owner or tenant. This is a common misconception, but it's crucial for buyers to verify this before completing the purchase to avoid any unexpected bills.
In the city of Krasnodar, the median cost of long-term rent has seen a decrease, with June's median cost standing at 27,000 rubles, a 11% drop compared to six months ago. This trend may make it more attractive for buyers to consider purchasing properties, but they should still exercise caution when dealing with properties that have debts.
In conclusion, unpaid capital repair debts generally pass as liens on the property to the new buyer. However, sellers typically must clear these debts at or before closing, commonly by applying sale proceeds to satisfy the liens, ensuring the buyer takes ownership free of these debts. Buyers should be cautious when purchasing properties with debts and seek legal advice to fully understand their obligations.
- The unpaid capital repair debts, often manifesting as liens on a property, can encumber a property even when there's a change in ownership.
- Title companies, during a title search, uncover any existing liens that the seller must clear before the sale can be completed, usually by paying off the debt using the sale proceeds.
- When a property has debts, buyers should be mindful and seek legal advice to fully comprehend their potential obligations, as they may inherit the debt if the seller fails to clear it.
