Most of us buy property just a few times in our lifetime. This means we don’t have much opportunity to gain enough experience in this area to know what to check before buying. This can lead to the property not meeting our expectations. In this article we’ll cover what to look out for when buying a property in the Czech Republic so that everything goes to plan.
Trust but verify
From the point of view of my daily practice, I can say that most buyers are quite trusting. They believe that the smooth running of the transaction depends on the skills of the intermediary (i.e., me) and the trustworthiness of the seller. If one of us were to be, let’s say, less than transparent, it would not be that hard to cheat the buyer. Moreover, cases where the purchase did not meet the customer’s expectations are quite common. However, by checking a few pieces of information, you can avoid unpleasant situations and disappointment. There are three areas in total. The first one is the data registered in the Land Registry, followed by information about the payments for the apartment, and finally information about the functioning of the house.
Now let’s use the example of a housing unit to show what needs to be checked for each of the headings.
Check the owners at the land registry
The first piece of good news is that you can easily obtain the data from the Land Registry in the Czech Republic online or at the relevant office, and you don’t need the help of the seller to do so. You should look for two documents. The first is the title deed, which contains basic information about the property, such as who owns it, how the current owner acquired the property and whether the property has any restrictions on ownership. The second important document is the owner’s declaration. This legally divides the property into residential units and specifies what is included in each unit. Now let’s take a closer look at the specific information to examine in each document.
The title deed will reveal the foreclosure or lack of ownership of the land under the house
First, let’s discuss how you can even obtain a title deed in the Czech Republic. There are several options:
- Online inspection of the cadastre. Once you have found the property you want, click on “Buy e-security”, specifically “Extract from the Land Registry (LV)” in the top right corner. The cost of the document is 50 CZK per page and the title deed is usually one or two pages long. You can pay by card.
- By visiting the Czech POINT in person, which you can usually find at any Czech post office, municipal office or notary. At the post office and the municipal office, the statement costs CZK 50 per page, at the notary you pay CZK 120 per page, regardless of whether the document has one or ten pages.
- Online remote access to the Land Registry. This can be easily set up at the cadastral office. You can get an extract from the title deed in the cadastre application, and it will cost 50 CZK per page. In addition to this document, you can then download other documents. This remote access is particularly useful if you are looking for information about real estate frequently. For occasional property purchases, the other options are sufficient.
- A personal visit to the cadastral office, which is usually located in every Czech district town. The listing costs uniformly 100 CZK and it does not matter how many pages it has.
Now let’s cut to the chase and tell you what you should look for in a title deed.
Find out who is the real owner of the property
First of all, focus on the owner of the property. Is the person you are dealing with the sole owner or is it a share ownership? Is the property community property? These questions are important for one simple reason: you need all important aspects of the purchase to be confirmed by all owners in the reservation agreement. And the more sellers, the higher the risk that one of them will complicate the sale.
Be clear about the use of the apartment
The next step is to look at the property description and check the use of the property, i.e., that it is an apartment, not a commercial unit or a studio etc. Check that the apartment has a share in the land attached to it, for example, the land under the house, the yard or the garden. When looking at the land registry, I also recommend looking to see if there is access to the house, in other words, if the access road is municipally owned.
Beware of ownership restrictions, some of them can cause problems
Section C of the title deed contains other essential information, namely restrictions on title, which you should examine carefully. Some of these are relatively harmless. For example, one of the most common restrictions – a contractual lien and related entries in favour of a banking entity. Here you need to make sure that the lien is properly paid off and subsequently cleared by the bank, but generally the processes are already standardized and there is no need to worry about major problems. But then there are limitations that can make things difficult for you. These include easements of use (formerly known as easements of occupancy), foreclosure records, liens in favour of a non-bank entity, rights of first refusal, and leases. In addition, you can review each of these problematic entries in detail. Just ask the cadastral office for a copy of the document in question (its price is CZK 20 per page). Each of these registrations would deserve a separate article, there are other possible registrations, but there is no space to describe them in this article. However, I have selected the most common restrictions that should not escape your attention and which you should definitely address before signing the contract.
Has your chosen property found itself in court?
If you find information in Section D of the title deed that there is a lawsuit pending regarding the property, such as a dispute over ownership, beware. This entry also needs to be resolved before you proceed with the purchase. The Land Registry will also issue the deed to you.
