{"id":2263,"date":"2026-09-25T04:32:13","date_gmt":"2026-09-25T01:32:13","guid":{"rendered":"https:\/\/linden.lt\/tinklarastis\/paying-for-property-lithuania-notary-deposit-advance-pledge\/"},"modified":"2026-09-25T04:32:13","modified_gmt":"2026-09-25T01:32:13","slug":"paying-for-property-lithuania-notary-deposit-advance-pledge","status":"publish","type":"irasas","link":"https:\/\/linden.lt\/en\/blog\/paying-for-property-lithuania-notary-deposit-advance-pledge\/","title":{"rendered":"Paying for property in Lithuania: notary deposit, advance and pledge"},"template":"","kategorija":[],"class_list":["post-2263","irasas","type-irasas","status-publish","hentry"],"acf":{"visi_puslapiai_cta_statusas":false,"visi_puslapiai_cta_antraste":"","visi_puslapiai_cta_formos_id":"","visi_puslapiai_cta_papildomas_tekstas":"","visi_puslapiai_cta_nuotrauka":null,"tinklarastis_1_autorius":null,"tinklarastis_1_iraso_tipas":false,"dinamiski_blokai":[{"acf_fc_layout":"tekstas","tekstas":"

When you buy a plot or a project, the buyer fears paying and not getting the property, and the seller fears handing over the property and not getting paid. The law gives several tools to manage this risk. A notary accepts money into a deposit account where the payment arises from a notarially certified transaction or relates to a future notarial act, and pays it out to the seller on the dates set in the contract or once the agreed event has happened. So the money can wait with the notary until what the parties agreed has happened. If the buyer pays an advance under a preliminary agreement, that is not earnest money (rankpinigiai<\/em>): the law forbids using earnest money to secure a preliminary agreement or a contract that must be in notarial form. So it is worth securing the return of the advance with a mortgage or a pledge, for example a pledge of the shares in the seller's company, and with liquidated damages. Finally, the deadline matters most: if the main agreement is not concluded within it, the obligation to conclude it ends.<\/p>\r\n

How to check whether the property is mortgaged or seized, and what the notary checks, we described in the article Buying property in Lithuania: how to check for a mortgage, seizure and encumbrances<\/a>. We covered the form of a preliminary agreement in Preliminariosios sutarties ypatumai<\/a> (in Lithuanian), and the notary's other functions in Notaras \u2013 ne tik sandori\u0173 tvirtintojas<\/a> (in Lithuanian). This article is about how to agree on the money.<\/p>\r\n

The basic rule: the money and the ownership have to \"meet\"<\/h2>\r\n

A contract for the sale of immovable property must be in notarial form, except contracts concluded during bankruptcy proceedings (Article 6.393(1) of the Civil Code of the Republic of Lithuania (CK)). Ownership passes to the buyer from the transfer of the property (CK Article 6.393(4)). Against third parties, the contract has effect only once it is registered in the public register (CK Article 6.393(3)). The notary sends the data on the certified contract to the register keeper within 24 hours of certification (Article 46(7) of the Law on the Notarial Profession of the Republic of Lithuania (N\u012e)).<\/p>\r\n

This raises a practical question: when does the seller get the money \u2013 before the transfer, at the same moment, or after registration? The law sets only a default rule that applies where the parties have not agreed otherwise: if no time for payment is set, the buyer pays when the seller transfers the property (CK Article 6.314(2)), and reciprocal obligations are performed at the same time unless the law, the contract or the nature of the obligation provides otherwise (CK Article 6.39(3)). This default is often not enough, so set the order precisely in the contract. The buyer's interest is that the seller receives the money only once the buyer's ownership is secured. The seller's interest is for the money to be really paid before the property is handed over. The notary's deposit account is used to reconcile the two.<\/p>\r\n

The notary's deposit account<\/h2>\r\n

A notary accepts sums of money into a deposit account (N\u012e Article 26(1)(11)). The procedure for accepting money into a notary's deposit account and paying it out is set by the Minister of Justice in agreement with the Chamber of Notaries (Notar\u0173 r\u016bmai<\/em>) (N\u012e Article 26(3)). That procedure is laid down in the Description of the Procedure for Accepting Money into a Notary's Deposit Account and Paying It Out (Pinig\u0173 pri\u0117mimo \u012f notaro depozitin\u0119 s\u0105skait\u0105 ir j\u0173 i\u0161mok\u0117jimo tvarkos apra\u0161as<\/em>), approved by Order No. 1R-35 of the Minister of Justice of 9 February 2021 (the Deposit Rules).<\/p>\r\n

