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Real estate transfers in the Czech Republic

In the Czech Republic transferring real estate is an extremely formal and complex matter. In this article, we summarise the basic steps for acquiring real estate and share a few tips on how to avoid pitfalls.

1. Before concluding a transfer contract

Prior to concluding a transfer contract, every buyer should verify the legal and actual (technical, environmental) status of the acquired property to identify potential risks. From the legal perspective, such a check (known as due diligence) should at least cover the following:

a) Ownership and other rights registered in the Land Register

The first step for a successful transaction is to verify the ownership right of the seller to the acquired real estate in the Land Register and its legal status. The Land Register also contains information about most easements and liens encumbering the real estate (such as right of use / passage, etc.) or information about pending enforcement proceedings on the property.

b) Use of land according to zoning plan

When acquiring a plot of land for further development, it is necessary to verify what kind of construction may be built on the land, what utility networks are accessible and what other constructions may built in the surroundings. All this information may be found in the zoning plan, which is available online or at the local building authority office.

c) Potential restitution claims

We always recommend requesting a statement of the State Land Office regarding potential restitution claims of third parties over the property. If such claims have been raised by the original owner of the property and court proceedings are still pending, there is a risk that these claims might be satisfied and the property transferred to the claiming party.

2. Conclusion of the contract

The real estate transfer contract must be in writing and must comply with several legal requirements to be valid. The contract must specify the contracting parties, contain a description of the real estate, and indicate the purchase price, date and signatures of the parties. All signatures must be on one document and the signatures on the counterpart that will be submitted to the cadastral office must be officially verified.

3. After concluding the contract

a) Registration of changes in the Land Register

The transfer contract and an application for registration of changes must be submitted to the local cadastral office.

The cadastral office will inform all the owners and the buyer of the acceptance of the documents. This is followed by a 20-day period during which the cadastral office is obliged to wait for a potential reaction or disapproval of any of the parties involved. If there are no objections, the cadastral office will then proceed with the registration of changes in the Land Register and effectuate the transfer of the property.

b) Submission of tax return

Although the real estate transfer tax has been cancelled, there is still a real estate tax to be paid. The tax return must be submitted by 31 January of the year following the acquisition. We strongly recommend filing the tax return on time. The tax authority will be informed of the transfer by the cadastral office and, in case of delay, the owner may be fined.

Should you have any questions relating to real estate acquisitions in the Czech Republic, please contact our expert at Eversheds Sutherland Czech Republic, Dominika Veselá.