In today's real estate market situation, most of the population can afford to purchase their own home only by concluding a mortgage agreement. After completing the contract and purchasing the home, it is pledged to the bank until the loan is fully repaid. Due to the fact that a mortgage implies a long-term relationship with a financial institution, the owner of an apartment may need to carry out certain transactions with mortgaged real estate. One of such transactions is the donation of a mortgaged apartment.
Is it possible to?
If the home has a mortgage, is it possible to issue a deed of gift for it?
Article 37 of the Federal Law “On Mortgage” (No. 102-FZ dated July 16, 1998) states that living space taken out under a mortgage may be transferred as a gift based on the decision of the person who provided this property as collateral.
As the Federal Law “On Mortgage” states, mortgaged housing is secured by the bank.
It follows that it is this financial and credit organization that actually owns the residential premises until the borrower pays the entire amount and is able to obtain a certificate of state registration of the right only for itself.
Clause 1 of Article 37 of the Federal Law “On Mortgages” contains information about what the mortgagee can do with the property pledged to the bank. For example, an apartment may be subject to donation, but the mortgagor must agree to this.
Property relations connecting the borrower and the lender regarding housing taken on credit are subject to regulation by the following regulations:
- The Civil Code of the Russian Federation, containing general information about the ownership of residential premises, the loan agreement, and the pledge.
- Law No. 102-FZ “On Mortgage”. Regulates the process of transferring real estate to the bank as collateral.
- Provisions for registration of rights and restrictions are contained in Law No. 122-FZ “On State Registration of Rights to Real Estate”.
- Loan agreement. This document outlines the obligations and rights of the mortgagee and the bank.
Who will be allowed to donate an apartment?
Is it possible to donate a house with a mortgage? What about an apartment? For a bank, changing a borrower is a troublesome process. Donating living space for which the debt has not yet been repaid implies that not only square meters, but also loan obligations are transferred to the new owner. He will have to make monthly payments in the future, pay for insurance, etc.
The likelihood of approval of the transaction increases if the original borrower has paid more than 50% of the total amount under the agreement.
Accordingly, the recipient's candidacy is subject to careful consideration and study. The new borrower must be solvent and within the age limits established by the specific lender. And the “old” debtor will definitely be required to prove the reasonableness and necessity of such a transfer of obligations.
If we are talking about the presence of a serious illness, an extract from the medical record and a certificate from a specialized doctor will be useful. If the financial situation worsens - a dismissal order, a copy of the work record book or a 2-NDFL certificate.
Important! If the lender's security service decides that the risks of non-repayment of funds increase with a change of owner, the transaction will be prohibited.
Below we consider the attitude of credit structures to different categories of persons - apartment recipients.
Recommended article: Rosselkhozbank mortgage for a new building
How to re-issue a mortgage to another person: procedure and conditions is detailed in another article.
The apartment is transferred to a minor or relative
Is it possible to give an apartment with a mortgage to your daughter or son? The option is unlikely if he is not yet 18 years old. He is considered incompetent and does not yet have his own income sufficient to pay off the debt. In 99% of cases, the bank will not agree to a change of owner.
Assuring parents that they will take over the loan payments themselves or going to court to recognize the recipient as legally competent will not help. Banks insure against such risks and in most cases stipulate in the agreement a ban on transferring property to a minor.
If, for various reasons, the borrower wants the apartment or house to go to a specific son/daughter/nephew, he can draw up a will and have it certified by a notary. This procedure is not prohibited by law.
Is it possible to gift an apartment with a mortgage to a relative? Yes, provided that he meets the bank's requirements, is solvent, has not reached the upper age limit set by the lender, and does not have his own credit obligations.
Lenders do not approve the procedure of gifting real estate to elderly people, regardless of the degree of relationship. It is believed that the only stable income is a pension, but it will not be enough to pay off the debt. An exception is the provision of additional collateral, guarantors or co-borrowers.
Gift recipient - spouse
In accordance with current legislation, spouses automatically become co-borrowers under the Credit (Mortgage) Agreement and co-owners of the purchased property.
Important! Banks strongly “recommend” registering living space not as shared ownership, but as common joint ownership.
There are only two cases when a spouse is not included in the list of co-borrowers:
- he/she is not a citizen of Russia. Some banks refuse such restrictions and issue loans to residents of the Russian Federation. But most of the creditors are conservative, not wanting to cooperate with those who can leave the country at any time and never return here;
- The spouses entered into a prenuptial agreement providing for separate ownership of real estate. In this case, the husband/wife does not become co-borrowers and cannot claim a share in the purchased apartment.
The process of donating a mortgaged apartment to a spouse is considered inappropriate and is not practiced. Initially, the contract implies a community of ownership, and therefore responsibility. There may be exceptions, but in a very limited number of cases, for example:
- the loan agreement was signed by the husband/wife before marriage;
- The apartment was purchased during marriage, but the union broke up. One of the spouses wants to get rid of unnecessary property and transfer it to the other.
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Regardless of the reason for the transfer of square meters, the bank will assess the recipient’s solvency, taking into account all the requirements and rules in force in the credit institution.
