General information

• Ownership title (Purchase Contract, Deed of Gift etc.)
• Documents related to the property (Easement Agreements, Execution Order, Security Agreements)
• Extract of the Property Sheet for the given property
• Cadastre Map/Survey Sketch (Geometric Plan) (in case of land)
• Drawings related to the given property, in an ideal case updated and with spot heights and dimensions (Catalogue Sheet of a flat, project documentation for a house)
• Certificate of Incorporation (if the property is owned by a legal entity)
• Declaration of the Owner (in case of a flat)
• Certificate of being in no debt with the Homeowner Association or the Cooperative (in case of a flat)
• Statutes of the Homeowner Association (in case of a flat)

A lien comes into being on the basis of a written agreement. A Security Agreement has to include the description of the pledge and of the receivable, which is secured by the pledge. Both the pledge and the receivable have to be specified clearly (i.e. the day and reason of the receivable´s coming into being, its subject and monetary amount, payment terms, interest rate and late interest rate). The agreement is concluded by the pledgee (as a rule a bank providing the mortgage) and the pledgor (the owner of the object in pledge, as a rule the debtor, but it can also be a different person). The Security Agreement is usually submitted to the relevant Land Registry before the Purchase Contract, but the incorporation at the Cadastre can be executed independently too. The lien is, after the incorporation by the Land Registry, marked in the relevant Property Sheet.

Construction work and alterations and maintenance of buildings can be carried out solely on the basis of a Building Permit, with the exception of minor buildings, building modifications etc., in which case it is enough to inform the Building Office. The Building Permit is a ruling issued by the relevant Building Office in the building procedure. It contains obligatory terms concerning the execution and usage of the building, including objections by the procedure participants. The building procedure is opened on the request of the builder, including the specified documentation. This ruling has a time-limited validity and it is valid, as a rule, within two years after coming into force unless the Building Office determines a longer period.

A Survey Sketch (a Geometric Plan) serves to depict a new state of allotment in the relevant pieces of land. It has to be transferred (updated) to the relevant Land Registry. The Survey Sketch is always made exclusively by an authorized surveyor and features a relevant surveyor´s stamp. Subsequently it is submitted to the relevant Cadastre, where it is first verified and then incorporated.

The Declaration of the Owner of the Building is a unilateral legal act of the owner, by which a building is divided into units (i.e. flats and non-residential premises).The Declaration of the Owner describes the building and the land on which it is situated, delimits the units inside the house and specifies the common parts of the building, regulates the rights to the plots and rights and obligations related to the building, states the rules of co-owners´contributions to the administration of the house and the rules of the administration of the common parts of the house, including the person of the administrator. By the registration of this Declaration at the Land Registry, the existing owner of the house becomes the owner of each unit. The Declaration of the Owner of the Building is a basic prerequisite for the transfer of the ownership of the individual units inside the building. The Declaration of the Owner of the Units under Construction delimits the units under construction which will be built inside the object on the basis of a building permit. After the final inspection the units under construction transform into finished units by the deposit of a legally effective final inspection approval at the Land Registry.

A proposal of entry is generally understood as a proposal to start the procedure of the registration of ownership rights, lien, right corresponding to easement or right of first refusal, submitted to the Cadastre, or a proposal to delete such right. The procedure for the authorization of the entry is started on the day of the delivery of the written proposal of the procedure´s participants (or some of them) to the Land Registry and it usually lasts several weeks or even longer. However, the legal effects of the entry come into being retrospectively as of the day of the submission of the proposal to entry to the relevant Land Registry. Nowadays this act is commonly considered to be decisive for the settlement of the purchase price (and also for drawing a mortgage).

Since 1 May 2009 both the citizens of the European Union member states and the foreigners from the countries of the former Commonwealth of Independent States (which came into being after the Soviet Union had ceased to exist) have been allowed to acquire and transfer properties with no limits in the Czech Republic. At the Land Registry it is no more necessary to prove residency or to submit the European Union Identification Card. The same is valid for concluding a contract as a legal entity – it is not necessary either.

