Buying a property belongs to the category of operations with a greater risk, so the seller may require to make a deal only with the letter of credit.This is understandable, as the calculations based on such a system - this is the most reliable option for both parties.That is why the need to consider in detail not only what it is, but how it works in reality.
Real estate
If we consider this type of interaction in the most simplified form, the buyer buys an object pays the money for it, and the seller is selling it at the price at which the agreement was reached, and receives money.It's all pretty simple, but there are certain nuances.
important to understand that the purchase and sale will be considered valid only in case of a successful registration of the sales contract in the relevant structures of the recording.It is real a situation where the contract is signed, and even referred to the buyer registration authorities, but then thought better of the seller to sell his property.He goes to Rosreestr to pick up a declaration of intention to realize the property.
In such cases, there is a problem, especially if at that time the money has already been transferred to the seller.For their return need to go to court, which is quite a long and costly affair.Then we get a situation where you can not immediately and pay, but do not give money, too, will not work, because the seller does not guarantee that the buyer will return the money after the registration.In this case, for both sides as a big risk to remain without money, and without an apartment.
General characteristics
Letter of Credit - is one of the modern forms of non-cash payments, used to communicate the seller and buyer.In fact - it is the guarantor of the security and legality of any transactions.For individuals, the letter of credit when buying real estate has such a huge advantage, as well as all non-cash transactions: it is the absence of the need for large amounts of money on hand, as well as concern for their transportation.When placing the letter of credit the buyer authorizes the bank to transfer a certain amount of money to the seller after they are made and confirmed certain obligations under the contract.
Practical application
If we talk about how to apply the letter of credit when buying real estate, there is a certain characteristics.Calculation scheme in this case looks in a certain way.Between buyers and sellers a contract for that for mutual transaction will be used exactly this form.The Credit Agreement contains all the information on what will be used payment terms and method of notification of the parties, as well as the details of the transaction participants.
buyer should contact the bank that it serves to issue a letter of credit there.The seller is also serving bank opened a special account.On a bank of the buyer will transfer funds from the account of his client.It turns out that the letter of credit funds to the seller's account usually found before the start of the transaction.This is the essence of security for both sides.
How to get funds
Cash to the seller will be available only when it is completed the purchase and sale, and the bank will be provided with all the necessary documents for its confirmation.If doubts about their legality, accuracy and reliability are not there, then the seller's bank will be debited from the letter of credit account to another client.
necessary documentary evidence
This type of transaction, like buying real estate involves the provision of the contract of sale home or apartment that has passed the state registration procedure.Some banks requested an extract from the Unified State Register of Rights, which will confirm the right of ownership to the buyer purchased the property.If you find accounts of the seller and the buyer in the same bank scheme becomes much simpler.
Benefits LC
If you use a letter of credit when buying a property, here there is a whole range of benefits for both parties to the transaction.For the seller, this will guarantee receipt of funds in full by the buyer.Money will be on the letter of credit the buyer's account already at the moment of transaction, so it will be sure of their safety.Bank guarantees payment in case the seller will present all the required documents and will comply with the terms of the credit.
purchaser may rely on the full guarantee of the deal: If for any reason the transaction does not take place, then a refund will be made in full.If the seller will not be performed at least one letter of credit, the bank payment will not be made.
Buying property with a letter of credit allows you to not make an advance payment or to pay for the transaction in parts.
Cashless way to interact is safe and convenient.
compliance with the conditions of the contract are closely watching a third party, ie the bankers.If you use a letter of credit when buying real estate, the accuracy and the lawfulness of his design are not only interested participants.Credit institutions, in this case, too, bear responsibility in accordance with applicable law.In this case it ensured that the nominated bank for payment will not be accepted fake or not fully drawn up documents for the transaction.When the guarantor of the transaction serves the credit entity that is used by a letter of credit when buying real estate, it is always a sign of reliability.
Disadvantages LC
While that this form of settlements is a whole range of positive things here and there are some drawbacks.Workflow is rather complicated, as at each stage of the transaction required careful monitoring.Execution of the contract and letter of credit transactions on it is usually accompanied by the need to pay the commission.Usually it depends on the amount of the transaction.
Why not use
Few people now using a letter of credit when buying real estate.Sberbank has long offered its clients to use a secure service.This form of mutual settlements is often compared to the use of bank of cells, but use it less often.Techniques have similarities, but there are strong differences.Using a cell requires a physical manifestation of money, and for the second case - a non-cash settlements, and this is the letter of credit.Sberbank offers both options, but most customers stop at the first one.
This is due to many aspects.Adding client funds in the deposit box is made secretly, that is it does not disclose its contents to the bank.In this case, the seller can not be confident in the integrity of the buyer.And in this case, the Bank shall not be liable, even if has to be concluded a contract of sale.Letter of Credit, in this case to protect both sides, as the credit institution is responsible for any irregularities in the registration of the transaction.
Conclusion
Application when buying real estate letters of credit recognized experts good option.Banks are interested in the success of the transaction carried out, so be careful to watch her every step.
