What to check before buying a property

Those interested in buying a house or apartment often rely only on information they get from a real estate agent or the property owner. Of course, they may not tell you everything you need to know.

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Chapters of the article

In addition to the condition of the apartment itself, it is advisable to become familiar with the overall condition of the house, i.e. the elevator, risers, ducts, basements and other common areas. It is also necessary to find out what everything we are buying with the apartment and in what condition it is. Often it is a garage, for example, but it may be a separate property.

The legal status of the apartment or house

It is definitely worth checking the legal status of the property you are buying thoroughly. Who owns it, whether there are any easements, leases or liens on the apartment.

For example, Mr Štefan looked for a plot of land outside Prague where he wanted to build a Canadian log cabin. According to the zoning plan, the land was indeed a suitable refuge for such a development. However, there were several obstacles in the land registry. There were more easements on the land than usual.

These were both the classic water and gas utility easements, but several neighbours also had easements registered. They had the right of passage over the land, and one of them even had the right to let his flock of sheep pass.

Tip: It is also worth checking whether the property owner is insolvent. Our article on how to check that the seller is not insolvent will help you to do this. You will also find our article on how to search the insolvency register useful.

In legal terms, this could be described as a state of affairs that would be incompatible with a peaceful neighbourhood life. Plain and simple, Mr. Stefan would not have much peace in his cabin. But he backed out of his plan in time and chose a more suitable plot of land, not far from the original one.

The key is then to set the terms of the purchase contract, or the possibility of withdrawing from it. The transfer of the purchase price should not omit the intermediate step of escrow. The money is transferred to the account of a lawyer, real estate agent or notary and the seller receives it only when the new owner is registered in the land register. This avoids a situation where the money arrives in the seller’s account but you are not yet the owner of the property.

Tip: We will help you with the drafting of the application for entry into the Land Registry so that everything is in order the first time and you do not miss important deadlines or lose money.

Type of ownership

It makes a difference whether you are buying a freehold or a co-operative property. While a freehold flat belongs to you and you can do practically whatever you want with it, in a cooperative you are de facto just renting. Your options are therefore quite limited.

So always find out what your rights and obligations are. You can find this out from the statutes. These will answer questions about whether you can sublet a cooperative flat without permission, what the fees are and what other obligations you will have to fulfil. For example, you may be responsible for the cleanliness of part of the hallway and have to mop it once a week.

This is similar for freehold flats. Again, it’s good to know the basics, such as how much you’ll be paying each month to the repair fund and on other items. Also look at who owns the other flats in the building. If they are all owned by the same person, there is a big risk that they will outvote you at meetings and push through whatever suits them.

You may also be unpleasantly surprised by arrears to the repair fund, tax arrears or foreclosures on the owner. You can find out this information from an attorney, directly from the seller, by informally approaching another resident of the building, or from members of a committee or body of the co-op. However, the willingness to share information about life in the house may not be great. So you can ask for minutes of house meetings or go through public sources.

The reason why the owner is selling the apartment, the relationships between neighbours, the mix of residents or the issues that are weighing on residents can tell you a lot. It is equally helpful to know what plans are in place for development around the home. If trains or thousands of cars are going to pass under your windows in a few years, you won’t be too happy.

What we need from the seller

From the seller, you should mainly ask for the information about the property necessary for the creation and subsequent signing of the purchase contract. This, or a certified copy of it, must be submitted to the Land Registry. Although the signatures on the purchase contract do not have to be certified, this is preferable as the Land Registry will check the authenticity of uncertified signatures. In some specific cases, other documents if their necessity arises from the law.

Documents written in a foreign language (with the exception of Slovak) must be submitted by the party to the proceedings in the original text and at the same time in an officially certified translation into Czech.

In addition, request the documents necessary for the transfer of energy from the seller of the apartment or house. If you will be transferring them yourself, copy the meter readings and you will also need a power of attorney. This is basically signing you in as the customer and signing out the former owner. Nowadays, most of these transfers are handled online.

Also, be sure to opt out of the place where you used to take your energy. Alternatively, the new owner can do the same.

Are you interested in buying a property?

At Dostupný advokát we have legal experts who have long specialised in real estate. Thanks to their erudition and experience, we have helped hundreds of clients to successful transactions, saving them a lot of trouble, time and money and protecting them from the pitfalls of the real estate world.

Preparing for business

Before signing the actual purchase contract, it is common to first conclude a contract of sale and purchase agreement. This happens mainly when we want to buy time. For example, to have the property inspected by an expert or to have a proper “inspection” of the apartment, as well as the conditions in the house, etc. We then have the opportunity to fine-tune the purchase contract itself with a lawyer to avoid possible problems and unexpected pitfalls.

In theory, it may happen that an unexpected event occurs before the actual purchase contract is signed. For example, a flood or fire that damages the property. Do we still have to sign the purchase contract? According to the Civil Code , we cannot be required to enter into a contract in the event of such a change of circumstances; the obligation ceases.

Purchase contract

The purchase contract itself then directly obliges the purchase of the property, the transfer of ownership and the change in the land register. The buyer is therefore obliged to take possession of the property and pay the agreed purchase price. The seller, on the other hand, must hand over the property and take over the money.

In addition to the purchase contract, an escrow agreement is also negotiated. This means that the purchase price is deposited in an account with a lawyer, notary or bank, after which a petition for change is filed with the Land Registry. Only after the registration in the Land Registry is made, the money is paid to the seller. This is due to the fact that a change in the Land Registry usually takes the office around 30 days. Without escrow, there would be a situation where the seller has your money in the account but you are still not the owner of the property. If for some reason the transfer does not happen, it could be a problem to get your money back.

In summary – don’t let your emotions and feelings get the better of you and let someone beat you to the punch and blow your dream home. Think carefully about buying your own home and only sign all documents when you have them checked.

Do not transfer the purchase price directly to the seller, but use an escrow. This way you will not end up with neither the money nor the apartment.

Download the free e-book 5 tips to buy or sell property risk-free and go through the process of selling or buying a house, flat and land smoothly.

We prepared this article for the Lidové noviny series “Law & Housing”. See also other articles from the series:

  1. What to look out for when buying a property
  2. How to get a mortgage
  3. What to check before buying a property
  4. Who pays the property transfer tax and how?
  5. What should be included in the property purchase contract
  6. The most common mistakes when drafting a proposal to the Land Registry
  7. Buying a property from a developer
  8. Keeping the purchase price when buying a property
  9. The difference between a condominium and a freehold
  10. What is an annuity?
  11. How to properly gift a property
  12. What is the purpose of an easement or servitude?
  13. Making a will and settling an estate
  14. What is a collation
  15. What shouldn’t be missing from a lease agreement
  16. When rent increases can be made
  17. Termination of the lease
  18. Agreement to end the tenancy
  19. How to draw up a work contract with a tradesman
  20. Hidden defects and cancellation of a works contract
  21. When do you need planning permission to renovate a property?
  22. Home Rules
  23. What does serving on a condominium board entail?
  24. Why not underestimate the bylaws in a condominium
  25. Common areas in a block of flats
  26. What is involved in refurbishing a block of flats
  27. Can a condominium or housing association go into debt?
  28. How to renovate a house or cottage
  29. What to watch out for when dealing with a construction “company”?
  30. Building a house on a “green field”
  31. How to remove land from the agricultural fund

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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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