Selling a garage and garage space – how to do it?

Quick overview

• When selling a garage, first check whether it is a detached garage, a unit, a building on someone else’s land or just a garage as a shared ownership interest. This determines the contract, the pre-emption right and the registration in the Land Registry.
• The contract of sale must specify the seller, the buyer, the property being transferred, the price, the method of payment and the time of handover. Ownership is only transferred by registration in the Land Registry.
• Taxes are mainly concerned with income tax, which is not payable if the seller meets the conditions for exemption.

Are you selling a garage or a garage space and want to make sure that the contract passes through the Land Registry without unnecessary corrections? We will prepare or check the purchase contract for the property, look after the pre-emption right, the escrow of the purchase price and the proposal for entry into the Land Registry.

What should be included in the garage purchase contract?

A garage purchase agreement cannot do without formalities that are identical to any other property purchase agreement:

• personal data (for a natural person, name, surname, address and birth number, for a legal entity, name, registered office, identification number, document of registration in the Commercial Register),
• the date of payment,
• in the case of payment by instalments, the amount and the obligation to pay, as well as the penalties for non-compliance,
• the signatures of both parties.

What to remember before signing the contract from the buyer’s point of view?

Inspect the garage or garage space thoroughly before the sale to make sure it is in the condition described in the contract. An even more important step that is often overlooked is establishing ownership of the property. To avoid possible fraud, a simple verification through the Land Registry is sufficient. In a few minutes, you can verify not only whether the seller is the real owner, but also whether there is a bank lien or foreclosure on the garage.

Nowadays, there are also demands for the ability to charge an electric car or electric motorbike in the garage. If you require this, make sure that this option is included in the contract. An assurance in an email is not enough.

In particular, check with the garage or car park before signing the contract of sale:

• whether the seller actually corresponds to the owner listed in the land register,
• whether the garage is not subject to a lien, execution, easement or other restriction,
• that the garage is not on someone else’s land,
• whether the transfer is not subject to a pre-emption right,
• whether the garage space is actually demarcated and transferable,
• what are the regular fees, repair fund and planned investments in the house,
• whether the contract addresses handover, the condition of the garage, keys, drivers, chips and any defects.

The most common mistake in practice is not the price itself, but that the buyer overlooks legal or operational restrictions. The garage may look trouble-free at first glance, but legally it may be a share, a building on someone else’s land or a site encumbered by a dispute between the owners.

Beware of the fees associated with selling a garage

The transfer of the garage may be part of the sale contract for the flat. However, sometimes it is necessary to buy the garage space separately. This was also the case for Mr. Jiří. He was buying a flat from a man who also “matched” him with a garage which he rented himself. He said it should not be a problem to transfer it.

However, after a detailed check, we found out that our client would pay a lot of money for the garage, which was also located in a different house than the flat. The house in question had high fees. And as if that were not enough, there was also a “war” between the garage owners and the rest of the residents of the building over the aforementioned fees and reconstruction costs. Becoming a part of such a situation could have been a revenge for Mr. Jiří, especially when the garage itself cost as much as an apartment in a smaller town.

Mr. Jiří ended up buying a garage right in the backyard of the house next door. It was seemingly even more expensive, but without the need for additional investment. Everything went smoothly and peacefully. And Mr. Jiří can park whenever he wants without any problems.

Selling a garage on someone else’s land

When selling a garage (as well as any other property), it is necessary to take into account the legal pre-emption right that belongs to the owner of the land on which the garage stands. The sale of a garage is then conducted as follows:

1. A contract of sale of the garage is signed with the interested party.
2. The owner of the land is invited to exercise his right of pre-emption, in which case he signs an identical purchase contract. The owner has three months to exercise his pre-emption right.
3. If the owner exercises the pre-emption right, the purchase contract with the interested party is cancelled. Otherwise, the interested party shall be required to pay the purchase price.

