The property buying process in the Czech Republic
Koutris Efstratios, Monday, 27 January 2014
This article is part of a series of 8 articles about buying property in the Czech Republic. The other articles in the series cover the following topics:
Introduction
The Czech Republic is now considered to be one of the most attractive places for purchasing properties, and therefore more and more foreign buyers decide to invest their money on domestic real estates. A very common question that foreigners tend to ask is how easy and time consuming the buying process is, and of course what are the critical steps that need to be followed in order to accomplish the investment. Hence, the following lines will guide foreign investors throughout the purchase procedure, and will provide a brief, yet punctual overview of all the steps that should be followed. It needs to be said that this article assumes no former experience in purchasing real estates or dealing with real estate agents either in the Czech Republic or in any other country.
Identification of property – negotiations
The first step in order to purchase a real estate is of course to thoroughly search and locate a property that meets your criteria and standards, and which, furthermore, fulfills your expectations. The buyer should take into consideration that there are two options with respect to the potential ownership; a private one but also a cooperative one, in which case the buyer will owe a share of the cooperative and not the whole property. Nevertheless, prospective buyers essentially need to follow one of the three following options: address to friends or family members for potential suggestions, search individually for properties over the internet or in newspaper ads, or finally appoint a real estate agent. The latter option is usually the most common one because not only does it speed up the process but at the same time ensures that the buyer will not spend a lot of personal time searching and searching for the appropriate property. In any case, the buyer needs to have a clear opinion of what he wants and what kind of deal would be considered as acceptable for him. Always keep in mind that there is a great deal of money at stake, hence real estate agents will try to sell you just anything. A traditionally strong negotiation factor is the ability to pay in cash. In fact, in most cases this would allow you to save up to 7 % of the initial purchase price, not to mention that you will avoid the process of applying for a mortgage to a bank (which will require additional paperwork, time, and money). In general, try to be convincing, steady, and positively sure of what you want and what you are talking about.
Visual Inspection and Reservation Contracts
The next step is to physically visit the property and inspect whether it really meets your standards and criteria (such as the area around the property, the level of noise, how old the building is, if it spacious enough for your needs, etc.) Most typically, you should be accompanied by a trustworthy attorney who can also provide a more in-depth estimation of the property (you don’t want to pay more than the property is worth) or a professional evaluation of the property conditions. One of the most important things to avoid is signing any type of reservation contract before you actually inspect the property with your own eyes AND with an independent attorney. There are many cases where individuals sign this contract beforehand and then decided to cancel the purchase process. This will automatically suggest that not only will the buyer lose the property but will also lose the respective deposit to the agent as well.
Double Check
The next crucial step is to double check the property, through extracts from the Land Registry, and of course its technical status. The first one includes pledges, easement rights, executions, etc. and, most often, is performed by a lawyer. In case you don’t know any lawyer the real estate agency will offer to provide you one. However, this can be a very tricky decision because he/she will not be fully working for you but instead for the profit of the agency. Therefore, make sure you appoint a qualified professional lawyer whom you trust. On the other hand, double-check of the technical status usually deals with aspects such as the installation of gas, water, sewerage. This is extremely essential because this inspection will provide a fair estimation of the costs for potential reconstruction or restoration.
Purchase Contracts and Land Registry
Finally, and assuming you have followed the previous steps, you can sign the purchase contract which allows for the deposition of the purchase price to an escrow account. An escrow account via bank or notary is highly recommended for settling the purchase price because it will save you money. It usually takes approximately 15 days from the day you signed the purchase contract in order to be able to transfer funds to the account. The purchase contract is then submitted to the Land Registry for official registration and money from your escrow account will be then used to pay the transfer tax to the respective authorities. Finally, the purchase contract will typically stipulate that the seller must give the property to the new owner after receiving the money from the escrow.
