Real estate purchase and sale is one of the highest-value asset transactions. To secure the transfer commitment, the parties often sign a deposit agreement. However, using a simple handwritten deposit agreement that lacks solid legal terms is a common cause of complex and prolonged disputes.

1. Legal Validity of a Handwritten Deposit Agreement

Under Article 328 of the 2015 Civil Code, a deposit is a measure to secure the performance of an obligation. Current law does not require a deposit agreement to be notarized or certified (unless the parties agree otherwise). Therefore, a handwritten deposit agreement is still legally valid if it satisfies the following conditions:

• The parties have full civil act capacity;
• The parties participate entirely voluntarily;
• The purpose and content of the transaction do not violate legal prohibitions or contravene social ethics.

2. Common Legal Risks of a Handwritten Deposit

Although binding, an uncertified handwritten agreement still carries many potential risks:

• The property is not eligible for transfer: The land may be subject to a boundary dispute, fall within a pending planning zone, be under judgment-enforcement seizure, or have a forged land use right certificate.
• The person signing the deposit lacks the authority to decide: The land plot may be under the joint use right of a household or the shared property of a married couple, yet only one individual signs to receive the deposit without a valid power of attorney.
• The party receiving the deposit “takes the money and runs”: After receiving a large deposit, the seller delays notarizing the sale contract or deliberately transfers the property to a third party offering a higher price.
• Disputes over the deposit penalty: A handwritten agreement that does not clearly define force majeure conditions or the deadline for completing the transfer often leads to fierce disputes when one party wants to cancel the transaction.

3. Risk-Prevention Solutions for Buyers

To protect their lawful rights and interests, buyers should take the following steps before making a deposit payment:

• Verify the actual legal status: Check the original Land Use Right Certificate directly, and look up planning information and any transaction restrictions at the local land management authority.
• Ensure the signatures of all co-owners: Require all co-owners (spouses, household members if the land was issued to a household) to sign the deposit agreement.
• Clearly define the deadline and penalty for breach: Specify the date, time, and place for notarizing the transfer, the deposit penalty amount, and the responsibility to refund the deposit in the event of an objective error.
• Notarize the agreement at a notary office: Notarizing the deposit agreement helps verify the legal validity of the documents and prevents the risk of the property being sold to multiple buyers.

If a deposit dispute arises, or if you need to review the legal status of your property documents before a transaction, please contact Di An Law Firm right away for prompt and reliable support from our team of Lawyers.