And debts as a burden: how to buy real estate in Latvia and not get cheated – expertise 0 12

The "three-year rule"

Article 13.1 of the Apartment Ownership Law Dzīvokļa īpašuma ieguvēja atbildība par brīvprātīgi atsavinātā dzīvokļa īpašuma izdevumu segšanu/"Responsibility of the apartment purchaser for covering the expenses of the voluntarily alienated apartment".

Thus, until recently, claims for debt repayment could and should only be made against the previous owner, but now all unpaid payments for a specific apartment – for utilities, land use (if the land does not belong to the apartment owner), contributions to the savings fund, building maintenance, etc. – will fall on the new owner.

There is also good news: if you happen to purchase an apartment with "hidden" debts, the responsibility for covering them will only transfer to new owners if these debts accumulated within 3 years prior to the purchase. If the previous owner did not pay earlier, then he will bear the responsibility for old debts. Despite the fact that the principle of "debt follows the apartment" has been known for quite some time, questions still remain.

Pay immediately, then litigate

It is important to note that part 3 of Article 13.1 of the aforementioned law provides a procedure whereby debts for the apartment must be paid immediately – in fact, right after its acquisition. The law grants the new owner the right to both recover the debt from the previous owner through the courts and dispute the debt if there are grounds to believe that the payment is being claimed unjustly.

If legal proceedings have already been initiated by the previous owner of the apartment, the new owner can continue this litigation. In other words: first, pay off all debts, and then fight and litigate as much as you want, either trying to recover the amount of debts left on the apartment from the dishonest seller or disputing the validity of these debts, in direct communication or through the court, with the manager and/or service providers.

"Hidden pitfalls" and human rights

It is clear that a person acquires an apartment to live in it. And the last thing they would want is to get embroiled in some disputes over apartment debts to which they previously had no relation. Moreover, with an unknown outcome. Therefore, a reasonable question arises: what precautions can a buyer take to avoid unpleasant surprises?

How to protect yourself from fraud

Master of Law Ekaterina Zhukovskaya:

– The most common advice that everyone gives today is to request a certificate of absence of debts from the seller of the apartment. Information about debts or their absence can also be obtained by reviewing the bills. However, in reality, there is a risk that both the certificate and the bills can be easily forged. Therefore:

1. It is best to ask the seller (the owner of the apartment) not for the certificate itself, but for a power of attorney to request such a certificate. And based on this power of attorney, request the certificate yourself.

2. Go with the seller to the management company and obtain the certificate together with them.

(But it is not a fact that the seller will agree to give a power of attorney for obtaining the certificate or will go with the buyer to the management company).

However, unfortunately, this is the only 100% option to ensure that you are being sold an apartment without debts. No other mechanisms for obtaining these certificates have been developed yet.

The three-year period, which serves as a kind of time boundary separating responsibility for debts between the previous and new apartment owner, raises questions. The three-year term was clearly taken from the Civil Law, from the Rules on rent (realnasta), but it is unclear how a debt three years old will be distinguished from an older one, considering that all debts are recorded in one column.

3. The most important question: how does the principle of "debt follows the apartment" align with human rights in general?

Specifically: the management company has a wide arsenal of means to combat debts. They have direct contacts with all utility providers, have tools to recover debts, and have a staff of lawyers capable of professionally dealing with defaulters. But instead, the law shifts the responsibility for obtaining information onto the ordinary person.

In the end, why not impose a ban on the sale of an apartment if there are debts on it – especially if the debts are old, three years old? Until recently, when filing a lawsuit for debt recovery, the management company could indeed demand a ban on the sale of the apartment until the debt was paid or the court proceedings were completed. And interestingly, such requests were most often granted. However, management companies have not been very active in using this mechanism in the past, and now, most likely, they will not bother with this issue at all, as all responsibility, along with the associated "costs" in terms of time, nerves, and money, is shifted onto the potential buyer of the apartment.

It is clear that without experience (after all, a person does not buy an apartment every day), and far from all buyers are well-versed in legal matters, the buyer will have to turn to professional lawyers (which incurs additional expenses).

Or risk, and then, trying to recover debts from the seller, get embroiled in lengthy litigation, spending time, energy, and financial resources on it. Moreover, it concerns quite substantial amounts, as this is a property claim where the state duty is calculated based on the amount of the claim.

But where is the guarantee that the seller either did not leave the country the very next day after the transaction or that by the time the lawsuit is filed, they will have neither property nor money? Therefore, I do not rule out that, possibly, in the foreseeable future, the amendments will be challenged in the Constitutional Court.