You want to buy an flat for installments? Experts inform against hidden traps

In the face of rising mortgage costs and tightening of bank credit policies, more and more Poles are looking for alternate ways of financing the acquisition of housing. 1 specified solution is notarial instalmentwhich let the payment of real property in instalments without intermediaries of banks. Although the offer seems attractive, experts point to many traps that may surprise unconscious buyers.

Mechanism of action of notarial instalments

Notarial instalments are a form of interest-free repayment of real property without the engagement of financial institutions. The purchasing process is as follows:

1. Initial deposit: Buyers pay a certain percent of the flat value, most frequently 20%, as a down payment.
2. Payment by instalments: Then for a fixed period, e.g. 18 months, makes regular monthly payments, e.g. PLN 3 000.
3. Transaction finalisation: erstwhile the full amount is settled, the property is transferred to the buyer.

For example, 1 of the developers offers specified a sales model, where after deposit 20% the value of the apartment, the client by 18 months repays monthly instalments of PLN 3 000. Just before the receipt of the apartment, it is essential to pay the last tranche followed by the transfer of ownership.

Hidden risks and traps

When deciding to acquisition an flat in notarial instalments, be aware of the possible risks:

• No transfer of ownership until full repayment: The buyer becomes the owner of the flat only after the full payment has been settled. In case of late payment, the developer has the right to claim his claims, including through bailout.
• Risk associated with the bankruptcy of the developer: In the event of insolvency of the developer, the funds paid may be included in the bankruptcy and the buyer may have difficulty recovering the money invested.
• Limited legal protection: A transaction based on notarial instalments is not covered by the same legal safeguards as a mortgage, which may impede redress in the event of disputes.

Advantages and disadvantages of notarial instalments

Benefits:

• No borrowing required: For persons with reduced creditworthiness or unwilling to indebt in a bank, this is an alternate allowing the acquisition of an apartment.
• Flexibility of payment conditions: It is possible to negociate the amount and date of repayment without financial intermediaries.

Deficiencies:

• Risk of failure of deposits: In case of financial problems of the developer or late payment, there is simply a hazard of losing any or all of the funds paid.
• No full ownership until repayment: The purchaser cannot full exercise the rights of the owner of the apartment, specified as the anticipation of selling or renting, until the full claim is settled.

Recommendations for possible buyers

Before deciding to buy an flat for notarial installments, it is worth:

• Check the developer's reliability carefully: Analysis of the company's history, financial situation and implementation of erstwhile investments can give an image of its stability.
• Carefully examine the contract: It is crucial that the contract includes clear records of payment deadlines, the consequences of delays and procedures in case of insolvency of the developer.
• To consult with a lawyer: The specialist will aid you realize all legal aspects of the transaction and will pay attention to possible risks.
• Consider alternate forms of financing: It is worth comparing mortgage offers even if they affect higher costs to measure which option is more advantageous in the long term.

The acquisition of an flat in instalments without credit may seem an attractive alternate to conventional forms of financing. However, prior to specified a decision, all legal and financial aspects of specified a transaction should be carefully analysed. Awareness of possible risks and careful preparation for acquisition can prevent unpleasant surprises in the future.