Ownership of Czech Property
Agreeing to buy a house is only the first step -- next you'll need to register your purchase with the Cadastral Register
So you've signed the purchase agreement to buy an apartment in Prague. You should be able to just get the keys and move in, right?
Actually, property ownership in the Czech Republic is different than it is in many countries because a signed purchase contract doesn't make you the owner of a property. In order for you to be recognized as the legal owner, you must be registered as such in the Cadastral Register (Land Register).
A purchase contract for real estate property in the Czech Republic is only the first step. Next, the agreements must be submitted to the Cadastral Register for their final decision. In your application, you must ask for the recorded ownership of the property to be changed, based on the signed purchase contracts.
This application must be submitted to the correct office, since each area of the Czech Republic is governed by a different branch of the Cadastral Register.
The fact that there are different officials governing different areas, combined with poor internal training and a general lack of motivation among government employees, makes it difficult to ensure consistency as to what's acceptable and what isn't. If in doubt it's always best to contact the cadastral branch before finalizing the deal, to check what they require. In some areas it's been necessary to actually show the officials the section of Czech law that determines whether or not something unusual is legal.
Note: This process of registering new ownership in the Cadastral Register can take anywhere from four to 24 weeks. In Brno currently the waiting period is six weeks and in Prague between 12 and 24 weeks.
What happens with the property in the meantime?
This is a matter of negotiation.
Since the Prague Cadastral branch is currently taking so long to register changes, many sellers request some payment up front and the rest when the ownership change is actually completed. (OK, most will start out wanting all the money up front -- putting them in the position of still being the legal owner of the property, and having all the cash in hand.) However, in exchange for an advance payment, the potential buyer is often given the keys immediately.
Note: This is a last resort and in most cases, Czech Point 101 recommends using a notary office to hold the full purchase price while waiting for the Cadastral Register's decision.
Is it possible that the change in ownership could be rejected by the Cadastral Register?
Yes, this is entirely possible.
If the purchase agreements don't meet the requirements of the officials in terms of clearly identifying the property, sellers, or buyers, or if the buyers are not legally able to purchase the property (i.e., EU citizens without a residency permit or an SRO), the change of ownership requested in the application can be rejected.
In such a case, buyers whose purchase money is being held at a notary office will have their money returned (depending on the terms of the agreement with the notary office on the handling of the money) but those who made direct payment would be at the mercy of the seller or have to take them to court to get the money back.
In the first situation, with the purchase price or the majority of it still at the notary and not in the hands of the seller, it is easier to have some control over the seller to ensure they cooperate in correcting the problems.
Who is responsible for the property during this "limbo" period?
Technically the property still belongs to the seller while a decision is being made by the Cadastral Register. However, once the decision is made to accept the buyer as the new owner, the buyer is registered as the owner from the date on the purchase agreements.
If something happened to the property during this "limbo" period, such as some sort of damage, the new owner would have to take the issue up with the seller to get compensation.
This article first appeared in the July/August 2006 Czech Point 101 Newsletter.
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