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Guide through the real estate jungle - Episode 8

Real estate fraud: Sale and rental of the same apartment

Elena Jakubovic
16.Jun 2021
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2 minutes

A luxury apartment for sale in a lucrative house, offered at a high price, attracts a young couple. They are looking for an apartment they could rent first and buy later, after a few months.

The owner immediately feels there is something off about the prospective tenant and doesn’t want to rent him the apartment, but at the same time he would agree to sell the apartment to the same person - and in this case, even rent it for the duration of the reservation period.

Allowing a prospective buyer to rent the apartment before purchasing is not ideal for property owners. Why?

If such a tenant moves into a new apartment, the apartment will never be new again.

You can never be 100% certain whether they actually want to rent the property, or buy it.

If the sale isn’t successful, you might end up with an unwanted tenant who is incredibly difficult to get rid of.

The tenant was paying the rent as agreed upon and extended the reservation period twice (because he was waiting for funds from some business).

Luxusní byt na prodej - Praha 2 - Vinohrady
Luxusní byt na prodej - Praha 2 - Vinohrady, Praha 2

Fast forward to the day when the purchase contract was to be signed. When checking the ownership certificate, the lawyers found out that there was a note on pending charge registered for the apartment, and proceedings on a claim for deletion had been initiated at the land registry. A man, completely unknown to the owner, claimed that he had already bought the same apartment from the owner ten years ago and demanded that his ownership of the apartment be determined in court.

Thus, there was a legal defect in the property (seemingly arising from the owner), due to which the interested party could not buy the apartment and asked for the return of the entire reservation deposit.

During the police investigation, it was discovered that the person who had filed the lawsuit didn’t exist and that the owner became a victim of fraud.

What did we learn from this story?

Never allow a prospective buyer to rent your property.

Have your legal representative check for legal defects during the reservation and on the day of signing the purchase contract (it could, for example, happen that on the day when the contract is supposed to be signed, there is suddenly a foreclosure on the property).

In the end, the dispute notice was deleted. However, the Office is required by law to initiate proceedings on such a notice when a complaint has been filed. That is the only way in which the owner can defend himself against it, or even find out about the entire case.

When selling a property, always sign a reservation contract and ask for a reservation deposit - this guarantees that the buyer has serious interest. In suspicious cases, consult your legal representative before returning the deposit.

And one last thing...

In addition to public sources from which you can gain information about a prospective buyer or tenant, and advice from experts, always rely on your intuition. Then you will never end up in a situation like this.

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