Transfer of the apartment to private ownership

Quick overview

• Transferring a cooperative apartment to private ownership is not a given. If the cooperative does not want the transfer or the statutes do not allow it, the cooperative member himself cannot usually unilaterally force the transfer.
• First, you need to check the bylaws, the decision of the membership meeting, the debts of the cooperative and the conditions of the particular house.
• Once the transfer has been approved, the owner’s declaration, the unit transfer agreement and the proposal for entry into the Land Registry are prepared.
• For larger houses, it is often also necessary to deal with the formation or setting up of the HOA.

Not sure if the condominium association can refuse the transfer? Send us the co-op’s bylaws, minutes of a membership meeting or a draft agreement. A solicitor will check what your options are and where the greatest risk is.

Owning a condominium comes with a number of restrictions that can be a bonus for some and a bad dream for others. Most often, you cannot either mortgage the flat and take out a mortgage (not applicable to council flats) or rent the flat without the consent of a members’ meeting. You are only the owner of a share in the cooperative and you rent the apartment. However, today there are often transfers of cooperative flats into personal ownership and the conversion of housing cooperatives into unit owners’ associations.

What is a housing cooperative

A housing cooperative is a legal entity, a type of cooperative with a focus on housing. In addition to providing for the housing needs of its members, it may also manage houses with flats (or non-residential premises) or run a business. Any profits are used to provide for the housing needs of its members.

What is a unit owners’ association

a Unit Owners’ Association (HOA) or HOA is made up of people who own flats in a block of flats. The main activity of the HOA is to manage the common property, for example the common areas and the surrounding land. Each community has two basic documents that determine its operation – Statutes and house rules.

How are they different?

The main difference lies in ownership. In the case of a housing cooperative, the cooperative owns the flat and you only have a leasehold interest in the flat, which means that your disposal of your flat is very limited. On the other hand, in the case of an HOA, the apartment belongs to you and you can dispose of it as you wish, so you can sell it or rent it out.

How to transfer an apartment into personal ownership?

Before you go ahead, you should find out about the cooperative, especially the financial information. As a cooperative member, you have the right to see documents relating to the management of the cooperative. It is a good idea to find out whether the cooperative has any outstanding debts and, if so, how much it still has to pay. It is not unusual for a cooperative to decide to take out a loan for renovation, for example. You would then still have to pay off your share of this debt when you transfer ownership.

If you are determined, have considered all the pros and cons of personal ownership, and want to go down the transfer route, you need to make an application, which is decided by the tenants’ membership meeting. Unfortunately if your application is refused there is nothing that can be done about it, there is no legal entitlement to transfer.

It’s different if the members’ meeting has already decided to transfer the flats before you joined the cooperative (by buying a cooperative share). If the members’ meeting does not agree to the separation of the flats into private ownership, you can try to convince a larger part of the building’s residents and apply en masse and make a full conversion of the cooperative into a unit owners’ association.

If the co-op agrees to the transfer, it will file a so-called property owner’s declaration with the land registry, thereby declaring that it defines the residential and non-residential units in the building. Owners who do not wish to transfer their share to personal ownership will remain condominium owners even though all apartments in the building will be designated as units.

You will then enter into a contract with the condominium to transfer the unit to personal ownership. The Land Registry will then register you as the owner of the new unit.

Do you want to make sure that the apartment transfer agreement, the owner’s declaration and the application for entry into the Land Registry are correct? Have the documents checked by a lawyer before signing. One mistake in the transfer documentation can delay or make the whole registration unnecessarily expensive.

Checklist

We recommend checking the following points in particular before you discuss the transfer with the co-op or other members:

• whether the co-op’s bylaws allow for the transfer of units and under what conditions,
• whether transfers have ever been decided at a membership meeting,
• whether the cooperative has any loans, outstanding annuities or other liabilities,
• what share of the debts would be attributable to your apartment,
• whether the house is technically and legally ready for the demarcation of units,
• whether it will be necessary to establish or modify the operation of the condominium after the transfer,
• who will bear the costs of legal services, land registry, expert documents and any project documentation.

The most common mistake we see in condominium transfers is the attempt to deal with the transfer only when the contract is ready. However, by that time it may be too late to correct the problem in the bylaws, in the decision of the membership meeting or in the owner’s declaration itself.

Bulk transfer

You may also encounter a bulk transfer of all cooperative flats into personal ownership.
As far as bulk transfers are concerned, they are often a very stressful experience for the board members of the cooperative. It is in fact a kind of privatisation on a small scale. And if one remembers how, for example, coupon privatisation was carried out, one can easily imagine the dismay of those in charge of this process.

From law practice: a housing cooperative was transformed into a community of unit owners

In many condominiums where a condominium association operates, they eventually decide to convert the units to private ownership. They then find out which particular option of transfer is the best in the given situation.

We were recently approached by a Prague housing association about such a matter. After familiarizing ourselves with the case, we recommended the option of a complete and total transformation of the cooperative into a community of owners. In such a case, the cooperative is then dissolved, thus eliminating the double obligation of bookkeeping and the need to dispose of the cooperative’s profits.

