How to avoid legal pitfalls when buying property in Czechia

Jana Sedláčková, attorney-at-law at Pajerová Sedláčková ADVOKÁTKY s.r.o., warns that even a small omission can result in the invalidity of contracts, delays, unexpected financial liabilities, or even the collapse of the entire purchase.

Risks do not arise only when acquiring property held in private ownership. They also apply to co-operative housing, which has recently been experiencing a strong comeback on the Czech property market. While often more affordable, co-operative housing comes with a more complex legal framework. Here are the most common legal pitfalls associated with real estate transactions in the Czechia, and how to avoid them.

Due to the fast pace of real estate transactions, buyers are often under pressure, which may prevent them from carrying out a thorough technical inspection of the property. As a result, hidden defects may only become apparent after the purchase.

Such defects can include moisture concealed within walls, mold discovered after renovation, faulty electrical wiring or plumbing, or structural issues such as cracked load-bearing walls that were only cosmetically repaired before the sale. 

In apartment buildings, hidden defects may also relate to outdated shared utilities or unresolved issues in common areas, which can later lead to costly repairs borne by the owners and substantial increases in the maintenance fund, significantly reducing the comfort of your new home.

Under the Czech Civil Code, sellers and real estate agents are obliged to inform buyers of known defects. However, disputes often arise over what they “knew or should have known,” Sedláčková adds. Buyers also frequently discover too late that they waived their rights related to the previous owner fixing these hidden defects when signing the purchase agreement.

Buyers should be aware that they usually bear the burden of proof that the defect existed at the time ownership was transferred and that claims must be asserted without undue delay.

It is essential to clearly distinguish the type of property you intend to buy or sell. This is particularly relevant for co-operative apartments (and now also houses), where the buyer does not acquire ownership of the property itself, but rather a membership interest in a housing co-operative along with a lease agreement.

Such transfers are not registered in the Land Registry, often require the co-operative’s consent, and may significantly limit financing options, as standard bank mortgages secured by a pledge over the property cannot usually be used.

Another situation where consulting a legal expert is advisable involves properties held in co-ownership. Although most statutory pre-emption rights have been abolished and the sale of co-ownership shares has become easier, statutory or contractual pre-emption rights may still exist in certain cases.

As Sedláčková explains, this means that the seller must properly inform specific persons and allow them the legally prescribed period to exercise their right. Such pre-emption rights may apply, for example, to recently inherited shares in real estate or to persons whose pre-emption right is registered in the Land Registry.

Failure to comply with these procedures may result in the sale being challenged later, exposing the buyer to further legal complications and jeopardising the acquired ownership.

Reviewing Land Registry records before, during, and after a real estate transaction is absolutely essential, particularly in light of the principle of material publicity. Under this principle, it is presumed that what is entered in the public register is accurate.

The Land Registry must be checked to confirm the seller’s ownership, and the property must be described in the contract exactly in line with its registration. Common consequences of poorly drafted agreements include garages, storage units, or shares in common land not being transferred, or even the failure to acquire a share in the building itself when purchasing an apartment.

Conversely, when buying a house with a garden, you may unexpectedly acquire unauthorized or unregistered structures on the land, such as illegal sheds, shelters, or gazebos.

It is also important to verify who all the owners of the property actually are. Is it only the seller you are dealing with, or is there, for example, a spouse who is unaware of the sale and fundamentally opposes it?

Sedláčková recommends always verifying ownership data, previous acquisition titles, registered restrictions on ownership rights, cadastral maps and their consistency with the actual state of the property. This can also be done through the online portal of the Czech Office for Surveying, Mapping and Cadastre (ČÚZK), which serves as the official public database.

Before paying any deposit, you should also obtain professional advice on existing mortgages or liens registered against the property and understand what easements mean. While some easements are necessary and largely harmless (such as utility lines), others may significantly restrict your right to use the property.

If you are purchasing land only, carefully verify its actual permitted use. Not all plots advertised as building land have this designation. Failing to check the zoning and regulatory plans may leave you, for the next ten years, as little more than a farmer without a roof over your head, even if the advertisement showed an attractive project for a future family home.

The financial aspect of the transaction deserves special attention. Sellers often aim to receive the purchase price as quickly as possible, sometimes based only on future promises. An imprudent buyer may pay irreversibly before the registration process in the Land Registry has even begun or been successfully completed. If the registration is later rejected, the buyer may be left without both money and property.

Secure escrow arrangements managed by a lawyer should be a standard part of any real estate transaction facilitated by legal counsel. The financial situation must also be reviewed with regard to enforcement proceedings and other debts, information that is often unavailable without legal assistance and conveniently omitted from real estate advertisements.

Disputes most commonly arise due to hidden defects, unclear contractual wording, undisclosed easements, or incorrectly defined property boundaries where fencing does not correspond to Land Registry records. Sedláčková explains that buyers should insist on all warranties, representations, and obligations of the seller being explicitly stated in the contract to avoid ambiguity.

If a dispute arises later, reaching an agreement, including through mediation, is often faster and cheaper than court proceedings, provided both parties are willing to cooperate. Otherwise, litigation is unavoidable, likely to last for years, impose a significant financial burden, and severely diminish the enjoyment and value of the property.

According to Sedláčková, many common risks can be avoided through careful verification of documents, thorough assessment of ownership structures, a clear understanding of contractual obligations and consultation with qualified professionals.

The role of a lawyer differs fundamentally from that of a real estate agent. Legal counsel acts exclusively in your best interests, focusing on risks and legal compliance rather than merely completing the transaction.

When uncertainty arises or when dealing with a real estate transaction worth millions of Czech crowns, consulting a lawyer is by no means an unnecessary expense. It helps identify risks at an early stage, highlights issues you would not anticipate without comprehensive knowledge of Czech law, and prevents costly disputes after the contract is signed, making the entire purchasing process safer and more predictable.