Documents needed for a real estate deal 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
One of the most essential procedures, that prospective real estate investors need to take into consideration when purchasing a real estate in the Czech Republic, is the acquisition of all relating documents and contracts which are needed to complete the transaction. In the past, and as described in a previous article, the buying process that foreigners needed to initiate, and consequently follow, was extremely time-consuming due to bureaucracy. Foreigners would need to either hold a Czech residency permit or to commence the respective procedures through an established Czech company (Special Purpose Vehicle - SPV). Nevertheless, 2009 was a distinct mark for foreigners, especially for those who reside within the EU, because the CR had to comply with the with the EU directive (article 56 of the EU articles of establishment) which essentially abolished the adoption of different criteria between Czech citizens and EU citizens in terms of buying a property. This, not only did it render the buying process as very fast but also reduced the prerequisite amount of paperwork and documents needed. Therefore, the following lines are dedicated to a full overview of all documents and kind of contracts needed by foreigners in order to finalize the purchase of a real estate in the Czech Republic.
Overview of Documents required for purchasing a Real Estate in the Czech Republic
Essentially, EU citizens need only to show their passport in order to be eligible to buy real estates in the Czech Republic. The very first document that prospective buyers need to purchase is a statement from the Land Registry (Výpis z Katastru nemovitostí) which confirms the former legal ownership of the respective property and also ensures that there are no current loans on that property (you don’t want to pay someone else’s loans!). This document is primarily needed due to the fact that only legal owners are entitled to sell real estates in the CR; nevertheless, a lawyer with a power of attorney can also act on behalf of the seller. The extract from the Land Registry can be acquired by a simple visit to any near Czech Place. The charge is only about 100 CZK (4 euros), and the individual must provide his ID/Passport. However, he/she should also know the cadastral number (katastralni uzemi), provide the land register area, land plot number (parcelni cislo), building registration number, and of course the ownership document. Most of this information can be acquired from the Land registry either in person or online (for free). In case someone prefers to use a notary for this process then he/she should know that the respective pay will be per page, thus amounting to some serious amount of money.
Apart from the Land registry documents, the prospective buyer should also care to acquire documents regarding the conditions of the property, the so- called an expert report (znalecký posudek). This is of upmost importance in case the property is relatively old and deals with heating, insulation, plumbing, electricity etc. On the other hand, if the building is quite new, then the prospective buyer should acquire its building approval (kolaudace). Finally, it would be also extremely useful to purchase any previous building documentation regarding future construction plans or in general any changes to the property.
Contracts
In order to finalize your real estate purchase the prospective investor needs to be aware that there are several contracts that he/she needs. Essentially, the only things the buyer must provide, in order to finish the deal, are the written contract and the petition to the Cadastral (Land) Registry. The purchase contract is the paper with which the property is transferred from the former owner to the new one, whereas the petition will officialise and register this transfer of ownership rights to the respective authorities. This is the situation if ou are really lucky though. Most typically, there will be a plethora of further contracts that the buyer will also need. First of all, the buyer might need the reservation contract which is intended as Deposit contract (or Letter of Intent). This ensures that throughout the buying process (mortgage arrangements, setting up an escrow account etc) the owner will not cancel the deal in case he/she receives a better offer. Furthermore, there is the contract for appointing a respective lawyer or a notarial deposit of money. This works as a safety net and defines the conditions that the buyer should proceed in order to buy the property, but also the conditions under which the lawyer/notary is obliged to transfer the money to the former owner. In addition to the aforementioned contracts, there is also the mortgage contract that is signed with the bank (that is of course in case the buyer gets a mortgage and don’t have the whole amount of money to pay beforehand). This will also imply a contract for collateral with which the bank will ensure that will have something as a guarantee in case the buyer cannot fulfil his ‘paying mortgage’ obligations. Finally, there are further optional contracts to be signed which, for instance, involve a restriction of the joint property of spouses (in case the buyer does not want his/her property to be jointly owned by his/her spouse). It should be noticed that ALL contracts should be in accordance with the Czech Law, thus every single signature or the purchase/collateral contracts must be verified. This implies that the role of lawyers in the purchase process is something that cannot be avoided.
