Who Pays the Previous Owner's Apartment Debts?
When buying real estate from an individual, situations arise where after the transaction a surprise awaits the new apartment owner – the seller has left utility bills unpaid for some time. What should you do if you find an outstanding balance on a utility bill? Who should pay the previous owner's debts?
Once the apartment association has been notified of the new owner, the old debts are not erased. Debts are transferred based on the apartment property. To avoid unpleasantness, the new owner must pay the entire debt amount.
We offer some recommendations on how to avoid paying someone else's debt:
1. Once you have selected a suitable apartment, ask the seller or real estate agent to show you the utility bills.
2. If the bills show "debt," find out whether the debt has been paid or when it is planned to be paid.
3. If you cannot obtain the bills from the seller, contact the apartment association. Explain to them that you plan to buy the apartment, and make sure before proceeding with the transaction that all bills have been paid on time.
4. If you see an outstanding balance on the bill, ask the seller when they plan to pay it. If the bill remains unpaid by the time of the purchase and sale transaction, take the utility bill to the notary and ask the notary or bank representative to withhold the bill amount from the purchase price. The notary will then pay the outstanding amount to the apartment association from either the deposited amount or the bank loan amount, and the seller will receive a correspondingly reduced sum.
5. If the apartment property is transferred to the buyer mid-month, it should be agreed upon who pays the last month's bill. Typically, the bill is divided on a daily basis. From the moment of apartment handover, the buyer pays the bills.
6. If the seller has left bills unpaid and the apartment has already been transferred, the new owner must pay the debt themselves. The purchase and sale transaction does not erase the previous owner's debt; instead, it is transferred to the new owner on an apartment basis.
7. It is not advisable for the new owner to pay bills in a way that leaves debt outstanding. Unpaid debts accumulate late fees and the debt amount increases further.
8. If the new owner pays the debt themselves, they can begin to claim the debt from the seller. There are several ways to claim the debt, ranging from contacting the seller to going to court. Claiming debt through court is a time-consuming and expensive process.
If you buy real estate through a real estate agency, the risks are smaller. The broker checks the bills before the transaction takes place and, if necessary, takes the bills to the notary and they are paid during the notarial transaction.
Article source: Arco Vara
