Real Estate Due Diligence in Estonia

Estonia is a very suitable investment destination for foreign citizens or companies wanting to purchase real estate properties because they will benefit from the same treatment like national citizens and companies. Furthermore, the Estonian real estate market is sought nowadays because purchase prices have not increased very much but provide a good and constant income from rentals. 

Even if certain restrictions apply to foreign companies when purchasing real estate in Estonia, these mainly concern agricultural and forest land of 10 hectares or more and certain areas restricted for national security reasons (such as border areas and smaller sea islands). However, for a better understanding of the real estate customers may request the help of an Estonian law firm.

The real estate due diligence process in Estonia

Even if real estate due diligence in not regulated by any laws, Estonia has an exhaustive legal framework regarding real estate property. Among these there are:

1. the General Part of the Estonian Civil Code Act,
2. the Law of Property Act and the Implementation Act,
3. the Apartment Ownership Act,
4. the Law of Obligations,
5. the Land Register Act and the Land Cadaster Act,
6. the Planning and Building Acts.

Real estate due diligence is usually conducted by Estonian lawyers, but also by architects. While an Estonian lawyer will check the property for encumbrances, third parties rights and will also verify the seller’s credibility, the architect will inspect the property’s structure. Real estate due diligence can also be performed regarding the zone the property is situated in, if any permits are necessary for conducting certain business activities in cases of commercial real estate purchases and if any restrictions apply.

Property purchases in Estonia

Once the legal real estate due diligence procedure is over, the seller and the purchaser can agree on the transaction. When purchasing real estate property in Estonia parties must sign two notarized agreements: the first one is the sale contract and the second one is the real right agreement through which the property rights are transferred from seller to buyer. Once these two phases have been completed and the purchase price paid in full, the new owner can register the new property with the Estonian Land Register.

Real estate due diligence is also notably useful for foreign nationals who wish to acquire residency in Estonia and need to provide proof of accommodation. Our team can answer your questions about the documents you need to prepare and the fees you are expected to pay when you submit an application for temporary residence in the country. We can also give you details about residence permit renewals. 

If you are interested in purchasing a property and need legal advice you can contact our law firm in Estonia.

Foreign nationals who purchase a property in the country and intend to remain in Estonia for temporary or permanent purposes can also take into account the possibility that, in time, they can apply for citizenship in Estonia. This is possible after at least eight years of residence in the country, the last five of them on a permanent basis and when their place of residence is duly registered with the population register. Other conditions also apply.