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
One of the most essential procedures, that prospective real estate investors need to take into consideration when purchasing a real estate in the Czech Republic, is the acquisition of all relating documents and contracts which are needed to complete the transaction. In the past, and as described in a previous article, the buying process that foreigners needed to initiate, and consequently follow, was extremely time-consuming due to bureaucracy. Foreigners would need to either hold a Czech residency permit or to commence the respective procedures through an established Czech company (Special Purpose Vehicle - SPV). Nevertheless, 2009 was a distinct mark for foreigners, especially for those who reside within the EU, because the CR had to comply with the with the EU directive (article 56 of the EU articles of establishment) which essentially abolished the adoption of different criteria between Czech citizens and EU citizens in terms of buying a property. This, not only did it render the buying process as very fast but also reduced the prerequisite amount of paperwork and documents needed. Therefore, the following lines are dedicated to a full overview of all documents and kind of contracts needed by foreigners in order to finalize the purchase of a real estate in the Czech Republic.
Overview of Documents required for purchasing a Real Estate in the Czech Republic
Essentially, EU citizens need only to show their passport in order to be eligible to buy real estates in the Czech Republic. The very first document that prospective buyers need to purchase is a statement from the Land Registry (Výpis z Katastru nemovitostí) which confirms the former legal ownership of the respective property and also ensures that there are no current loans on that property (you don’t want to pay someone else’s loans!). This document is primarily needed due to the fact that only legal owners are entitled to sell real estates in the CR; nevertheless, a lawyer with a power of attorney can also act on behalf of the seller. The extract from the Land Registry can be acquired by a simple visit to any near Czech Place. The charge is only about 100 CZK (4 euros), and the individual must provide his ID/Passport. However, he/she should also know the cadastral number (katastralni uzemi), provide the land register area, land plot number (parcelni cislo), building registration number, and of course the ownership document. Most of this information can be acquired from the Land registry either in person or online (for free). In case someone prefers to use a notary for this process then he/she should know that the respective pay will be per page, thus amounting to some serious amount of money.
Apart from the Land registry documents, the prospective buyer should also care to acquire documents regarding the conditions of the property, the so- called an expert report (znalecký posudek). This is of upmost importance in case the property is relatively old and deals with heating, insulation, plumbing, electricity etc. On the other hand, if the building is quite new, then the prospective buyer should acquire its building approval (kolaudace). Finally, it would be also extremely useful to purchase any previous building documentation regarding future construction plans or in general any changes to the property.
Contracts
In order to finalize your real estate purchase the prospective investor needs to be aware that there are several contracts that he/she needs. Essentially, the only things the buyer must provide, in order to finish the deal, are the written contract and the petition to the Cadastral (Land) Registry. The purchase contract is the paper with which the property is transferred from the former owner to the new one, whereas the petition will officialise and register this transfer of ownership rights to the respective authorities. This is the situation if ou are really lucky though. Most typically, there will be a plethora of further contracts that the buyer will also need. First of all, the buyer might need the reservation contract which is intended as Deposit contract (or Letter of Intent). This ensures that throughout the buying process (mortgage arrangements, setting up an escrow account etc) the owner will not cancel the deal in case he/she receives a better offer. Furthermore, there is the contract for appointing a respective lawyer or a notarial deposit of money. This works as a safety net and defines the conditions that the buyer should proceed in order to buy the property, but also the conditions under which the lawyer/notary is obliged to transfer the money to the former owner. In addition to the aforementioned contracts, there is also the mortgage contract that is signed with the bank (that is of course in case the buyer gets a mortgage and don’t have the whole amount of money to pay beforehand). This will also imply a contract for collateral with which the bank will ensure that will have something as a guarantee in case the buyer cannot fulfil his ‘paying mortgage’ obligations. Finally, there are further optional contracts to be signed which, for instance, involve a restriction of the joint property of spouses (in case the buyer does not want his/her property to be jointly owned by his/her spouse). It should be noticed that ALL contracts should be in accordance with the Czech Law, thus every single signature or the purchase/collateral contracts must be verified. This implies that the role of lawyers in the purchase process is something that cannot be avoided.
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Commencing all necessary steps for the acquisition of a property in a country other than yours can be a very tedious, time-consuming, or even
horrifying experience. Therefore, this article intends to provide a brief, yet punctual overview of the appropriate procedure that foreign prospective
investors need to follow in order to successfully accomplish their real estate transaction.
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