Check when the purchase was made
The last section of the title deed that you should look at when buying a flat is section E on the title of acquisition. Pay attention to the date when the property was transferred to the current owner. If the seller has only recently bought the property, such as a few days or weeks ago, you need to be wary. It may have been a speculative purchase on unusual terms, and in such a short period of time there has not yet been an entry in the title deed to contradict the transfer. If, on the other hand, the acquisition of the property took place some time ago, there is nothing to worry about. The length of ownership in itself proves that the purchase was properly made. Furthermore, there is no a priori need to worry about acquisitions by inheritance and gift between family members. The Land Registry will also issue the title for you for CZK 20 per page.
The owner’s declaration will tell you what all belongs to the apartment
If you haven’t forgotten anything important on the title deed, you can start looking at the owner’s declaration. It should state the exact size of the apartment’s internal area and external areas such as the loggia, balcony or terrace. It should not be missing information about whether the apartment has a cellar and how big it is or whether the apartment also has a parking space for use. The entire document is usually several dozen pages long and describes all the units in the building. At the Land Registry, we can only request the part concerning the apartment we want to buy. The price is 20 CZK per page. And why is it so important to think about the owner’s declaration? Because the actual areas are the cause of frequent resentment. For example, when you find out that the originally presented 60 m² apartment is actually 52 m² and the missing size is due to a 3 m² cellar and a 5 m² loggia.
Prepare for the fees associated with owning an apartment
This completes the first set of important information, and we can move on to the next one, which is the details of the payments for the apartment. Here you need to ask for the cooperation of the seller or the broker. Since this is a very common query, they should already have this information ready. Therefore, ask for a registration sheet in which all payments to the building management relating to the apartment unit are recorded. These are usually for water, sewerage, hot water, heating, waste, lift, cleaning and lighting of common areas, administration, accounting, contributions to the repair fund, house insurance and the remuneration of the HOA committee. Note also how many people the registration sheet is issued for. If there is only one person listed on the document and you plan to have two people living in the apartment, expect some items to be double. And if you see that the seller or broker is willing, ask them to bill you for the services listed for the past year as well. That way, you can compare whether the deposits match the actual consumption.
If the home is heated and the water is heated by electricity or gas, rather than centrally by the house boiler or district heating, ask for a summary of the deposits and utility bills. These items will be higher, and you should have a good overview of them.
Also get a certificate of no debt from the property management company before signing the purchase contract. According to the Czech Civil Code, all debts of the original owner are transferred to the buyer, so you might end up having to pay the debt yourself.
Explore how the apartment building is managed
The third and final area of information that needs to be verified is how the building is run. These should be correctly available in the commercial register. Search for the HOA, open the collection of the principal and you will see all the information published by the HOA, such as the bylaws, the profit and loss statement for the period of operation of the HOA, the management report and the minutes of the HOA meetings. In reality, however, only a small number of HOAs enter the information in the register. So, if you do not find what you are looking for, ask the seller to contact the chairman of the HOA and ask for the relevant documentation. We will now go through together which documents should be of most interest to you.
The balance sheet and profit and loss account will reveal savings and debts
The profit and loss account and balance sheet for the last financial year will tell you about the balance in the community’s bank account. This is usually equal to the repair fund, the money the community has available for repairs to the house. However, you may also find that some owners owe regular payments to the property management. In the Czech Republic, such a debt is a burden for the HOA and all other owners, because the costs of the debtor must be paid collectively by everyone. The next item is whether the HOA has a debt with an entity (for example, a loan for the revitalisation of the building). In this case, you should be interested in when the loan will be repaid, because then the regular payments will probably be reduced.
Use the repair schedule to see how much you will need to invest in the home
Before buying a property, you should have an overview of what has been repaired in the house in the past and what will be changed in the future. This will give you an idea of how expensive it will be to contribute to the repair fund. Be particularly interested in insulation, facade/insulation, internal services (risers, drains, electricity and gas), internal spaces, windows and roof. The more that is done, the better.
In addition to a summary of repairs, have the minutes of the HOA meetings sent to you. They will reveal the most pressing problems in the apartment building, and you will know whether the owners are cooperating with each other, how much is owed on the demands and what repairs are planned in the near future.
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