This article is part of a series of 8 articles about buying property in the Czech Republic. The other articles in the series cover the following topics:
Introduction
The Czech Republic is now considered to be one of the most attractive places for purchasing properties, and therefore more and more foreign buyers decide to invest their money on domestic real estates. A very common question that foreigners tend to ask is how easy and time consuming the buying process is, and of course what are the critical steps that need to be followed in order to accomplish the investment. Hence, the following lines will guide foreign investors throughout the purchase procedure, and will provide a brief, yet punctual overview of all the steps that should be followed. It needs to be said that this article assumes no former experience in purchasing real estates or dealing with real estate agents either in the Czech Republic or in any other country.
Identification of property – negotiations
The first step in order to purchase a real estate is of course to thoroughly search and locate a property that meets your criteria and standards, and which, furthermore, fulfills your expectations. The buyer should take into consideration that there are two options with respect to the potential ownership; a private one but also a cooperative one, in which case the buyer will owe a share of the cooperative and not the whole property. Nevertheless, prospective buyers essentially need to follow one of the three following options: address to friends or family members for potential suggestions, search individually for properties over the internet or in newspaper ads, or finally appoint a real estate agent. The latter option is usually the most common one because not only does it speed up the process but at the same time ensures that the buyer will not spend a lot of personal time searching and searching for the appropriate property. In any case, the buyer needs to have a clear opinion of what he wants and what kind of deal would be considered as acceptable for him. Always keep in mind that there is a great deal of money at stake, hence real estate agents will try to sell you just anything. A traditionally strong negotiation factor is the ability to pay in cash. In fact, in most cases this would allow you to save up to 7 % of the initial purchase price, not to mention that you will avoid the process of applying for a mortgage to a bank (which will require additional paperwork, time, and money). In general, try to be convincing, steady, and positively sure of what you want and what you are talking about.
Visual Inspection and Reservation Contracts
The next step is to physically visit the property and inspect whether it really meets your standards and criteria (such as the area around the property, the level of noise, how old the building is, if it spacious enough for your needs, etc.) Most typically, you should be accompanied by a trustworthy attorney who can also provide a more in-depth estimation of the property (you don’t want to pay more than the property is worth) or a professional evaluation of the property conditions. One of the most important things to avoid is signing any type of reservation contract before you actually inspect the property with your own eyes AND with an independent attorney. There are many cases where individuals sign this contract beforehand and then decided to cancel the purchase process. This will automatically suggest that not only will the buyer lose the property but will also lose the respective deposit to the agent as well.
Double Check
The next crucial step is to double check the property, through extracts from the Land Registry, and of course its technical status. The first one includes pledges, easement rights, executions, etc. and, most often, is performed by a lawyer. In case you don’t know any lawyer the real estate agency will offer to provide you one. However, this can be a very tricky decision because he/she will not be fully working for you but instead for the profit of the agency. Therefore, make sure you appoint a qualified professional lawyer whom you trust. On the other hand, double-check of the technical status usually deals with aspects such as the installation of gas, water, sewerage. This is extremely essential because this inspection will provide a fair estimation of the costs for potential reconstruction or restoration.
Purchase Contracts and Land Registry
Finally, and assuming you have followed the previous steps, you can sign the purchase contract which allows for the deposition of the purchase price to an escrow account. An escrow account via bank or notary is highly recommended for settling the purchase price because it will save you money. It usually takes approximately 15 days from the day you signed the purchase contract in order to be able to transfer funds to the account. The purchase contract is then submitted to the Land Registry for official registration and money from your escrow account will be then used to pay the transfer tax to the respective authorities. Finally, the purchase contract will typically stipulate that the seller must give the property to the new owner after receiving the money from the escrow.
All types of property for sale in the Czech Republic by private sellers and estate agents. Find your perfect house or apartment in Bohemia, Moravia, Prague, Hradec Kralove, Ostrava or Plzen.
It is extremely important to know beforehand that the actual purchase price of a real estate is only part of the final cost. In fact this final cost
can be ultimately raised up to 6 – 8 % of the property’s value once additional fees relevant to legal and registration costs or the real estate’s agent
commission are to be considered. Therefore, this article effectively provides an overview of the total costs that a prospective buyer or seller needs
to spend in order to finalise his/her inve
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