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.