Off-Plan Property Purchase — Preliminary Registration as a Protective Mechanism
Buying an apartment off-plan is one of the riskiest transactions on the property market — and at the same time one that must be well protected: the buyer pays for an object that does not yet exist. Precisely for this reason the law on the public registry gives this transaction a special instrument — the preliminary registration of a right to immovable property. This page explains how this mechanism works, which rights it can protect, how priority is resolved and how ownership of an under-construction object is registered.
The off-plan buyer's two principal dangers are a repeated sale of the same object by the developer and the discovery of a bank mortgage or other encumbrance after completion. Both risks are reduced precisely by registration recorded in the registry, and the norms providing this protection are set out below.
What May Be Registered on an Under-Construction Object
The registry of rights to immovable property registers not only ownership: superstructure and its mortgage encumbrance, usufruct, easement, mortgage, tenancy and subtenancy, lease and sublease, request, leasing, public-law rights, obligations connected with ownership — including privatization conditions — and pre-emption rights are all subject to registration. The registry also records identification data of the subject and object of the right, including cadastral data.
It also matters that rights such as mortgage, tenancy or lease may be registered only if ownership of the corresponding immovable property is registered; and data registered on those rights and on privatization conditions pass unchanged to the new owner. For the off-plan buyer this means: if the developer finances construction through a bank and a mortgage is registered on the land or the object, that encumbrance stands before the buyer as well — which is why studying the extract before the transaction is indispensable.
Preliminary Registration — How It Protects the Buyer
To secure the registration of a right to immovable property, a preliminary registration of that right in the registry may be effected on the basis of a contract concluded between the parties. This is precisely the off-plan buyer's principal protection: by registering the contract, the buyer's future right is fixed in the registry before the object is even built.
The effect of preliminary registration is precisely defined by law: it excludes the registration of any other right on that property on the basis of a transaction, and the registration of abandonment of ownership, unless the parties agree otherwise. At the same time, preliminary registration does not exclude the registration of an heir as owner of the property. It is terminated by registration of the right it was meant to secure; by expiry of a term, if one was set; by written agreement of the parties; or by registration of another person's ownership — subject to the defined exceptions.
The effect of preliminary registration is fully revealed together with the priority norms: of mutually exclusive rights, the one submitted earlier for registration is registered. Therefore, once the buyer has preliminarily registered its right, later competing applications — including the developer's other transactions — can no longer push ahead of it. Here time is worth more than money.