Property without a title deed: the risks

What does a house "without documents" mean?

By "kupcha" people mean the extract from the register. A house "without a kupcha" or "without documents" is usually a house not registered in the state register; if there is no registration, there is no extract either. But several different cases hide behind this name, and the risk depends on the cause. In one you simply need to wait and collect the missing documents. In another the house may never be put in order.

There is a separate guide on the extract itself. A house can be left without documents for these reasons:

• A new building not yet commissioned
• An apartment in a housing construction cooperative (MTK) building
• A private house with incomplete documents for the land or the construction
• A house built on the basis of a document issued by a municipality
• A house built without a permit
• A house inherited but not yet registered

If you buy a house without an extract, will it legally be yours?

No. Ownership of real estate passes to the buyer from the moment the transfer is registered in the state register. Payment, an arrangement with the seller and living in the house do not replace this. If there is no entry in your name in the register, legally you are not the owner.

The seller may offer to "close" the purchase another way: give you a power of attorney, register you at the address, or put the utility bills in your name. None of this gives ownership. A power of attorney only gives you authority for certain actions. The seller who issued it can cancel it at any time, and if the seller is an individual, the power of attorney also ends with his death. Residence registration and a meter only show that you live there. They do not show that you are the owner.

Since the house is not recorded in the register in your name, others may lay claim to it. If a dispute arises, getting back the money you paid may become a separate problem too.

Can you sell a house without an extract, or buy it with a mortgage?

The law is this: a contract on real estate not registered in the state register is not notarized, and such contracts are considered invalid. The only exceptions are special cases provided by law. A notary checks the seller's right to dispose of the house against the state register. And for a house with no entry in the register there is nothing to check. So such a house usually cannot be officially sold or gifted. If you later want to sell it, the same obstacle will stand before you.

With a mortgage the house becomes collateral, and the pledge is also registered in the state register. The official page of the Mortgage and Credit Guarantee Fund likewise says that a mortgage loan is issued for buying housing whose ownership has passed state registration. As a result, a house without an extract usually cannot be bought with a mortgage. For an unfinished building there is a separate case: if the share of land tied to the apartment was bought under a notarized contract and a security entry was made in the buyer's favor, the Fund's terms allow a mortgage loan. This does not apply to private houses without documents or to buildings put up without a permit. Whether there is an exception for a particular house, ask the bank directly and rely only on the bank's written answer.

Can you get an extract for a house without documents later?

It depends on why the house was left without documents. The fact that the house stands is not enough for an extract; the documents the law requires are needed. And the safest path is simple: finish the paperwork first, and move on to the purchase after.

In a developer's building (an LLC) the procedure is usually this. First the company's right to the building is registered in the state register. Then the company and the buyer conclude a notarized purchase and sale agreement. After that the buyer's right is registered and the extract is issued.

In a cooperative building the conditions are different: the building must be commissioned, the general meeting of members must decide to allocate the apartment, and full payment of the share must be confirmed by a financial document. In both cases, write into the contract at what stage the registration is and when the extract will be issued.

Which documents will be required for a private house depends on when it was built. For a recently built house, besides the document on the right to the land, documents on the construction are needed too, and for old houses there is a separate list. This list recently changed in the law, so do not rely on old information. The missing document must first be obtained by the seller. Get the exact list from the State Property Service or from "ASAN service." A document issued by a municipality also does not replace an extract from the state register; check separately whether it is a basis for an extract.

A building put up without a permit is a separate matter. This means a house built on land not allocated for construction, without a permit, or with a serious violation of urban planning norms. By law the person who built it does not acquire ownership and cannot sell, gift or rent it out. A court may recognize the right, but for that the land under the building must belong to this person. If the building violates the rights of others or endangers people's life and health, the court cannot recognize the right. Such a building can also be demolished by court decision.

What should you check before buying a house without documents?

If you take this risk knowingly, take every step carefully and on paper. If the seller says "I'll obtain the document myself," ask for a document confirming that he has filed the application. Do not pay for the promise of a document that is not ready yet: the fact that an application was accepted does not guarantee a positive result.

The list below does not replace the work of a notary and a lawyer. If the matter involves a power of attorney, a cooperative, a private house, a municipality document or an unpermitted building, be sure to talk to a lawyer. The steps of an official purchase and the buyer's checklist are on separate pages.

• Ask in writing why the house has no documents, and ask for supporting documents: construction permits, the land document, the cooperative's decision, the inheritance document
• If you are shown an electronic extract, verify its authenticity in the State Property Service's electronic document verification service; the name, address and area in it must match the house you saw
• If there is an extract, find out through a notary whether the house has encumbrances (a pledge, an attachment); the notary checks this against the state register
• Ask the notary whether the consent of the seller's spouse, of family members registered at the address, or of other co-owners is needed
• If the house was inherited, ask for a document showing that the seller is the heir and whether there are other heirs
• Write down everything you agree on: a paper does not transfer the house to you, but it proves the terms and the payment. Pay through a bank and keep the receipts

When should you walk away from a house without documents?

If the seller lowers the price because of the missing documents, compare that discount with the cost of the risk. If you buy the house as is, the registration may then fall to you. That is time, a state fee and legal costs, and the result is not known. Find out from official sources in advance how much these costs are today, and only then compare them with the discount. Whether the discount is really big is shown by the live median price of listings for similar apartments. But this figure is calculated over all listings, with documents and without, so it gives only a general benchmark.

If you need a mortgage, or you plan to sell the house later without trouble, look at listings with an extract. On Birev, the filter for sale listings has an "Has a title deed" option. This is a mark in the listing, not a confirmation by Birev, so check the extract yourself anyway.

If you see even one of these, however tempting the offer, it is safer to stop.

• The seller does not explain why the house has no documents, or tells a different story each time
• The seller offers only a power of attorney and avoids a sale at a notary
• The house was built without a permit or stands on land not allocated for construction
• The seller demands that a lower price than the one you pay be stated at the notary
• The seller rushes you into a booking payment or cash
• The seller objects to a lawyer or notary looking at the documents