You love the apartment, but the seller has mortgaged it to a bank — should you buy? You can, but this is the riskiest residential transaction. One wrong step and you lose money with no home.
The legal principle
A mortgaged home cannot be traded unless the mortgagee (the bank) consents. Any workaround — trading before release, without the bank’s written approval — risks being declared void, and the bank keeps its right to dispose of the asset to recover the debt.
The safe process (3-party agreement)
Step 1 — Deposit: the deposit contract states clearly the mortgage (which bank), with the seller’s commitment to transfer after release (blocking seller’s remorse). Step 2 — At the bank: all three parties (buyer–seller–bank) sign a notarized 3-party agreement: the buyer pays into the bank account an amount equal to the seller’s debt (principal + interest); the bank removes the mortgage registration and returns the title to the seller (surplus, if any, goes to the seller). Step 3 — Notarize the sale and transfer title at the land registration office after release.
The alternative
The seller fully repays the debt first, releases the mortgage, retrieves the title, then sells — a normal transaction afterwards. Safer for the buyer, but requires the seller to have the cash.
Risks to anticipate
Seller’s remorse after you’ve helped clear the debt (a tight deposit contract + 3-party agreement is your shield). Debt exceeding the price — verify the outstanding balance before depositing. Disputes/seizure: check at the land registration office whether the home is seized or disputed — a seized home is never to be bought.
Frequently asked questions
1. Can I buy a mortgaged home?
Yes, with the bank’s written consent (3-party agreement) or after the seller’s full release.
2. Must the 3-party agreement be notarized?
Notarization is recommended for maximum evidentiary value in disputes.
3. Should I deposit before release?
Only with a contract stating the mortgage status and the post-release transfer commitment.
4. Who pays release fees?
As agreed; usually the seller, as it’s their debt obligation.
5. What if I learn of seizure after buying?
Check first at the land registration office; seized homes can’t be traded — don’t deposit.
This article has been quality-reviewed by the FLAW AI Legal Council
This article provides general legal information and does not substitute advice for specific cases.