Exchanging keys

Written by Richard Gürlich
of GÜRLICH, ODROBINA & spol.



When do you become the owner of a real estate property according to Czech law?

If you have read our articles, you already know quite a lot about the acquisition of a real estate property in the Czech Republic. As we have mentioned before, you may need to get some kind of a residency permit or establish or purchase a limited liability company first, because Czech Law sets out some conditions you have to fulfil.

In our last article we mentioned and described several kinds of contracts or documents which are required in relation to the acquisition of property in the Czech Republic. We mentioned that not only a written purchase contract, but also an application to a Cadastral Office are always necessary. We will explain why below.

In the Czech Republic there is a Cadastral Register in which almost all property must be registered. This Cadastral Register is administered by several Cadastral Offices which are further divided into Cadastral Branches. These branches enter and record the details of the property, the owner(s) and some rights and obligations related to the property. Generally speaking, no-one can become the owner of property recognized by Czech law based solely on a purchase contract, until they are also registered as the owner of the property in the Cadastral Register.

This means that it is not enough to just sign the purchase contract to become the owner of real estate property in the Czech Republic. The purchase contract must be submitted to the appropriate Cadastral Office. In the application, you have to ask the Cadastral Officers to change the records in the Cadastral Register based on the signed Purchase Contract.

Records in the Cadastral Register are also very important when you want to get or check any information about the property you are interested in. This way you can find out whether the potential seller is really the owner of the property, and whether there are any rights of third parties connected with the property, and other potential problems.

So we would always recommend only putting down a small deposit before the application to the Cadastral Office is filed, rather than paying the whole price up front. Then, when you are recorded as the owner of the property in the Cadastral Register, you can make the full payment for the property. Only by doing this do you have some control over the seller, and have some leverage to make them cooperate in case any problems arise during the buying process.

The last thing we want to mention concerns the cooperation with the bank providing the mortgage, in the case that you need one. The bank requires some guarantees that you will repay the borrowed money. For this purpose a contract for collateral must usually be concluded and submitted to the Cadastral Register. The bank won’t transfer the money to the seller before the collateral contract and the related application are filed with the relevant Cadastral Office.

We considered it important to write this article because in some other countries, registry of real estate properties serves only as a kind of evidence of intent, and has no influence on the actual ownership rights. The situation is different in the Czech Republic. As it is impossible to describe the whole registration procedure in a few pages, we would like to offer you our help regarding the whole process of acquisition of property here, and with the submission of the application to the Cadastral Register. Should you wish to proceed with buying a property, it will be a pleasure for us to work with you.