When a notary may accept the money.<\/strong> An obligation may be performed by paying into a notary's deposit account where it arises from a notarially certified transaction or another legal fact, where the payment relates to a future notarial act, or on other grounds set in legislation (point 5 of the Deposit Rules). A sale agreement that the notary will certify is exactly such a future notarial act. The person paying submits a request to the notary. It states the details of the person in whose favour the money is paid, the sum, the currency and the conditions on which the sum must be paid out, and it is accompanied by the documents showing the basis of the obligation (point 7 of the Deposit Rules). The notary agrees, or refuses with reasons, to accept the money (point 8 of the Deposit Rules). Where the obligation is expressed in a foreign currency, the money can be paid in and will be paid out only in the currency provided for in the notary's deposit account agreement (point 17 of the Deposit Rules).<\/p>\r\n

How the money is held.<\/strong> It is accounted for separately from the notary's other funds, and the notary may not dispose of the money or use it at their own discretion (point 4 of the Deposit Rules). The notary informs the person in whose favour the money was paid within a reasonable time (point 11 of the Deposit Rules).<\/p>\r\n

When the money is paid out to the seller.<\/strong> The sums are paid out on the dates set in the parties' contract, once the legal fact for which the money was paid has occurred, or on the creditor's request where the basis for the payment is set in legislation and\/or the parties have not agreed the conditions for paying it out (point 12 of the Deposit Rules). The notary transfers the sum by payment order to the account the creditor names (point 13 of the Deposit Rules). So what you write in the contract essentially decides the moment of payout. If you write no conditions, the money may be paid out on the seller's request alone.<\/p>\r\n

Can the buyer take the money back.<\/strong> The person who paid may withdraw the sum only until the creditor has accepted performance or until the notarial act for which the money was paid has been performed. Withdrawal is not possible if it would harm the interests of third parties or of jointly liable debtors or sureties (point 16 of the Deposit Rules). The notary charges a fee set by legislation for accepting and paying out the money (point 19 of the Deposit Rules).<\/p>\r\n

In our practice, we usually set out payment through the deposit like this: the buyer transfers the sum to the notary's deposit account before the main agreement is signed; the notary confirms the money has arrived; the contract states on what event the notary pays it to the seller (for example, once the agreement and the transfer and acceptance deed are signed, or once ownership is registered). If the property is mortgaged to the seller's bank, it is worth writing into the contract what part of the deposit is paid to the bank so the mortgage is removed. Agree the conditions with the notary in advance.<\/p>\r\n

Do not confuse two things. The Civil Code separately allows a debtor to perform a monetary obligation by paying into the deposit account of a notary, a bank or another credit institution where, for example, the creditor avoids accepting performance (CK Article 6.56(1)(3)). Such a payment counts as proper performance (CK Article 6.56(2)). That is a tool for when the other side does not cooperate, not a normal payment arrangement.<\/p>\r\n

An advance under a preliminary agreement is not earnest money<\/h2>\r\n

Under a preliminary agreement the parties undertake to conclude a main agreement in the future (CK Article 6.165(1)). It must be in writing, otherwise it is invalid (CK Article 6.165(2)). The buyer may pay part of the sum when signing it. Where an individual buys a not-yet-built house or flat from a legal person (CK Article 6.401(1)), the preliminary agreement must state additional mandatory terms, including the buyer's right to withdraw from the preliminary agreement within a period set by law (CK Article 6.401(2)).<\/p>\r\n

The law defines earnest money as a sum one party gives the other under a concluded contract, on account of the amounts it owes, to prove the contract exists and to secure its performance (CK Article 6.98(1)). But earnest money cannot secure a preliminary agreement, nor a contract that must by law be in notarial form (CK Article 6.98(2)). A contract for the sale of immovable property, other than one concluded during bankruptcy proceedings, is exactly such a contract. So the rule that earnest money stays with the recipient where the giver is responsible for non-performance, and that the recipient must pay double the sum where it is responsible (CK Article 6.100(1)), does not apply to such a payment as earnest money. It is an advance \u2013 the first part of the sum payable.<\/p>\r\n

