Real Estate Contracts

You might have already gone through the whole procedure regarding the acquisition of property in the Czech Republic. If you were lucky you didn´t need anything but one written contract and a simple petition to the Cadastral Registry. Usually it isn´t as simple and so this is the reason we are writing this article.

We have already written several articles about the different procedures used to acquire a property in the Czech Republic regarding citizens of member states of the European Union, and citizens of member states of other countries. We have also discussed the procedure of acquisition of a limited liability company for the purpose of purchasing property. This process applies regardless of the nationality of the purchaser, but it is the current position of the person interested in purchasing the property which is relevant.

Generally it can be said that whichever situation you are in and whatever the property you are interested in, it is likely you will have to enter into several contracts, or sign several documents. The most common ones can be divided and briefly described as follows:

a. Purchase contract -based on this contract the ownership right to the property will be transferred from the seller to the buyer

b. Petition to the cadastral registry – this petition must be filed together with the purchase contract – based on this petition, the change of the ownership rights to the property will be registered in the Cadastral Registry – the change of the registration is necessary so that the buyer is considered the owner of the property by Czech Law

a. Contract for future purchase contract – this contract obliges the seller to sell the property to the buyer, and also obliges the buyer to buy the property from the seller – it is a good idea to have this contract, particularly if:

– the property (house/flat) has not been completely built yet

– you need a mortgage to pay the purchase price

– you need some time to get a residence permit

– there are any other issues which you want to have solved before you enter into the purchase contract

b. Reservation contract – this contract is usually entered into only between the real estate agency and the person interested in purchasing the property. Usually there are no obligations binding the owner of the property. It is a good idea to have this contract, particularly if:

– you have to decide very quickly whether you are interested in the property or not

c. Contract for appointing an attorney or a notarial deposit of money – this kind of contract works as a guarantee for both the seller and the buyer. This contract  agrees:

– the conditions under which the buyer is obliged to pay a part of the purchase price to a deposit account

– the conditions under which the attorney/notary is obliged to transfer the deposited money to the seller

d. Contract on mortgage credit – this contract is used whenever you don´t have enough money to pay the whole purchase price of the property, and is entered into between the buyer of the property and the bank providing the mortgage credit

e. Contract for collateral – this contract is entered into in relation to the contract on mortgage credit. The seller of the property is also the contracting party to this contract – this contract provides the bank with some guarantees that the bank will get the money back

f. Petition to the Cadastral Registry – this petition must be filed to the Cadastral Office together with the contract on bailment so that the right of lien in favour of the bank can be registered in the Cadastral Registry

a. Contract on restriction of the joint property of spouses – this contract is used when the person interested in a purchase of a property is married, the marriage is valid in the Czech Republic, and the person who is interested in the purchase of the property for some reason doesn´t want the property to be jointly owned by his or her spouse. This contract must be executed in the form of a notarial deed.

We would like to mention that each of the above mentioned contracts or documents must be executed in a form which is in accordance with the Czech Law. For example the signatures on the purchase contract or on the collateral contract must be verified. It is also very important to find the right method for you to purchase the property you want, in the minimum time and with the lowest costs.

It will be our pleasure to help you find the right method for you, and provide you with all the related necessary services regarding the acquisition of the property.

For more information about the services offered by GÜRLICH & Co. please visit www.akrg.cz or call Mr Richard Gürlich directly on 420 222 101 595