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Understand the Kinnisvara Ostu-Müügileping

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When it comes to buying real estate in Estonia, making sure you fully grasp the property sales contract is essential.

Indeed, not fully understanding the document you will sign can lead to financial losses, including the forfeiture of deposits, payment of penalties, unexpected costs, legal expenses, and potential poor investment decisions.

We've heard countless stories of people making costly mistakes when signing their property agreement in Estonia. We want to help you avoid the same experience.

We'll give here a very brief overview regarding the property sales contract in Estonia ; if you want a full checklist, please check our property pack for Estonia.

What is the Kinnisvara Ostu-Müügileping in Estonia?

In Estonia, the property purchase agreement is known as the "kinnisvara ostu-müügileping."

This agreement is a key document in real estate transactions, outlining the terms and conditions of the property sale. It is legally binding once signed by both the buyer and the seller.

The agreement includes crucial details like the property description, price, terms of payment, and any conditions or obligations for both parties.

It serves as a guarantee for both the buyer and seller, ensuring that the terms agreed upon are adhered to. For the buyer, it secures the property once the agreement is in place, and for the seller, it ensures that they will receive payment as stipulated.

For international buyers or non-residents, there are no specific regulations or considerations that differ significantly from those for residents.

However, it's important to be aware of local laws and practices, which might require consulting with a local real estate expert or legal advisor.

Typically, the purchase agreement is signed during the later stages of the property buying process, after initial negotiations and once both parties agree on the terms. Before signing, it's common to conduct due diligence on the property to ensure everything is in order.

A deposit is usually involved in the process, known as a "tagatisraha" in Estonian.

The amount can vary but is often a percentage of the purchase price, negotiated between the buyer and seller. This deposit is meant to secure the buyer's commitment to the purchase and is typically held in an escrow account until the transaction is completed.

Comparatively, the property purchase process in Estonia may differ from other countries in terms of legal requirements, the role of real estate agents, or specific contractual terms.

For example, the involvement of notaries in the finalization of the sale is a notable aspect in Estonia.

They play a crucial role in verifying the documents, ensuring the legality of the transaction, and registering the property transfer.

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What should be included in the property purchase agreement in Estonia?

In Estonia, the property purchase agreement, crucial in real estate transactions, is governed by the Law of Obligations Act (Võlaõigusseadus), which sets the legal framework for such agreements.

This law stipulates what the agreement should contain and outlines the requirements for a legally binding contract.

A standard property purchase agreement in Estonia should include:

- Full legal names and identification details of both the buyer and the seller.

- A precise description of the property, including its address, size, and any unique features or boundaries.

- The agreed-upon price for the property and the terms of payment, including any deposit amount and the schedule for payment.

- The rights and obligations of both parties, including any responsibilities for repairs, maintenance, or other property-related issues.

- The agreed-upon date when the ownership of the property will be transferred to the buyer.

In addition to these mandatory clauses, the agreement can include various additional clauses or contingencies based on the specifics of the transaction.

These may cover aspects such as:

- Conditions related to the satisfactory completion of property inspections, verification of legal titles, or other due diligence processes.

- Clauses that make the purchase contingent on the buyer securing necessary financing or a mortgage.

- Sometimes, the purchase might be contingent on the buyer selling their current property.

Regarding authentication, it is mandatory for the property purchase agreement to be notarized in Estonia.

The role of the notary is significant; they are responsible for verifying the identities of the parties, ensuring the legality of the agreement, and overseeing the proper execution of the document.

What's the signing process like?

In Estonia, the signing process of a property purchase agreement is structured and follows specific legal protocols to ensure the legality and validity of the transaction.

The property purchase agreement is a bilateral contract, meaning it requires the signatures of both the buyer and the seller to be valid. It's possible for "the buyer" or "the seller" to comprise several people, such as in the case of joint ownership or if a company is purchasing the property. In such cases, all parties representing the buyer or seller must sign the agreement.

Both parties need to provide certain documents and information for the agreement:

- Proof of ownership, property documents (such as a cadastral extract), and personal identification.

- Personal identification and, if applicable, proof of financing or mortgage approval.

The signing process typically involves the following steps:

Step Description


The agreement is drafted, often with the assistance of a real estate agent or legal counsel.


Both parties review the agreement, possibly with legal advisors.

Signing Appointment

A notary appointment is scheduled for the signing. This step is critical as the notary verifies the identities of the parties and the legality of the document.

In Estonia, the preference is for both parties to be physically present for the signing. However, remote signing options might be available, especially in the wake of increasing digitalization and acceptance of electronic signatures.

This would typically involve secure digital platforms and adherence to Estonian e-governance protocols.

There isn't a fixed deadline for signing the agreement; it depends on the agreement between the buyer and seller.

Once signed, the agreement remains valid until the transaction is completed, unless specified otherwise within the contract.