Donating an apartment to a co-borrower
Co-borrowers are special people in the relationship between mortgagees and title borrowers. They are fully liable for debts to the creditor, but do not always claim square meters. Is it possible to gift an apartment with a mortgage to a co-borrower (not husband or wife)? The issue requires separate consideration.
The relationship between the main debtor and each co-borrower is governed by additional agreements. For example, he is allocated a share in an apartment in the amount of 25-30-40-50%, provided that he deposits the required amount into the lender’s account. If the main debtor, for various reasons, stops paying under the agreement, the bank automatically switches its attention to the co-borrower. He won't even have to go to court for this.
Transferring the debt to a co-borrower is possible (the situation when a husband/wife becomes a co-borrower was discussed earlier). For example, the main debtor wants to transfer both obligations and property to a second person specified in the contract due to health reasons, due to the inability to make payments in the future.
Important! Regardless of who the borrower wants to give his property to, the lender will calculate his risks. If, based on the results of the analysis, it is decided that the likelihood of non-return of money increases, the transaction will be prohibited.
In order for the lender to treat the procedure favorably, the recipient must have an income higher than that of the current payer. He should not have debts in banking structures or negative entries in his credit history.
Is it possible for a co-borrower to take out a mortgage and how to increase the chance of approval - is described in detail in another article on our website.
Banks' reaction
How might the bank react? The possibility of transferring real estate as a gift before the end of the credit relationship is indicated in the agreement. In this case, the organization carrying out banking activities has the right to prohibit the gift transaction.
At the same time, the bank can, on the contrary, give consent, or indicate in the agreement that it is not necessary to wait for a positive response when transferring encumbered real estate as a gift.
So, when drawing up an agreement between the bank and the borrower, if the apartment is planned to be donated to another person in the future, it is best to discuss this possibility in advance and include this clause in the loan agreement.
Before drawing up an alienation agreement for a mortgaged home, you need to obtain approval from the bank. If you cannot give good reasons, then the deal is unlikely to go through.
It is necessary to argue to the lender that the relationship between the donor and the donee is necessary in this case. It is also possible that the person donating the residential premises is in poor health or does not have sufficient financial resources.
All this is explained by the fact that, along with the ownership of real estate, the bank loan is also transferred to the donee. Therefore, a person who can receive housing as a gift must meet the following conditions:
- be a citizen of the Russian Federation and have permanent registration where the bank is located;
- have worked at your last place of work for at least 6 months (must have at least a year of total experience);
- be provided with enough money to successfully repay the loan.
You can give an apartment as a gift, even if there are debts on it. The donee will be obliged to repay all debts owed to the bank or HOA (this also includes penalties).
If the successor is not notified of the debts, the transaction will be invalid.
The bank will not agree to the execution of the gift agreement and its registration if this procedure increases the risks of the financial organization. For example, it will most likely not be possible to donate living space to an elderly person or a minor citizen.
This can be explained by the fact that it will be difficult for the bank to force the sale of the mortgaged housing if the borrower stops fulfilling its obligations.
Possible problems and nuances
The main problem is that financial companies do not approve such transactions for everyone. Since the payer of a mortgage loan changes, the bank bears great risks. No one guarantees the bank that the new borrower will fulfill his loan obligations as well as the previous payer.
That is why the bank requires the same package of documents from the new borrower as from the previous one. You will also need to confirm your financial solvency.
For the same reasons, the bank rarely approves transactions in relation to minor citizens. The bank cannot be sure that the child will be able to pay the monthly payments.
As mentioned earlier, the bank rarely approves such transactions. And in order for a client of a financial organization to have at least some chance of donating an apartment, this point must be stipulated in advance in the contract.
Consequences of violating the ban
Is it possible to register a deed of gift if the home is under a mortgage, without the bank’s permission? What happens if the terms of the non-donation agreement are violated? It will not be possible to draw up a deed of gift without the consent of the bank.
To consider the transfer of property to have taken place, you must first register the transfer of ownership. And for state registration, certain documents issued by the bank are required.
The borrower may try to violate the terms specified in the agreement. In this case, the bank can do the following:
- File a claim with a judicial authority. This is necessary so that the transfer of the home as a gift is considered invalid.
- Insist on the early closure of the debt and payment of fines that were imposed due to violations of the terms of the contract.
- Sell the mortgaged home if the debt is not repaid.
You can learn how to terminate an apartment donation agreement from our article.
Other Features
It is very rare to obtain permission from a credit institution to make a gift. No bank will want to risk their money in order to help you with your problems.
Therefore, be prepared for the possibility that you will receive a refusal. However, don't be discouraged.
They can meet you halfway only if you have an impeccable credit history, have paid your mortgage on time, and also have a good, stable income that allows you to pay the mortgage without any problems.
Instructions for registration
How to draw up a deed of gift for living space that is on a mortgage?
To give a home to another person if it has a mortgage, you need to go through the following steps:
- First, you need to obtain consent from the bank (in writing) for the free transfer of property.