On the other hand, this is not the right option in every situation. The cooperative can serve as a trustee and also possibly deal with the issue of premises that no one wants or can transfer to personal ownership. However, this did not play a role in our case.

However, this approach is not universal. If the cooperative has other assets, non-residential premises, credit, or members who refuse to transfer, another option may be more appropriate. Therefore, we always recommend assessing the specific bylaws, the co-op’s assets, and the long-term operation of the building.

Establishment of SVJ

According to the current regulation, an SVJ is established in a building where there are at least five units and at least four of them are owned by four different owners. Therefore, when transferring condominiums, it is not enough to deal with the transfer agreement itself, but also with whether and when the obligation to establish the SVJ will arise and how its statutes will be set.

The statutes will then determine the chairman of the HOA and the rest of the committee members and possibly other details about the voting of the HOA or the heat distribution. Beware, however, that the model articles of association, which are freely downloadable, may be unsuitable for your particular case and may cause considerable complications in the future. It is always worth seeking professional advice when drawing up the articles of association.

Will you pay property tax on the transfer? Not in 2026. The real estate transfer tax has been abolished, so it is not payable on the transfer of a cooperative flat to private ownership and no tax return is filed.

However, this does not mean that the transfer has no financial implications. Once the unit is registered, you may be affected by the real estate tax and, of course, regular payments related to the management of the house, the repair fund, services or any loan.

Advantages and disadvantages of personal ownership compared to a housing cooperative

Higher apartment value

As it is sometimes (half-jokingly) said, money comes first. This is the first reason for the preference for personal ownership. The value of a privately owned apartment is higher than that of a cooperative ownership. however, this also means that the purchase price is much higher than for cooperative flats.

Experts on the real estate market claim that privately owned flats sell for up to units or even tens of percent higher than cooperative flats. On the other hand, the transfer of a cooperative apartment is faster and easier.

The reason for the frequent reluctance to buy a cooperative flat (apart from the distrust of many people to enter cooperative ownership) is mainly the possibility to finance the purchase of a flat in private ownership with a mortgage. In the case of a condominium transfer, the purchaser must have sufficient spare cash or another property to pledge to the bank, which limits the pool of buyers considerably.

“Tenure of the flat”: who owns the flat?

The most important reason, however, and many co-operative owners do not fully realise this, is that in the case of a co-operative flat they are only tenants of the flat, not its owners. Only the co-operative owns the flat and the house, and only the co-operative exercises the right of ownership. Under certain conditions, a member of the cooperative may even have his lease terminated and be expelled from the cooperative and lose his apartment.

The settlement share that the expelled member receives is certainly not the market value of the cooperative flat. However, an extreme case, which would not be the first or last time in our history, is the bankruptcy of a cooperative caused by errors in the cooperative’s management. The consequence can be the loss of the cooperative’s assets and their sale at auction. However, it should be added that an owners’ association can also end up in insolvency, and neighbours are in fact liable for each other’s debts.

Easier renting and adaptations

If you have a freehold flat, you can dispose of it freely – rent it out, run a business in it or sell it. However, this is not so easy with a cooperative flat and renting out a cooperative flat is usually prohibited.

On the other hand, selling it is simplified in that you are not selling the flat itself, but only the share in the housing association. This saves you a lot of time and paperwork, as the sale does not need to be registered in the Land Registry or require the consent of the housing association.

In addition, it should also be mentioned that only the owner of the apartment decides whether any building modifications or reconstruction will be carried out in the apartment. Therefore, any major alterations to a condominium apartment are subject to the consent of the condominium. If a person wants to have a non-traditional modern home, there are a few more obstacles in a cooperative apartment.

As far as ongoing charges are concerned, in a condominium you pay a monthly rent which includes utilities, repair fund charges and possibly an annuity. In a freehold flat, you do not pay rent, but you have to pay regular common area management charges (for example, regular cleaning), repair fund charges, utilities and property tax each year.

Lastly, if you don’t have the cash to buy a flat, then a cooperative flat is almost out of the question for you, as the bank will not give you a mortgage loan for it.

Summary

Converting a co-operative flat to private ownership can increase the value of the flat and give the owner more freedom to sell, rent or finance with a mortgage. However, it is not an automatic entitlement for every co-op owner. It always depends on the co-op’s bylaws, the decision of the membership meeting, the legal status of the house, the co-op’s debts and the readiness of the documentation for the land registry. Therefore, before the transfer, it is important to check the management of the cooperative, the conditions of the transfer, the possible annuity, the formation of the SVJ and the content of the transfer agreement. The real estate acquisition tax is no longer payable, but after the registration of the apartment in the land registry, the real estate tax and regular payments related to the management of the house must be taken into account.

Are you dealing with the transfer of a cooperative flat, a collective transformation of a house or a dispute with the cooperative? Send us the statutes, minutes of a membership meeting or a draft transfer agreement. A lawyer will tell you whether the transfer is legally viable, what needs to be added and how to avoid problems with the land registry or other members of the cooperative.