Registration of the garage in the Land Registry

The ownership rights to the garage are automatically transferred to you when you have it registered in the Land Registry. When registering your garage in the Land Registry, you must add:

• 2x the application form for registration – you can download it directly on the Land Registry’s website or pick it up directly at the branch,
• 1x Deed of Deposit – in this case it will be a contract of sale of the garage,
• all other possible attachments (geometric plan, owner’s declaration),
• administrative fee of CZK 2,000.

Sale of garage parking

Garage sale and taxes

When you sell your garage, as with any other property, you will not avoid tax obligations. In 2020, there is a major change in the form of the abolition of property acquisition tax. However, the seller is still obliged to pay the tax on the sale of the garage = tax on the income from the sale of the property. The amount is subject to traditional personal income tax and is taxed at 15%.

You don’t have to pay tax if you meet at least one of the following conditions:

• You have owned the garage for at least 5 or 10 years under certain circumstances.
• The garage was inherited in a direct line of succession and the previous owner fulfilled the time requirement.
• You used the money you received from the sale to meet a housing need.

Note also that the tax assessment may vary depending on when you acquired the garage, whether you inherited it, whether it was part of another property, and whether you use the money from the sale for your own housing. For more expensive garages or city centre garages, it pays to deal with the tax implications up front, not when you file your tax return.

However, we always recommend discussing the specific terms with your attorney or tax advisor.

What is the difference between a garage and a parking garage?

A garage and a parking garage are defined differently, which results in differences relating to ownership, management and maintenance, as well as other legalities. Keep this in mind when entering into a purchase contract for a garage or a purchase contract for a garage.

A garage is a space that is used to park a motor vehicle. It differs from a garage in that it is spatially bounded and firmly separated from its surroundings. It may be a detached building or a unit. Plain and simple, it is one complete and separate space. Imagine it as a garage in the garden, in the cellar of a family house or as a separate cubicle in that strange oblong building often adorning the outskirts of Czech towns.

A garage, on the other hand, is just a dedicated space that is part of a larger non-residential space used for parking motor vehicles. Imagine it as a space underground under a hypermarket. It differs from a garage in that it is not rigidly separated from its surroundings.

The catch is that, legally speaking, the owner of a garage is usually his or her own boss, whereas the owner of a parking space is often just a co-owner of a large garage. He therefore has to make difficult arrangements with the other co-owners for its management and maintenance.

Selling a garage

Although management and maintenance cannot be done without an agreement, thanks to the 2020 amendment to the Civil Code , the co-owners do not need to be given priority when selling a garage. Since 1 July 2020, the right of pre-emption has been abolished. Even in this case, there are no exceptions that you have to get used to under the legal measures.

The right of pre-emption does not lapse if the co-owners could not influence their rights and obligations from the outset. For simplicity’s sake, we will explain this by means of a specific case. If you have inherited an apartment with a garage and wish to transfer it to a third party, you must first offer the share, i.e. the garage, to the co-owners. However, even in this case, the right of pre-emption expires after six months and you can dispose of the share as you wish.

Have a guarantee when selling your garage

Our clients most often make mistakes in the details that end up costing them a lot of time, nerves and money. We can provide a full contractual and legal service when selling your property, whether it is a garage, flat, house or land. We can do it within 48 hours, flawlessly and professionally.

Summary

When selling a garage, it is necessary to draw up a contract of sale with the personal details of the contracting parties, payment terms and signatures. Before signing, the status of the garage and its ownership must be verified with the land registry to avoid problems such as foreclosure. If he plans to charge the electric car, this must be explicitly stated in the contract.

The transfer of the garage is only completed by registration in the Land Registry, which requires a proposal for entry, a purchase contract and a fee of CZK 2,000. If the garage stands on someone else’s land, the landowner has a right of first refusal with a three-month period.

The sale is subject to 15% income tax unless the seller meets the conditions for exemption (possession for 5-10 years, inheritance in direct line, use for residential purposes). A garage is a separate space, while a garage space is a reserved space in a non-residential space. As of 2020, the right of first refusal for garage spaces has been abolished, except in the case of inheritance, where a six-month period for offering to co-owners applies.