What is a down payment for an apartment?

First of all, it is necessary to precisely define what a deposit for an apartment is . Article 6.98 of the Civil Code of the Republic of Lithuania. 1. states that a deposit is an amount of money that one party to a contract gives to the other party on account of the amounts due to it under a concluded contract to prove the existence of the contract and ensure its execution. Simply put, everyone who decides to purchase an apartment must pay the seller a certain amount of money to confirm the existence of the contract and ensure its execution. Court practice emphasizes that a deposit performs three main functions - payment, evidentiary and security. When buying an apartment, it is very important to know all the nuances related to the security function of a deposit:

• Security deposit function.
• One of the most important functions of a security deposit is a security deposit, in which the security deposit is transferred to ensure the performance of the main contract. This means that if the party that gave the security deposit is responsible for the non-performance of the main contract, the security deposit remains with the other party, and if the party that received the security deposit is responsible for the non-performance of the main contract, it must pay the other party double the amount of the security deposit.

Security deposit agreement – ​​why is it important to sign it?

A down payment when buying an apartment is a common practice not only in Lithuania but also in foreign countries. However, it is important to note that not only must the down payment be paid, but a contract must also be signed to prove it.

The Civil Code emphasizes that the fact of payment of a deposit must be established in writing . A deposit agreement protects both the buyer and the seller, since failure to comply with the written form renders the agreement on the deposit invalid. When buying an apartment, a preliminary or reservation agreement is usually signed, which accurately and clearly describes all the conditions. It should be emphasized that if the person giving the deposit does not fulfill the contract, then the deposit for the apartment goes to the seller. In the event that the recipient of the deposit does not comply with the terms of the written contract, he must return double the amount of the deposit.

When can you lose your deposit?

It should be noted that the main reason why a buyer may lose the deposit paid for an apartment is failure to fulfill the terms of the signed contract. This can happen for various reasons:

• Bank does not provide a loan . The most common example of losing a deposit is a bank not providing a loan of the required amount. This happens when the buyer first pays the deposit to the seller, not being sure that the bank will provide a loan of the required amount to purchase a home. This mistake has a painful effect, because without receiving a loan of the required amount, the buyer cannot fulfill the terms of the contract – conclude a notarial contract and pay the seller for the apartment he is selling. It has been mentioned that in such a case, the Civil Code states that the deposit paid remains with the seller.
• Failure to meet specified deadlines. The deposit agreement clearly states the deadlines by which the final contract will be signed and the remaining amount of money will be paid. In such a case, when the home buyer fails to meet the agreed deadlines, the seller has the right to keep the deposit and sell the home to another buyer.
• Change of opinion, wishes or circumstances. It may happen that the buyer changes his opinion or decides not to buy due to certain circumstances. In such cases, when the person providing the deposit is responsible for the non-performance of the contract, the Civil Code establishes that the deposit goes to the seller.

How not to lose your deposit?

How to protect yourself and not lose your deposit for an apartment? First of all, it is most important to comply with the terms of the written contract. However, the process of buying an apartment is quite complicated, requiring a lot of legal and practical knowledge. Therefore, when buying an apartment or other real estate, it is always best to consult with professionals in this field and useReal estate broker services.

It is worth emphasizing that it is advisable to contact specialists even before deciding to purchase an apartment. Professionals in their field will consult, help you figure out what steps you need to take after deciding to purchase an apartment, and advise you on other important apartment purchasing issues so that everything goes smoothly and without incurring losses.