After signing, the contract must be registered with the Land Register (Kinnistusraamat) in Estonia. This is a crucial step, as it legally transfers the property ownership. The notary usually facilitates this registration.

Any amendments to the contract after it has been signed and notarized are challenging. Both parties must agree to any changes, and such amendments may require a new signing and notarization process.

The typical timeframe for completing all necessary paperwork and approvals can vary but usually spans from a few weeks to a couple of months, depending on the complexity of the transaction, the speed of the notary and Land Register processing, and any financing arrangements.

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How is the payment handled when signing a property purchase contract in Estonia?

In Estonia, understanding the financial aspects of a property purchase agreement is crucial for both buyers and sellers.

Here's a breakdown of what you need to know.

When you sign the sales agreement, you typically need to pay a deposit or down payment. This amount varies but is often negotiated between the buyer and seller. It's usually a percentage of the total property price.

The typical down payment percentage for a property sale in Estonia can range from 10% to 30% of the purchase price.

However, this is subject to negotiation and can vary based on the property and the agreement between the parties.

There may be upfront fees or costs associated with signing the sales agreement. These can include notary fees, legal counsel fees if you've hired an attorney, and possibly a commission if a real estate agent is involved.

The payment is often made to an escrow account rather than directly to the seller. This is to ensure the security of the transaction. The escrow account holds the funds until all conditions of the sale are met.

The due date for the payment is typically specified in the sales agreement. It's not always immediate upon signing the agreement; it could be scheduled for a later date, depending on what's agreed upon by both parties.

In Estonia, there are property transfer taxes associated with real estate transactions. These taxes are usually the responsibility of the buyer. It's important to factor these taxes into your overall budget for the purchase.

You can negotiate the down payment amount with the seller. This is part of the sales agreement terms and should be agreed upon before signing.

The down payment may be refundable under certain conditions, such as a failed inspection or if a financing contingency isn't met. These conditions should be clearly outlined in the sales agreement.

You can use a mortgage loan for the down payment, but this depends on the terms of your mortgage agreement and lender policies. It's important to confirm this with your mortgage provider.

An attorney or real estate agent can assist in handling the payment process, ensuring that all legal requirements are met and the transaction proceeds smoothly. They can provide advice on the payment structure and help negotiate terms.

You should always request a receipt or confirmation of payment when making the down payment. This serves as proof of the transaction and is important for your financial records.

For the buyer, aside from property transfer taxes, there may be other tax implications depending on your specific financial situation.

For the seller, capital gains tax may be applicable, depending on the duration of ownership and the profit made from the sale.

What are the potentials risks and pitfalls?

You might be interested in reading our article about the common risks and pitfalls surrounding a property transaction in Estonia.

In Estonia, like in any real estate market, there are risks and pitfalls associated with property purchase agreements.

Understanding these is crucial for both buyers and sellers.

Both the buyer and seller can theoretically withdraw from the agreement, but this depends on the terms specified within the contract. Typically, withdrawal clauses and their consequences are outlined in the agreement.

Estonian real estate transactions don't typically have a statutory cooling-off period like in some consumer contracts. Once the agreement is signed, especially after notarization, it's legally binding.

However, parties can negotiate a cooling-off period within their contract, but this is not standard practice.

If a party wants to withdraw from the agreement, they usually need a valid motive, which should be specified in the contract.

For example, a buyer might back out if they are unable to secure financing, but this would need to be listed as a contingency in the agreement.

If one party fails to fulfill their obligations, the consequences will depend on the terms of the contract.

Typically, there are penalties for breach of contract, which might include forfeiture of the deposit or financial compensation.

Penalties for breach of contract could include financial compensation to the non-breaching party. If the buyer backs out without a valid reason, they may lose their deposit. If the seller withdraws, they might have to return the deposit with additional compensation.

Real estate transactions in Estonia might differ from those in other countries in terms of contract enforcement, the role of notaries, and buyer protections. For instance, in some countries, there's a mandatory cooling-off period, which isn't standard in Estonia.

Potential risks for buyers include undisclosed property defects, issues with the title, or unexpected legal complications. Sellers face risks like buyers backing out at the last minute or property devaluation during prolonged negotiations.

In case of disputes, the first step is typically negotiation or mediation. If unresolved, the matter may proceed to legal arbitration or court. The notary involved in the transaction can sometimes assist in resolving minor disputes.

If defects or issues with the property are discovered after signing, the course of action depends on the terms of the contract.

Often, the responsibility lies with the buyer once the agreement is signed, but this can vary based on specific contractual terms or if the seller intentionally concealed defects.

Disputes in real estate transactions are not extremely common but can occur.

They usually arise from misunderstandings about the property condition, disagreements over terms, or financial issues like financing failure. Most disputes are resolved through negotiations or mediation.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.