Clerical work

Definitions of advance and deposit. Advance or deposit: the difference in the processes for which the advance and deposit are suitable, the difference between the advance and the 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 what is better to give an advance or a deposit and in which case each of these financial transactions is carried out - we recommend reading the article.

Since the time of the conclusion of various agreements there is already little handshake. Because of this, in practice, when performing various transactions, even transactions related to the acquisition and sale of real estate, often people use advances and deposits. They are considered the most common prepaid methods for a particular transaction. As a rule, people do not notice how exactly the deposit and the advance differ. And this sometimes causes undesirable consequences for each participant in a perfect transaction. What is better to use - a deposit or an advance?

Deposit definition

Deposit - This is finance directed from the buyer to the seller on account of the payments specified in the contract. This money confirms that the contract is concluded. In addition, this deposited money gives a guarantee of the implementation of each item of documentation. If the transaction was completed successfully, then the deposit made is taken into account in the total amount of payment.

There are 3 main characteristics of the deposit:

  • The deposit is a certain part of the amount specified in the contract.
  • The amount deposited is proof of the conclusion of an agreement between the two parties.
  • The deposit is considered a security method.

It is especially necessary to highlight the last point. Its essence is that if one of the parties to the agreement violates its own obligations, then unpleasant consequences can occur. The consequences will depend on who exactly from the parties violated the agreement.


The deposit also has the following features:

  • The contract should be concluded only in writing. Enters into force after the purchase or sale agreement is registered.
  • The contract clearly states that the amount paid is considered a deposit.
  • The document indicates each property parameter, the full details of any party, the real value of the transaction amount.

If, after the deposit is signed, the seller wishes to purchase the property at a slightly higher cost, then it will be profitable for him when the price difference turns out to be more than the loss on the compensation of the deposit in the 2nd tariff. The buyer, in turn, if he finds a more affordable option, must also compare the benefit with the financial loss of the deposit. Therefore, the higher the amount of the new purchase, the greater the chance that the participants in the transaction do not refuse the agreement. The amount of the deposit is not controlled by law.

Before entering into a deposit and transfer agreement, the buyer must be sure of the following nuances:

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

The deposit is received only by those who are the property owners. A deposit agreement may be concluded in a notary office, which incurs some costs for notary services. If the transaction is violated due to the seller, and the buyer is not able to receive payment, then he has the right to sue the violator. With great probability, the final decision will be in favor of the party that suffered.

Advance determination

An advance is a part of the finance made in advance that is included in the payment of the purchased goods or services. The advance is able to fulfill the function of payment. But he does not have a security indicator, therefore, in case of violation of the contract of this contract, the funds are returned to the buyer in any situation. Advance payment is a certain advance payment.

So, the advance has a payment function, but it has no interim measure. But does he have evidence? The answer to this question is considered completely ambiguous. In such a situation, everything will depend on the current case.

Prepaid expense

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

Due to the fact that regulatory authorities do not monitor the process well, it is likely that the buyer will come across deceivers. In addition, there are situations when an advance is taken by a company that also commits fraudulent activities.

If the buyer has not received the advance payment and decided to go to court, then the final decision will depend on some important points.

What are the differences between advance and deposit?

In reality, many sellers who do not accept a deposit choose an advance payment. At the same time, they discuss some additional important conditions for them, for example, sanctions with penalties that apply to the buyer may be imposed in the advance agreement.

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

The purchase of housing in the secondary market, as a rule, is carried out by an agreement concluded by both parties. The advance payment agreement is made out on paper in writing, and can be executed in any order. From any of the participating parties, a trusted person or a real estate company may be present. The contract is executed by a notary, which is more competent and reliable, since in such a situation the notary person acts as a certain witness, giving the seller the opportunity to avoid liability if the transaction was disrupted.

The advance payment agreement has some significant details - this is the amount of the amount paid, the term of the advance. Also, in the documents during registration, the price of the property, address (if it is an apartment, house), initials of 2 parties are indicated. Important conditions for concluding an agreement are indicated - this is the form and the place where the calculation was made, the conditions for conclusion, the allocation of 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 distinguishing features of these financial procedures:

  • The deposit has an evidential, payment, security characteristic. But the advance has only a payment indicator (in some cases, evidence).
  • The moments of how the deposit is paid back will depend on who is responsible for breaking 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, an agreement is required. Advance can be made even before the transaction and the signing of the contract.

Of course, between these 2 concepts there are other, more important distinguishing features. They may be the possible consequences for each party.

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

Prepaid expense

This money transaction is suitable for:

  • The acquisition or sale of property of any nature.
  • Deliveries of goods.
  • Contracting.
  • If you need to order a paid service.
Process difference


This operation is relevant if:

  • Buying or selling land, real estate of any kind.
  • Supply of large quantities of goods.

Making a certain amount of the advance payment is considered more common, since during the breach of the contract none of the parties incurs any losses at all. But it is worth starting all the same from what particular case the process will be used. During the agreement on the advance payment agreement, it is necessary to prepare that the other party has the right at any time to withdraw from the agreement without receiving any punishment. The deposit allows you to control each participant. It is used if it is necessary for participants to comply with the terms of the contract.

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

During the agreement on the advance payment agreement, it is necessary to prepare that the other party has the right at any time to withdraw from the agreement without receiving any punishment. The deposit allows you to control each participant. It is used if it is necessary for participants to comply with the terms of the contract.

If the terms of the contract that was secured by the deposit are violated?

  • The amount of the deposit is returned if the obligations were suspended even before it was enforced, or because it was impossible to fulfill it due to circumstances for which the parties are not responsible at all.
  • If the contract is violated by the party that made the deposit, then the finances remain in the hands of the opposite side.
  • When the contract is breached by the responsible person who received the deposit, then the person must return the deposit in half to the opposite side.
Difference in consequences

What consequences may arise if the advance agreement is violated?

  • If the contract is terminated by agreement of the participants before it took its own action, or in other situations, the party that made the advance payment has the right to ask for money back.
  • The person who made the advance cannot demand money for the advance if, under the terms of the agreement, the other party has the right to receive remuneration, even if it is a violator. For example, a person will not receive an advance if during scientific work it was discovered that the process cannot bring the desired results.

The difference in the advantages and disadvantages of advance and deposit

Advantages of advance payment:

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


  • If the seller finds another buyer, he has the right to terminate the agreement.
  • The presence of uncertainty.
The difference in advantages and disadvantages

Advantages of a deposit:

  • A sufficiently effective way that allows the other party to fulfill all the conditions of the contract.
  • Both the buyer and seller have equal risks.
  • Confidence that the agreement will be surely executed.


  • Both parties may suffer significant losses.
  • The seller, breaking the agreement with the buyer on his own initiative, must necessarily pay a larger amount than he received. The buyer has the right to recover damage by filing a lawsuit. These are also certain costs.

There are many reasons why a deal is breaking. All of them are diverse, do not depend on the will of the parties. However, the opposite party to the contract in any situation may require 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 ideally matches the personal needs of the buyer, and he no longer wants to look for other options. The seller will definitely require a deposit if the cost of the apartment or house is overpriced, and the buyer has a chance to find a more affordable option.

Any of these options is acceptable in a given situation. Anyway, before you make an advance or a deposit, transferring money to the seller, you need to make sure that all the necessary documentation is present. If the buyer cannot independently evaluate how well the contract is drawn up, he has the right to contact a lawyer. Only a contract without violations will come in handy when defending rights if there are any contentious issues.

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