- After this, the donor collects the necessary documentation and draws up a deed of gift.
- Documents are accepted at the MFC or Rosreestr. The period for state registration of donation of an apartment on credit can last up to 1 month.
- The donee becomes the owner of the certificate of ownership of the residential premises encumbered with a mortgage.
You can find out how to register a deed of gift for living space with a notary and how much it will cost on our website.
Deed of gift for real estate in a mortgage during divorce
According to the rules of financial institutions, the spouse must act as a co-borrower. In this case, an apartment purchased with a mortgage is recognized as the joint property of the husband and wife. If spouses divorce, they can independently agree on the fate of the property. In particular, citizens have the right to re-issue a mortgage for only one person. He will continue to close the housing loan on his own and subsequently become the owner of the property.
To carry out the procedure, a person who does not want to repay the mortgage and is ready to give up his property in favor of his husband or wife draws up a deed of gift. However, the transaction can be carried out only after receiving the bank's approval. The company will make a final decision only after analyzing the financial situation of the borrower. If the person can repay the mortgage loan alone, the application will be approved.
List of required documents
When the bank has given its consent, the time comes to draw up a deed of gift for the apartment taken under the mortgage lending program. For state registration of an agreement, the following package of documents is required:
- Passports of citizens of the Russian Federation belonging to the donor and recipient.
- Application for registration.
- A document confirming the right to real estate.
- A technical passport for the living space that is given by one person to another.
- The approval of the second spouse, which must be certified by a notary. This is necessary if the home was purchased during marriage.
- An extract from the apartment register about the persons registered in this living space.
- Approval from the Board of Trustees. Requested when the gift transaction concerns the rights of incapacitated or minor persons.
- Bank consent.
You can learn how to issue a deed of gift for living space from our article.
Are there options to bypass the credit institution?
Participation in a transaction by a bank as a sovereign owner creates additional difficulties, because the decisive opinion of this party must be taken into account. Sometimes there is a desire to circumvent legal conditions by drawing up documents without the knowledge of the creditor. Such actions will have the following consequences:
- Rosreestr will not accept documents for registration.
- The bank may exercise its right to hold the violator accountable by demanding penalties.
- The donation transaction will be declared invalid.
- The credit institution may require early payment of the entire mortgage amount, taking into account interest or alienation of the housing that serves as collateral.
Requirements for the contract
The deed of gift for an apartment taken on a mortgage requires the following information:
- Details of the person who decided to donate the housing, the recipient, as well as the mortgagee.
- Information about the legal document.
- Characteristics and technical description of the property.
- Be sure to write that the housing is given free of charge and irrevocably.
- An indication of the rights and obligations that are attributed to the parties.
- Information about the transfer of ownership. It must certainly be said that the person receiving the living space as a gift is informed that the property is pledged to the bank.
- Signatures of all participants in the process.
After registering the transaction, the donee receives a certificate of receipt of the right to housing with an encumbrance.
Find out from our article how much it will cost to formalize a transaction of donating living space between close relatives.
How much will you have to spend?
The donation procedure includes paid and free moments. Free are:
- the direct act of transferring an apartment as a gift from one close relative to another;
- issuing the consent of the creditor bank.
You will have to pay:
- if the donation occurs between non-close relatives or strangers. The contract stipulates which party pays a 13 percent duty on the cost of the apartment;
- state fee of 2,500 rubles in favor of Rosreestr;
- notary services, if resorted to.
What to do if you bought an apartment and a deed of gift came up?
Purchasing apartments on the secondary market is associated with increased risks. The mere existence of a gift history or transfer of premises is not illegal. However, relatives may try to challenge the agreement. Title insurance can protect a citizen. In this situation, if the transaction is contested, the company that sold the policy will compensate for the damage and repay the loan to the financial institution.
In all other cases, the money must be returned to the person who entered into the unlawful agreement. In practice, obtaining payment can be problematic. Therefore, experts recommend checking the premises in advance to ensure that the seller has legally received the property. Challenging the transaction will not relieve the citizen from the need to repay the loan. The person will have to pay off his obligations to the bank. In another situation, a person may be held accountable.
Owner's rights
The purchased property becomes the property of the buyer after he:
- Concluded a purchase and sale agreement with the seller.
- Transferred the agreed amount of funds to the second party.
- Registered property rights in Rosreestr.
When applying for a mortgage, some adjustments are made to this procedure. The contract is concluded between three parties - the seller, the buyer and the lender. The bank gives the money and therefore places an encumbrance on the living space so that the borrower cannot dispose of the property alone.
After registration of housing, the mortgage borrower has the right:
- Move into the premises yourself and move in close relatives and members of your family.
- Register there and register your relatives there.
- Make cosmetic repairs.
- Arrange the premises at your personal discretion.
Restrictions on the rights of the owner apply to the following procedures:
- Property For Sale.
- Registration of deed of gift.
- Registration in the apartment of persons who have no family relationship with the owner.
- Carrying out redevelopment.
- Long-term rental of premises.
Any of these actions must be agreed with the creditor and can only be carried out with his approval.