What if you want a similar effect? Write in liquidated damages (netesybos<\/em>). Liquidated damages are a sum of money set by the contract that the debtor must pay if the obligation is not performed or is performed improperly (CK Article 6.71(1)). An agreement on liquidated damages must be in writing (CK Article 6.72). In our practice, liquidated damages in a preliminary agreement are usually the same for both parties, but the parties may agree on different amounts \u2013 that is a matter for negotiation. Where CK Article 6.401 applies, the losses the seller may claim if the buyer uses the right to withdraw from the preliminary agreement are capped by law (CK Article 6.401(3)). Also write down when, and within what time, the advance is returned if the main agreement is not concluded.<\/p>\r\n

Keep in mind two limits on liquidated damages. The creditor cannot claim both liquidated damages and actual performance, except where the debtor misses the deadline for performance, and the contract cannot change this \u2013 an agreement providing otherwise is invalid. Where compensation for losses is claimed, the liquidated damages are counted towards it (CK Article 6.73(1)). If the liquidated damages are clearly excessive or the obligation has been partly performed, the court may reduce them, but not below the losses suffered; liquidated damages already paid are not reduced (CK Article 6.73(2)).<\/p>\r\n

How to secure the return of the advance: mortgage and pledge<\/h2>\r\n

Performance of obligations may be secured by liquidated damages, a pledge (mortgage), a surety, a guarantee, earnest money or other means provided in the contract (CK Article 6.70(1)). Future obligations can be secured too (CK Article 6.70(2)), for example the duty to return the advance if the main agreement is not concluded.<\/p>\r\n

Mortgage.<\/strong> A mortgage is a right in rem in another person's immovable property that secures the performance of an existing or future property obligation, where the pledged property is not handed over to the creditor (CK Article 4.170(1)). The buyer can ask for the plot being bought to be mortgaged in its favour until the main agreement. If the plot belongs to a company that has a board, the decision to mortgage long-term assets above the threshold set in the law or the articles of association is taken by the board (Article 34(4)(4) of the Law on Companies (AB\u012e)), so ask for that decision. If the company has no board, the manager takes this decision (AB\u012e Article 37(10)). The articles of association may require prior approval by the general meeting or the supervisory board (AB\u012e Article 34(5)), so read the articles. A mortgage transaction must be in notarial form (CK Article 4.185(1)). It can be relied on against third parties acting in good faith only once the mortgage is registered in the public register (CK Article 4.187(2)). Unless the mortgage transaction provides otherwise, the mortgaged property can be transferred, but the mortgage follows the property, unless the Code provides otherwise (CK Article 4.170(6)).<\/p>\r\n

A pledge of the shares in the seller's company.<\/strong> Where you are buying a project whose plot belongs to a company, or the advance is paid to the company's owner, the company's shares can serve as security. A pledge is a right in rem in another person's movable property and property rights (CK Article 4.198(1)). The law also treats as a handover of the pledged object the transfer of an equity security to the creditor or the making of entries in securities records (CK Article 4.198(2)). A share is a security (CK Article 1.102(1)).<\/p>\r\n

Where the shares are handed over to the creditor (an entry in the securities records also counts as a handover, CK Article 4.198(2)), a written pledge transaction is concluded (CK Article 4.209(1)). Where the pledged shares stay with the pledgor, the pledge transaction is certified by a notary and registered in the public register (CK Article 4.209(2)). The exception: where the creditor, the debtor and the pledgor are all legal persons, the transaction can also be concluded by electronic means, with the pledge registered in the public register (CK Article 4.209(3)). After certifying a pledge transaction, the notary sends the data to the Real Property Register or to the Register of Contracts and Restrictions of Rights (Sutar\u010di\u0173 ir teisi\u0173 suvar\u017eym\u0173 registras<\/em>), depending on the pledged object (N\u012e Article 46(8)). Between the parties, the pledge takes effect when the transaction is concluded, unless the transaction provides otherwise (CK Article 4.213(1)). Where the shares stay with the pledgor, the pledge can be relied on against third parties acting in good faith only once registered (CK Article 4.213(2)), so in that case it is safer to pay out the advance only once the pledge is registered.<\/p>\r\n

What else to know about a pledge:<\/p>\r\n