Deposit, advance and preliminary contract in Ukraine: when a buyer gets the money back

A property deposit in Ukraine is usually requested on the day of the viewing, often with a sentence like "give me a thousand dollars and I'll stop showing it". It's easy to assume that a signed receipt holds the house for you and puts the seller at risk of paying double. Two Supreme Court rulings suggest you should assume neither.

Ukrainian law separates two kinds of early payment. An avans (advance) is simply money paid up front. A zavdatok, translated here as deposit, also proves and secures an obligation, so the party at fault loses it or repays it twice over. Which of the two you've paid depends far less on the word you used than on the document behind it.

Your money, sorted by the paper you signed

How a 10,000 hryvnia deposit turned into an advance

In August 2016 a buyer handed 10,000 hryvnias to a woman selling a house she'd inherited, and got a signed receipt calling it a deposit. The buyer then discovered the inheritance paperwork hadn't been completed, and pulled out. The seller's argument was the obvious one: you refused to go to the notary, so I keep the money.

She lost in all three courts. In its ruling of 12 November 2018 (case 580/860/17) the Supreme Court noted that no preliminary contract existed, only a receipt. Article 570 of the Civil Code then does the rest: where a payment isn't shown to be a deposit, it counts as an advance.

A 2021 ruling (case 711/5065/15-ts, as reported by the Debet-Kredit legal news site) went the same way on similar receipts. The parties had only agreed to sign a sale later, so the court called the money an advance, which has to be returned regardless of whose fault it was that no contract followed.

Eleven years to recover $30,780

A preliminary contract takes the same form as the sale it promises, and a sale of a house or land plot needs a notary (Articles 635 and 657). Skip the notary and Article 220 makes the contract void, however careful the drafting. Case 367/942/17 shows what that means in practice. A one-room flat was priced at 37,530 dollars, and the buyer paid 30,780 of it, 82%, under a contract signed in plain writing.

So the buyer won, and the exchange-rate treatment kept the dollar value intact. She also spent over eleven years with neither flat nor money, and the first court turned down the interest she claimed, about 13,700 dollars in all. The ruling doesn't tell us whether she has actually been paid.

The date in the contract can end your rights

Yes, quite literally. Under Article 635(3), the duty to sign the main contract ends if the deadline passes without a signature, or if neither side has sent the other an offer to sign. A seller who stays quiet until the date goes by has no further duty. If you're buying from abroad, put the offer in writing well ahead of the deadline, propose a date at a named notary, and keep proof of sending. In the flat case, the courts found that neither party had proved any step towards a main contract.

Someone who evades signing without good reason owes you the losses caused by the delay. Those have to be calculated and proved, and Article 635 talks about losses, not about handing over this particular house.

A notarised preliminary contract doesn't make the house yours

Title to property arises on the day of state registration (Article 334(4)), and what gets registered is the main sale. Nor does a preliminary contract appear on the list in Article 73 of the Law on Notaries, which sets out when a notary bans a sale, although that list ends with "other cases set by legislation". Ask your notary before signing what can actually be done in your transaction, and don't assume a ban comes with the document.

So pull a fresh extract from the property register again before the main contract. The rest of the checking is in our guides to buying a finished house and checking a land plot. Those papers are worth reading before the first payment leaves your account.

Houses still being built

Law 2518-IX of 15 August 2022 added a separate rule to Article 635 for unfinished buildings and future property. The preliminary contract has to be notarised, and payments confirming the obligation are banned, as are other financial obligations between the parties except penalties. If someone asks for a deposit under a preliminary contract on such a property, stop and show that clause to a lawyer.

Can you really claim a deposit back twice over?

Don't budget for it. Article 571 reads simply enough: a defaulting payer forfeits the deposit, and a defaulting recipient returns it and pays the same again. If the obligation ends before performance starts, the deposit is returned. All of that presupposes a sum that really is a deposit under a valid contract.

This is where it gets contested. In 2013 the former Supreme Court of Ukraine (case 6-176ts12) considered a deposit unsuitable for securing a preliminary contract, and in 2018 the Supreme Court treated a guarantee payment under a preliminary lease as an advance (case 910/11491/17). We know both positions through a lawyer's commentary on the Yurliga site and haven't read those rulings themselves. None of the rulings we did read for this article awarded a buyer double.

If both sides want real money at stake, ask a notary or lawyer about a separate clause setting a fixed sum for walking away. Article 546 lets a contract create other forms of security, Article 635(2) lets the parties alter the consequences of evasion, and Article 547 voids any such security that isn't in writing.

What to agree before any money moves

• The house and the land under it, described separately, with address, cadastral and registration numbers and area.
• The full price, this payment, what it's called, and who gets what if each side withdraws.
• The scenario people forget: the papers simply aren't ready and nobody is to blame. That's how the inheritance case began.
• A date for the refund as well as the duty to make one.
• The date of the main sale, the notary, and how an offer to sign gets delivered.
• A spouse's consent where it's needed: the Ministry of Justice names it for preliminary contracts, and our piece on buying land as a married couple has the detail.

Then there's the amount. The law sets no ceiling, and the flat case shows that your exposure is exactly what you hand over. Pay by bank transfer with a clear payment reference, or take a separate receipt that cites the contract. If you can't attend in person, read our note on power of attorney and paying from abroad first.

If you've already paid and the sale has failed

1. Gather the receipt, messages, transfers, the listing and the names of anyone who was present.
2. Send the seller a written demand by registered post, with a repayment date and bank details.
3. Check whether the property is still registered to the seller, since a lawyer's options for protecting your claim depend on it.
4. See a lawyer while the evidence is fresh, not two years later as in the flat case.