What pitfalls can a property purchase agreement bring?

A well-prepared real estate purchase contract is like a well-forged sword. You’re glad you have it, and even gladder when you don’t have to use it in a fight. However, its quality will only become apparent in the event of a dispute, i.e. when you are forced to draw. If a good deal can’t be negotiated, it’s often better to walk away from the whole thing.

From law practice: when reality and plans diverge

When buying a property, it’s easy to overlook details that can cause unnecessary legal complications later on. We recently dealt with a case involving Mr James. Because of his growing family, he wanted to sell his apartment in the centre of Prague and use the money to buy a much larger property in Central Bohemia. He looked for a beautiful two-storey apartment, but soon stumbled. The plans didn’t fit, and one room that was in the apartment was completely missing from the plans.

It turned out that the “mysterious chamber” actually belonged to the common parts of the house and the owner was actually just renting it. However, he was not able to produce a proper contract and there were other ambiguities and debts on the apartment.

The best solution was therefore to abandon the negotiations and not to buy the property. However, a careless buyer would probably have been fooled and would have solved the ambiguities on the fly with an already concluded contract. Mr. Jakub ended up buying another, much better property south of Prague with our assistance.

Be careful, don’t just give in to feelings

When viewing an apartment, be especially careful of “love at first sight”. If you want an apartment too much, both an experienced estate agent and a shrewd seller can take advantage of this. Don’t sign contracts at any price and don’t use the beautiful view as an excuse for the poor condition of the apartment’s facilities. Don’t wave your hands over the condition of the house itself and look at the functioning of the local owners’ association.

Don’t rely on unverified model contracts

Particularly when buying a property, it doesn’t pay to rely solely on your own estimate or a template from the internet. Consult a professional when drawing up a contract, even if the transaction involves a real estate agent. Although there are plenty of free downloadable templates on the internet, they often contain errors. And, as if that weren’t enough, the templates usually don’t address the most important thing, the payment of the purchase price, for which a lawyer or other escrow must be used.

Unverified contract templates contain a number of errors that will cost you thousands of crowns and completely unnecessary stress. They may even block the transfer of the property at the Land Registry. Well, you tell me: Isn’t it better to consult a professional straight away and prevent problems than to put out problems that might not have happened in the first place?

Beware of formulations that cannot be enforced in practice

The creativity of legal laymen sometimes knows no bounds and they like to have everything their own way. But sometimes they run up against the limits of the law. For example, with the formulation that the ownership right to the property passes to the buyer immediately after the purchase price is paid. Although they can have this written in the contract in theory, according to the law this situation occurs only after the entry into the land register. The formulations we use to adapt the situation to our own image sometimes mean nothing, but sometimes they are directly unlawful. They can cause us more problems than they are good for.

It pays to check every word and number in a contract

When reading and checking contracts, we tend to focus on the most important things: what is the purchase price, what is being sent where when and what are the terms? However, it pays to really check everything carefully. A wrong designation of the property or the shares in the common parts can cause you a problem at the Land Registry. A different account number in the reservation and purchase contract will also delay the granting of the mortgage. All of this can cost you not only time, but also money that you may be spending on additional months of rent.

We will be happy to help you and take care of all the paperwork associated with the transfer of the apartment or house. Just say

Mistakes when buying a property can lead to losses of hundreds of thousands – yet they are often easily preventable. Download the free E-book How to Buy or Sell Property Risk-Free and walk smoothly through the process of selling or buying a house, flat and land.

Summary

A contract of sale when buying a property can hide a number of pitfalls that are easily overlooked by the layperson – from incorrectly plotting premises to incorrect wording that cannot be enforced in practice. The case of Mr James shows how easy it is to get burnt if one trusts only the estate agent or the visual impression of a viewing. Ambiguities in ownership, debts or mislabelling of the property can lead to delays in transfer or losses. Internet contract templates often do not address key points such as payment of the purchase price or terms of transfer of ownership. Thus, expert legal advice when buying a property can help avoid mistakes that can cost not only money but also the home itself.