Definitions of advance and deposit. Advance or deposit: the difference in processes for which the advance and deposit is suitable, the difference between an advance and a deposit in case of violation of the terms of the contract, the difference in the advantages and disadvantages of the advance and the deposit

If you do not know that it is better to give an advance or deposit and in which case each of these financial transactions is carried out, we recommend reading the article.

Currently, during the conclusion of various agreements, there is already little hand shaking. Because of this, in practice, when the conversation of various transactions, even transactions related to the acquisition and sale of real estate, often people use advances and inclinations. They are considered the most common prepayment methods for a particular transaction. As a rule, people do not notice how the deposit and advance are different. And this sometimes causes undesirable consequences for each participant in a transaction. What is better to use - a deposit or an advance?

Determination of the deposit

Deposit - This is finances sent from the buyer to the selling to the payments specified in the contract. These cash confirm that the contract is concluded. In addition, these money entered guarantee the implementation of each point of documentation. If the transaction was completed successfully, then the deposit paid is counted in the total amount of payment.

There are 3 main characteristics of the deposit:

• The deposit is a certain part of the amount indicated in the contract.
• The amount paid is evidence of the conclusion of a particular agreement between the two parties.
• The deposit is considered a security method.

It is especially necessary to highlight the last item. Its essence lies in the fact that if one of the parties to the agreement violates their own obligations, then unpleasant consequences may occur. The consequences will depend on who exactly the agreement was violated from the parties.

The deposit also has the following features:

• The contract should be concluded only in writing. It comes into force after the contract for the purchase of whether the sale is registered.
• The contract clearly prescribes that the amount paid is considered precisely a deposit.
• The document shall indicate each parameter of property, full data of any side, the real value of the amount of the transaction.

If, after the deposit is signed, the seller wants to purchase real estate at a slightly highest value, then he will be beneficial when the price difference is more losses in reimbursing the deposit in the 2nd tariff. The buyer, in turn, if he finds a more affordable option, must also compare the benefits with financial losses of the deposit. Consequently, the amount of the new purchase is higher, there is more the chance that the participants in the transaction will not refuse the agreement. The value of the deposit is not controlled by law.

Before concluding a deposit and transfer agreement, the buyer must accurately verify such nuances:

• The seller has all the necessary documents that confirm his ownership, and the data in them is considered valid.
• The owners of the goods are during the transaction, everyone agrees with the sale of property.

Only those persons who are owners of property receive a deposit. The deposit agreement may be concluded in the notary’s office, which carries some costs for the services of a notary. If the transaction is violated because of the seller, and the buyer is not able to receive payment, then he has the right to file a violator in the court. With great probability, the final solution will be in favor of the side that has suffered.

Determination of the advance

An advance is a part of the finance in advance, which is included in the payment of the purchased goods or services. The advance payment is able to fulfill the payment function. But he does not have an interim indicator, therefore, in case of violation of the contract of this agreement, the funds are returned to the buyer in any situation. An advance is a preliminary fee determined in size.

So, the advance payment has a payment function, but it does not have an interim measure. But does it have evidence? The answer is considered absolutely ambiguous to this question. In such a situation, everything will depend on the case.

The advance is also in writing on paper. The documentation prescribes the total amount of the amount, full data on the property, as well as the details of each side.

Due to the fact that the regulatory authorities do not monitor the process, there is a chance of the buyer to stumble upon deceivers. In addition, there are situations when an advance is taken by a company that also does fraudulent affairs.

If the buyer did not receive an advance and decided to go to court, then the final decision will depend on some important points.

What are the differences between the advance and the deposit?

In reality, many sellers who do not take a deposit choose an advance intake. At the same time, they discuss some additional conditions important for them, for example, sanctions with fines that concern the buyer may be made in the agreement on the advance payment.

If the buyer refuses to buy, then he does not receive an advance or part of the money. Funds are seized as a certain fine. The seller does not bear any responsibility if he decided to refuse to buy. He simply returns the received advance to the buyer.

The acquisition of housing in the secondary market is usually carried out by an agreement that both parties conclude. The advance agreement is drawn up on paper in writing, can be executed in random order. A trusted person or real estate company may be present from any of the participants. The contract is drawn up at the notary, which is more competent and more reliable, since in such a situation a notarial person acts as a certain witness, giving the seller the opportunity to avoid responsibility if the transaction was disrupted.

