Real estate purchase contract: purchase price

The preparation of the purchase agreement entails several pitfalls that can jeopardize or at least slow down the entire transfer. In this series on the purchase contract, we will try to unmask these pitfalls and give guidance on how to avoid them.

3 minutes of reading

Determination of the purchase price

Thepurchase price should be determined in a clear and understandable manner. When concluding a purchase contract for real estate or, for example, when transferring a condominium, the price is of course one of the most important “details” of the contract. The purchase price is also, together with the actual definition of the object of purchase (i.e. the thing to be acquired by the buyer under the purchase contract), an essential element of the purchase contract. Therefore, the amount of the purchase price or the manner of its additional determination must be agreed between the seller and the buyer in the course of the negotiations for the conclusion of the purchase contract. Otherwise, the purchase contract is not validly concluded.

Sometimes the price is expressed not only in figures but also in words so that it cannot be adjusted. However, this increases the emphasis on care, as it is necessary to bear in mind the need to change not only the number but also the bracketed text, which often appears in several places. It may therefore be advisable, particularly for simpler contracts, to prefer to use only one variant and to leave only the numerals.

Real Estate Purchase or Sale

We provide a complete package of legal services related to real estate sales and purchases, including reservation contracts and escrow services. We will also help you with all tax and land registry issues. Our work is fast and accurate, ensuring a worry-free transaction. You’re also welcome to pay after services are provided.

Dependence of the purchase price on an unclear factor

Another thing that can backfire is setting a price dependent on an unclear factor. For example, for a home that is under construction or being remodeled, the price is sometimes determined by the number of square feet. However, the size of the apartment may end up being different than planned and the contract should take this into account. It even happened to us that the developer wanted to use the change in the square meter conversion to his advantage (he suddenly started counting internal partitions and columns as well, as the new law stipulates, and thus made the apartment hundreds of thousands more expensive). In addition, if the price determination was completely unclear, the contract could be invalid.

However, the most important recommendation is that the parties should use a lawyer or notary. The latter allows for the safe payment of the purchase price only when the ownership is actually transferred or even the apartment is properly handed over (without any encumbrances). The parties are thus assured that the contract price will go where they agreed and at the moment when the transfer of the property is completed.

The contract price should also be paid in cashless payment. The limit for cash payments has been set at CZK 270,000 as of 1 December 2014. Cashless payment is also advantageous because it is easier to prove that it has been made.

Download the free e-book 5 tips on how to buy or sell a property without risk and go through the process of selling or buying a house, flat and land smoothly.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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