What to check before buying an apartment in the Czech Republic

Most of us don´t buy real estate more than a couple of times in our lifetime. That’s not enough to gain sufficient experience and to know what to check before buying. It may then happen that the property won´t meet our expectations. That’s why I decided to write down what to be careful about when buying so that you can be happy about the purchase.

Buyer Beware

 Seen from my daily practice, most buyers suspect nothing. They believe that the smooth running of the deal depends on the skills of the broker (that is me) and the reliability of the seller. If one of us was, to put it succinctly, „crooked“, it wouldn´t be so difficult to deceive the buyer. In addition, cases where the purchase didn´t meet the customer’s expectations are quite common. It´s sufficient to check some information and you can avoid unpleasant situations and disappointments. There are a total of three areas. The first of them are the data recorded in the cadastre, the next includes information on payments for the apartment and the latest area is the data on how the building is managed. Let’s now have a look at the example of a housing unit to show what needs to be found out for each of the areas.

Check the owners at the cadastre

The first good news is that the data from the cadastre can be obtained easily online or at the relevant office and you don´t need the help of the seller. You should search for two documents. The first is the title deed which contains basic information about the property, such as who owns it, how the current owner acquired the property and whether the property is affected by proprietary right restrictions. The second important document is the declaration of the owner. They legally divided the apartment building into housing units and specified what is included in each of them. We´ll now look more closely at what specific information to examine in each document.

The title deed reveals a foreclosure or missing ownership of the land under the building

First, let’s talk about how it is possible to get a title deed. There are several options:

1. Online search in the cadastre. Once you find the required property, click in the upper right corner on “Buy electronic document”, namely“Extract from the CN – cadastre (LV – title deed)”. The price of the document is 50 CZK per page and the title deed usually has one to two pages. You can pay by card.
2. A personal visit to Czech POINT which you can usually find at every post office, municipal office or notary. At the post office and the municipal office, the extract costs 50 CZK per page, at the notary you pay uniformly 120 CZK for it regardless of whether the document contains one or ten pages.
3. Online remote access to the cadastre. You can easily set it up at the cadastral office. An extract from the title deed will then be obtained in the cadastre application and will cost 50 CZK per page. In addition to this document, you can download other documents. This remote access pays off mainly if you often search for real estate information. Other options will be sufficient for the occasional purchase of real estate.
4. A personal visit to the cadastral office which is usually located in each district town. The extract costs uniformly 100 CZK and again it doesn’t matter how many pages it contains.

Now let’s get to the heart of the matter and talk about what you should focus on in the title deed.

Find out who the real owner of the property is

First of all, focus on the owner of the property. Is the person you are dealing with the sole owner or is it a joint estate? Or is the property included in the joint property of the spouses? These questions are important for one simple reason: you need all important aspects of the purchase to be confirmed by all owners in the reservation contract. (More information on this topic can be found in an e-book which can be freely downloaded here). And the more sellers, the greater the risk is that one of them will complicate the sale.

Have clear information on the manner of using the apartment

In the next step, look at the description of the property and check the manner of its use, i.e. whether it is an apartment, not a non-residential unit or a studio etc. Check whether the apartment is associated with a share of land, such as land under the building, yard or garden. When searching at the cadastre, I also recommend looking at whether access to the building is ensured, in other words, whether the access road is owned by municipality.

Beware of proprietary rights restrictions, some of which may cause problems

Section C of the title deed contains other essential information, such as proprietary right restrictions which you should carefully examine. Some of them are practically harmless. For example, one of the most common restrictions is the pledge contract and related entries in favour of the bank. Here it´s necessary to make sure that the mortgage is properly repaid and subsequently expunged by the bank but in general the processes are already standardized and there´s no need to worry about huge problems. But then there are the restrictions that can really put you in a tight corner. These include, for example, servitude of use (formerly known as encumbrance of use), foreclosure orders, pledges in favour of a non-banking entity, pre-emption rights and tenancy rights. In addition, you can review each of these problematic listings in detail. It´s enough to ask the cadastral office for a copy of the document (its price is 20 CZK per page). Each of these entries would deserve a separate article and there are other possible entries but there´s no room for their description in this article. However, I´ve selected the most common restrictions that you shouldn´t miss and that you should definitely deal with before signing the contract

Has your chosen property been involved in court proceedings?

If you find in section D of the title deed that there are judicial proceedings concerning the property, such as a dispute over ownership, beware. This entry also needs to be settled before making the purchase. You can also obtain the document at the cadastre.

