PURCHASE AND SALE OF REAL ESTATE

Real estate purchase and sale transactions must be notarized

A notarized transaction has greater evidentiary value and can only be contested in court. Failure to comply with the notarization requirement for real estate transfers renders the transaction invalid. Any notary practicing in Lithuania may certify a real estate transfer agreement, regardless of your place of residence or the property’s location. The choice of notary is up to both parties to the transaction.

A notary is a guarantor of the legality of the agreement being certified

Before certifying a real estate purchase and sale transaction, the notary verifies the legality of the transaction by checking the following state registers: the Population Register, the Register of Legally Incapable Persons and Persons with Limited Legal Capacity, the Real Property Register, and the Register of Property Seizure Acts. These checks ensure that the seller is the owner of the property, legally competent in this area, and has not entered into a decision-making assistance agreement. They also ensure that the property is not encumbered by a mortgage, seized, or subject to other restrictions on disposal. This procedure helps prevent possible cases of real estate fraud and manipulation, and it saves the seller time because they no longer need to order the certificates, wait for them to be produced, and collect them. Data and extracts from state registers cost the same whether they are ordered by a notary or by the clients. However, it should be noted that the data collected in state registers does not completely replace written documents. In certain cases, documents proving ownership, i.e. object purchase agreements, certificate of inheritance, etc., or other additional documents may need to be submitted to the notary public. 
Before certifying the agreement, the notary also verifies that the property being sold is not considered family property. In other words, it cannot be your only place of residence where you live with minor children. Once these circumstances have been established and the seller has provided the necessary information and supporting documents, the notary will certify the agreement. These documents must prove that the transaction will not leave the minor child without a place to live and will not violate their right to living conditions necessary for their physical, mental, spiritual, and moral development. The notary must ensure that all legal requirements are met. For example, if the Real Property Register indicates that an apartment, garage, or other premises being sold belong to an apartment building co-owners association (COA), the seller must submit a certificate of settlement with the COA. It is also recommended that the buyer of the property check that the property being purchased is free of debts (e.g., for water, electricity, etc.). 
If the property being sold is joint marital property acquired in marriage, both spouses or one spouse with a notarized power of attorney from the other must participate in the transaction as sellers. 
If an object is a community asset (i.e., jointly owned), and one of the co-owners intends to sell their share to a third party, the other co-owner must be given the right of first refusal to purchase that share of the asset. This principle reduces the number of co-owners and ensures the asset is used, managed, and disposed of more efficiently. Co-owners must be notified in writing through a notary of the exercise of the right of first refusal. This notification must specify the selling price and other conditions, which must be the same as those offered to the third party intending to purchase the asset being sold. If the co-owners refuse or fail to exercise their right of first refusal to purchase the part of the property being sold within one month, the seller may sell their share to another person. If the right of first refusal is violated, the co-owner may request in court that the buyer’s rights and obligations be transferred to them. 
When entering into an agreement to buy or sell agricultural land, the documents specified in the Law on the Acquisition of Agricultural Land of the Republic of Lithuania must be submitted to the notary. When entering into an agreement to buy or sell forestry land, the documents specified in the Law on Forests of the Republic of Lithuania must be submitted to the notary. 
When purchasing real estate with a loan from a bank or other credit institution, the notary must be provided with confirmation of the loan issued by the creditor. If a notary finds that the real estate purchase and sale agreement violates or fails to comply with the requirements of the law, the notary must refuse to perform the notarial act. 
When carrying out the responsibilities outlined in the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania, a notary may request a client to provide information about their beneficiaries (if the client is a legal entity), important public positions held by the client ((if the client is a natural person), and, in certain cases, information and documents that substantiate the source of the property or funds that are the subject of the transaction. 

Contents of an agreement

The real estate purchase and sale agreement being entered into should specify the exact identification data of the property being transferred, as indicated in the Real Property Register. This includes the property’s exact location, unique number, purpose, etc. It should also specify the exact details of the parties to the transaction, including names, surnames, personal identification numbers, and places of residence. The agreement should discuss the form of ownership under which the property is acquired: joint partial ownership, joint marital ownership (community assets), or personal ownership. An essential aspect of the purchase and sale agreement is the price, i.e., the amount for which the property is being transferred. 
When transferring a land plot with structures, buildings, facilities, etc., another essential condition of the agreement is the transfer of ownership rights to the structures. When transferring buildings, facilities, or other immovable property, the buyer’s rights to the land plot on which they stand must also be discussed. 
The agreement must also specify the moment when the ownership rights are transferred. These rights are transferred to the buyer when the acceptance and transfer certificate is signed. Typically, this certificate is an integral part of the real estate purchase and sale agreement. Therefore, the real estate is transferred to the buyer as of the moment the agreement is entered into. However, if the parties to the agreement agree that the property will be transferred to the buyer after a certain period of time rather than immediately, the acceptance and transfer certificate must be drawn up separately. 
In addition to the price of the asset, the purchase and sale agreement must also specify the payment terms. If the agreement stipulates that the full price of the asset is not to be paid immediately (e.g., when purchasing a home with a loan), the seller must confirm that the buyer has paid them in accordance with the procedure and terms specified in the agreement. In other words, the seller must issue a receipt. To protect the seller’s interests, the notary transfers the information to the Real Property Register, where the restriction on the disposal of the purchased asset is registered. The receipt issued by the seller is the basis for deregistering such a restriction. To balance the interests of the buyer and the seller when payment under the agreement is made by bank transfer, it is proposed that the purchase and sale agreement should stipulate that, should the seller fail to issue a receipt in accordance with the procedure and terms specified in the agreement, the buyer may prove the fulfillment of the agreement by submitting bank-certified payment orders to the notary. In this case, the notary should issue a certificate of full payment, which serves as the basis for deregistering the restrictions on disposal. The agreement also provides for other legal and agreed rights and obligations of the buyer and seller, as well as their respective guarantees. 

The notary transfers data on concluded transactions to state registers

To ensure the “one-stop shop” principle, property buyers no longer need to apply to the Real Property Register administrator (the State Enterprise Center of Registers) themselves for the registration of the agreement or ownership rights. The notary who certifies the transaction handles all of this. The notary also sends information about the concluded mortgage agreement to the Real Property Register administrator when the real estate is purchased with a loan and mortgaged to the creditor. As with checking data in state registers, the notary acts as an intermediary between clients and the state register administrator, collecting a fee from clients for the services provided by the state register administrator and transferring it to the State Enterprise Centre of Registers.