“The Real Estate Market: a legal review” — Dmitry Borisenko’s column for Vecherny St. Petersburg
A column by Dmitry Borisenko, Head of Projects at Prime Advice, for the Pravda column of the Vecherniy St. Petersburg newspaper. The category includes not only practical journalistic texts, but also a lively and relevant voice of the professional community. In 2023, Vecherniy St. Petersburg launched its Legal Rating, in which Dmitry won the nomination "Best Young Lawyer".
September has come to an end, almost everyone has returned from vacations, and the real estate market has traditionally gained momentum. The number of bankruptcy cases of citizens is also growing at an equally rapid pace. As follows from the statistical release of the Federal Resource, in the first half of 2023, the number of bankrupt citizens increased by 40.3% compared to the same period in 2022.
It is no secret to anyone that the property of a citizen (except, perhaps, the only housing) in the framework of a bankruptcy case goes under the hammer, as they say, and the proceeds are used to repay creditors' claims. As practice shows, not everyone is ready to put up with this state of affairs. On the eve of bankruptcy, someone rewrites assets to their relatives, and someone arranges a "sale" with a significant discount in order to have time to receive money before bankruptcy proceedings are initiated.
It would seem that buying an apartment with a significant discount is a great success. But, as in that anecdote, there is a nuance. If the seller is declared bankrupt within a year after the transaction, then the real estate sale transaction at a price significantly lower than the market may be invalidated.
What should the buyer do in such a situation, and what is new in the legislation?
Until July 2023, the following procedure was in effect: if the apartment purchase transaction was declared invalid, the apartment was returned to the bankruptcy estate of the debtor (seller), and then it was sold at auction.
However, from July 24, 2023, the buyer had the opportunity to "buy" the house instead of returning it.
To realize this possibility, the bankruptcy law provides several options.
The first is to pay up to the price recognized by the court as fair for a particular property option.
The second one is to participate in auctions for the sale of housing.
If the auction has already been launched, then in certain cases the buyer can pay extra for the property, even if he did not participate in them (for example, if the apartment was not sold at the auction, or there was someone willing to buy an apartment at a price not exceeding 20% of the price originally paid by the buyer).
But it is important to remember the following: in order to prevent the housing from being put up for auction, the buyer must act quickly and inform about his desire to pay extra for real estate no later than five working days before posting a notice on the sale of residential premises in the Unified Federal Register of Bankruptcy Information (EFRS). In this case, a new purchase and sale agreement will be concluded with the buyer within 30 days from the date of receipt of such an offer.
The only question is whether there is enough money for such an additional payment, since it will need to be made within 30 days from the date of signing a new contract. If the financial condition does not allow you to pay for the apartment within this period, then you can ask the court to provide an installment plan, but not more than three months.
And most importantly, the buyer will be able to pay extra for housing only if it is the only one for him. Otherwise, all the above privileges will not be applied and the housing will have to be returned.
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