Purchase Process in Czech Republic

Czech Point 101 July 22, 2014 @ 2:47PM

So you’ve signed the purchase agreement to buy an apartment in Prague. You should be able to just get the keys and move in, right? 


Actually, property ownership in Czech Republic is different than many countries because a signed purchase contract does not make you owner of a property. In order for you to be recognized as the legal owner, you must be registered as such in the Land or Cadastral Register. 


Thus, if you’ve signed a purchase contract for real estate property in Czech Republic, this is only the first step in completing the purchase. Next the agreements must be submitted to the Cadastral Register for the final decision. In your application a request is made for the recorded ownership of the property to be changed based on the signed purchase contracts. 


This application must be submitted to the correct Cadastral branch since each area of Czech Republic is governed by a different branch of the Cadastral Register. 


The fact that there are different branches governing the areas, meaning different officials, combined with poor internal training and general lack of motivation among government employees (please don’t forward this on, I want to keep my visa), makes it difficult to ensure consistency as to what is acceptable and what is not. If in doubt it is always best to contact the Cadastral branch to verify their standards before finalizing the deal. In some areas it has been necessary to actually show them in the law whether or not something unusual is legal. 


Note: This process of registering new ownership in the Cadastral Register can take anywhere from 4 to 24 weeks. In Brno currently the waiting period is 6 weeks and in Prague between 12 and 24. 


What happens with the property in the meantime? 


This is a matter of negotiation. 


Since the Prague Cadastral branch is currently taking so long to register changes, many sellers request some payment up front and the rest when the ownership change is actually completed (ok, most will start wanting all the money up front which puts them in a good position as still legal owner of the property and having all the cash in hand). However, in exchange for an advance payment, the potential buyer is often given the keys immediately. 


Note: This is a last resort and in most cases, Czech Point 101 recommends using a notary office to hold the full purchase price while waiting for the decision of the Cadastral Register. For other tips on buying Czech real estate please reply to this newsletter and request the report: ‘8 Critical Tips to Buying Czech Property’. 


Is it possible that the change in ownership could be rejected by the Cadastral Register? 


Yes, this is entirely possible. 


If the purchase agreements do not meet the satisfaction of the officials in terms of clearly identifying the property, sellers or buyers, or the buyers are not legally able to purchase the property (i.e. EU citizen without a residency permit or SRO), etc., the change of ownership requested in the application can be rejected. 


In such a case, buyers with the purchase money being held at a notary office will have their money returned (depending on the terms of the agreement with handling the money at the notary office) but those who made direct payment would be at the mercy of the seller or have to take them to court to get the money back. 


In the first situation, with the purchase price or majority of it still at the notary and not in the hands of the seller, it is easier to have some control over the seller to ensure they cooperate in correcting the problems. 


Who is responsible for the property during this ‘limbo’ period? 


Technically the property still belongs to the seller while a decision is being made by the Cadastral Register. However, once the decision is made to accept the buyer as the new owner, the buyer is registered to be the owner from the date on the purchase agreements. 


If something happened to the property during this ‘limbo’ period, such as some sort of damage, the new owner would have to take the issue up with the seller to get compensation. 

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