Verify when the apartment was purchased

The last section of the title deed that you should focus on when buying an apartment is Part E related to acquisition titles. Pay attention to the date when the property was transferred onto the current owner. If the seller bought the property only recently, e.g. a couple of days or weeks ago, it is necessary to be careful. It could have been a speculative purchase under non-standard conditions, and in such a short time an entry hasn´t appeared yet in the title deed that would contradict the transfer. If, on the other hand, the property was acquired a long time ago, there is nothing to worry about. The length of ownership in itself proves that the purchase was duly made. Furthermore, there is no need to worry a priori about the acquisition by inheritance and gift among family members. You can also obtain the acquisition title at the cadastre for CZK 20 per page.

The owner’s statement will designate everything that belongs to the apartment

If you haven´t missed anything important in the title deed, you can start examining the owner’s statement. It should state the exact dimensions of the interior area of ​​the apartment and the exterior area such as the loggia, balcony or terrace. It should include information about whether the apartment has a cellar and how big it is or whether there is a parking site use related to the apartment. The whole document usually has several dozen pages and describes all the units in the building. In the cadastre we can request only the part concerning the apartment we want to buy. The price is 20 CZK per page. And why is it so important to go through the owner’s statement? It is the real surface areas that cause frequent annoyance. That can happen at the moment when you find out that the apartment originally presented with an area of 60 m² has 52 m² in reality and the missing area is made up with the cellar of 3 m² and the loggia of 5 m².

Be prepared for the fees associated with the ownership of the apartment

We have covered the first area of important information and we can move on to the next, which includes the data on paying utilities and similar related the apartment. Here it is necessary to ask the seller or broker themselves for cooperation. As this is a very common question, they should have this information ready. Therefore, request a record sheet, recording all payments to the building management agency related to the given housing unit. These usually include water, sewerage, hot water, heating, waste, elevator, cleaning and lighting of common areas, administration, accounting, contributions to the repair fund, building insurance and remuneration of the Owners Association Committee. Also note how many people the record sheet is issued for. If there´s only one person in the document and you plan that two persons will live in the apartment, expect some items to double. And if you see that the seller or broker is helpful, ask them also for the bills concerning these utilities and services for the past year. This allows you to compare whether the advance payments correspond to the real consumption. In case the apartment and water are heated with electricity or gas, not centrally via a boiler room in the building or remotely via a heating plant, request a statement of advance payments and energy bills. These items will be higher and you should be aware of the costs.

Before signing the purchase contract, also ask the property management to provide you with a certificate of indebtedness in relation to payments. As per the Civil Code, all debts of the original owner pass onto the transferee, therefore it could happen that you´d eventually have to pay the debt yourself.

Find out how the apartment building is managed

The third and final area of information that needs to be verified is the data on how the building is managed. These should be available for download at the Commercial Register. Search for the Owners Association, open the collection of documents and here you will see all the information published by the association, such as the articles of association, the profit and loss statement for the time of existence of the owners association, the report on financial management and the minutes from the owners association meetings. In reality, however, only a small part of the owners associations keeps the information in the Register. Thus, if you don´t find what you´re looking for, ask the seller for a contact to the owners association chairperson and ask them for the relevant documentation. We´ll now have a look together at what documents you should primarily focus on.

The balance sheet and income statement will reveal savings and debts

You´ll find out in the income statement and balance sheet for the last financial year what the balance is on the bank account of the association. As a rule, it equals the savings in the repair fund, that means the money that the association has at its disposal for repairs of the building. However, you may also find that some of the owners owe on regular property management payments. Such a debt is a burden on the owners association and all other owners because the costs must be paid for the debtor collectively by all. Another item is the information on whether the association has a debt to any entity (such as a loan to revitalize the building). In this case, you should request information as to when the loan will be repaid because then the regular payments are likely to decrease.

You´ll find out from the list of repairs how much you´ll have to invest in the apartment

Before buying a property you should be informed about what has been repaired in the building in the past and what will be replaced in the future. This will show you how expensive it will be to contribute to the repair fund. Focus especially on insulation, facade / thermal insulation, internal supplies (risers, waste, electricity and gas distribution), interiors, windows and roof. The more has been done, the better.

In addition to the repairs list, ask for the minutes from owners association meetings to be sent to you. They will reveal to you the most serious problems in an apartment building and you´ll know whether the owners cooperate with each other, how much they owe in orders that are currently being carried out and what repairs are planned in the near future.

If you buy a property through a real estate agency, you will sign a reservation contract. If you want to be absolutely sure that you won´t get your fingers burnt, check the reservation contract according to the How to conclude a safe reservation contract article.