The 3% loan is an attractive opportunity, but one should not focus solely on the favourable interest rate. The legal status of the property, the bank’s conditions and the contractual details are equally important. A hasty decision or insufficient documentation can easily result in the loss of the deposit, but with proper care and preparation this can be avoided.

The most important thing is to have a clear understanding before paying the deposit. You should be fully aware of:

• what a deposit is and what legal consequences it has,
• how to document its payment securely,
• when it is forfeited and when it must be returned.

Deposit — briefly

The deposit serves to confirm the intention to conclude the contract. It is usually 10% of the purchase price, but the parties are free to agree on the amount, and this should be carefully considered.

Its legal consequences:

• If the sale is completed → the deposit is credited toward the purchase price

• If the transaction fails due to the buyer → the buyer forfeits the deposit

• If it fails due to the seller → the seller must return the deposit in double (i.e. return the received deposit and pay the same amount again as compensation)

• If neither party is responsible → the deposit must be returned

Deposit in practice

Even if we are aware of the above legal consequences, in practice it is often difficult to determine which situation applies — especially if the buyer fails to perform because the bank rejects the loan application.

As a general rule, the buyer risks losing the deposit if the contract merely states that the purchase will be financed by a loan, but does not specifically regulate what happens in case of loan rejection. This is why it is important to incorporate clear rules into the contract in advance.

In every case, I draw the parties’ attention to this and we agree on a regulation acceptable to everyone. We may differentiate based on the reason for the loan failure (e.g. if the property is unsuitable for financing versus the buyer being non-creditworthy), or we may stipulate that in case of failure the buyer is not liable for the full deposit, but for an amount accepted by the seller, since the seller’s waiting time should not remain uncompensated either.

There are many possible solutions — the key is thorough discussion and proper written documentation.

Practical tips — what to do before paying a deposit

• Request pre-qualification or preliminary credit assessment from the bank before paying the deposit, so you know the expected equity requirement and conditions

• Ideally, pay the deposit simultaneously with signing a preliminary agreement or final sale contract, or at least under a detailed written agreement regulating all conditions

• Consult a lawyer before paying the deposit and request assistance in preparing the documentation of transfer

• Pay attention to unauthorized extensions or constructions without permits: these may lead to loan rejection by the bank, and it is advisable to stipulate that in such cases the deposit must be returned

• Carefully review the title deed, cadastral map extract, the legal status of the property, its suitability for residential use and the existence of utilities

Note:If the exact terms of the sale are not properly recorded at the time of paying the deposit (e.g. payment schedule of the purchase price, cash or bank transfer payment, date of handover of possession, consequences of loan rejection, etc.), and during the preparation of the final contract there is disagreement between the parties on any point, a legal dispute may arise regarding who is responsible for the failure of the contract and what happens to the deposit.

A well-drafted contract, prior credit assessment and professional legal assistance significantly reduce the risk of losing the deposit.