The advance agreement has some significant details - this is the amount of the amount paid, the term of the advance. Also, the documents indicate the price of property, address (if it is an apartment, house), the initials of the 2nd sides are indicated. Important conditions for the conclusion of the contract are indicated - this is the form and the place where the calculation was made, the conditions of the conclusion, the delimitation of the costs of the parties, the fact that the amount of the advance is also included in the price of the goods.

Consider the most important distinctive features of these financial procedures:

• The deposit has evidence, payment, and interim description. But the advance payment has only a payment indicator (in some cases evidence).
• The moments of how the deposit is returned will depend on who is the culprit of the rupture of the contract between the participants. If we talk about the advance payment, the buyer has the right to return it if he breaks the agreement on his own initiative.
• In order to make a deposit, it is required to conclude an agreement. An advance can be made even before the transaction and signing the contract.

Of course, between 2 these concepts there are other, more important distinctive features. They may consist of possible consequences for each side.

The difference in the processes for which is the advance and deposit suitable

Prepaid expense

This monetary operation is suitable for:

• Acquisition or sale of property of any nature.
• Deliveries of goods.
• Contract.
• If you need to order a paid service.

Deposit

This operation is relevant if it is made:

• Buying or selling a land plot, real estate of any kind.
• Supply of large batches of goods.

The introduction of a certain amount of the advance is considered more common, since during the violation of the contract, none of the parties incurring losses at all. But it is worth pushing nevertheless from the case for which case the process will be used. During an agreement on an advance agreement, it is necessary to prepare that the other party has the right to abandon the contract at any time without receiving any punishment. The deposit makes it possible to control each participant. They are used if it is necessary that the participants fulfill the terms of the contract.

The difference between an advance and a deposit in violation of the terms of the contract

During an agreement on an advance agreement, it is necessary to prepare that the other party has the right to abandon the contract at any time without receiving any punishment. The deposit makes it possible to control each participant. They are used if it is necessary that the participants fulfill the terms of the contract.

If the terms of the contract that was provided with a deposit are violated?

• The amount of the deposit is returned if the obligations were suspended before he was fulfilled, or due to the impossibility of implementing it due to circumstances for which the parties do not answer at all.
• If the contract is violated by the party that has made a deposit, then finances remain in the hands of the opposite side.
• When the contract violates the responsible person who received a deposit, then a person should return the deposit in the opposite side in a double size.

What are the consequences if an advance agreement is violated?

• If the contract is terminated by agreement of the participants before he accepted his own action, or in other situations, the party that introduced an advance has the right to ask for money back.
• A person who introduced an advance cannot demand money for an advance, if under the terms of the agreement the other party has the right to receive a reward, even if it is a violator. For example, a person will not receive an advance if during scientific works it was found that the process cannot bring the desired results.

The difference in the advantages and disadvantages of the advance and deposit

Advantages of the advance:

• Any party has the opportunity to terminate the contract at any time.
• There are no risks of possible financial losses at all.

Flaws:

• If the seller finds another buyer, he has the right to terminate the agreement.
• The presence of uncertainty.

Advantages of the deposit:

• A fairly effective way that allows the other side to fulfill all the terms of the contract.
• Both the buyer and the seller have equal risks.
• Confidence that the agreement will be fulfilled.

Flaws:

• Both sides may suffer significant losses.
• The seller, breaking the agreement with the buyer on his own initiative, must pay a large amount than he received. The buyer has the right to recover damage by handing him to the court. These are also certain costs.

There are a lot of reasons because of which the transaction breaks. All of them are diverse, do not depend on the will of the parties. However, the opposite person of the contract in any situation may demand that his partner fulfill the deposit agreement.

The deposit is good for buyers, if they definitely intend to purchase a specific house or apartment. For example, housing perfectly corresponds to the personal needs of the buyer, and he does not want to look for other options anymore. The seller will certainly require a deposit if the cost of the apartment is high, and the buyer has a chance to find a more affordable option.

Any of these options is acceptable in a particular situation. Be that as it may, before entering an advance or deposit, having transferred the money to the seller, you need to make sure that all the necessary documentation is available. If the buyer cannot independently evaluate how correctly the contract is drawn up, he has the right to contact a lawyer. Only the contract without violations will be useful when protecting rights if any controversial points appear.

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