As an ownership title is generally understood a document on the basis of which a person acquired the ownership of the property, e.g. a Purchase Contract, Transfer Contract, Heritage Contract, Deed of Gift etc. These documents are deposited at the Land Registry.

The transfer from the original owner to the new one is to be carried out at the Customer Centre of the concrete energy provider (such as PRE, ČEZ, RWE, Pražská plynárenská etc.). The transfer is – as a rule – made by filling in a form, a written approval of the original owner is usually required too.

A Reservation Contract is a contract on the basis of which the seller reserves the relevant property including its accessories for the buyer. On its basis the buyer pays the reservation fee, which is subsequently included as the advance payment of the purchase price. In the contract, the subject of the future transfer (flat unit/chamber/cellar/parking or garage places/pieces of land in mutual ownership and especially preliminary areas) are specified exactly, furthermore here are plot numbers of pieces of land on which the house is to be built. The contract determines business terms. A Future Purchase Contract describes rights and duties of both the contractual parties in more detail. On the side of the future seller here is above all the obligation to make the Declaration of the Owner and to finish the building within the stipulated period so that the Final Inspection Approval can be issued by this deadline. The future buyer is especially liable to settle the purchase price according to the determined payment calendar. The Purchase Contract (The Unit Ownership Transfer Agreement) is a contract by which the ownership is transferred from the buyer to the seller and which is – as the only of the contracts mentioned above – registered at the relevant Land Registry. It contains not only the specification of the unit according to the Declaration of the Owner, but also the amount of ownership shares. Furthermore all the rights, duties and obligations being transferred to the buyer, such as Easement Agreements or Facility Management Contracts, are stated here. The Purchase Contract is submitted to the Land Registry in the appropriate number of copies, depending on the number of participants, together with the proposal of entry. If the buyer funds the property via a mortgage or another type of credit, the Security Agreement is also registered at the Land Registry.

The takeover of the unit is usually carried out after the fulfilment of two basic conditions: a full settlement of the purchase price by the buyer and at the same time the submission of the proposal of entry to the Land Registry. The takeover of the unit is a formal act during which the buyer thoroughly monitors the state of the property which is the subject of the transfer and the opening balances of utilities (hydrometer and electricity meter) and possible defects not preventing the unit from being used are written in a protocol. The buyer is also acquainted with the operation of the house and with the rules to which he/she accedes on the basis of the Facility Management Contract.

A bank guarantee is a special form of guarantee, which comes into being on the basis of a written declaration of the bank in the Warranty Deed that it will satisfy the creditors up to the amount of the given sum in compliance with the Warranty Deed if the Debtor fails to meet the obligation or if other conditions determined in the Warranty Deed occur. The bank is liable to meet its obligation only when it is asked to do so by the creditor in writing. The amount of the payment for the bank guarantee is quoted by a particular bank. The company SATPO sets project funding so that its clients can make use of a free bank guarantee for the settlement of the advance payments of the purchase price paid on the basis of the stipulations of the Future Purchase Contract.

Any flat unit, the total floor area of which does not exceed 120 m2, can be included in this category (the areas of the rooms of the flat unit including the rooms which are its accessories are included in this total floor area, but not the areas of the premises which are not rooms – especially balconies, terraces and enclosed balconies). If the unit does not comply with the criteria of social housing, a 21-percent VAT rate applies.

A building under construction is registered in the Cadastre on the basis of its owner´s notice, which is accompanied by the Survey Sketch (Geometric Plan) for the delimitation of the building under construction, the Building Permit in force, a certified copy of the Certificate of Incorporation and the Affidavit of the owner with the certified signature that this is a building under construction. As a building under construction is understood a building at minimally such as state of construction that the technical and functional disposition of the first above-ground floor is apparent, unless is has been given a house number or a registration number already.

A Certificate of an Authorized Inspector was issued for the construction and this Certificate was submitted to the Building Department of the Office of Prague 5 Town Part. A Certificate of an Authorized Inspector is a document whose notification to the Building Office has the same validity as a Building Permit issued by the Building Office. The institute of so-called summary proceedings, within the framework of which an Authorized Inspector gradually takes over some activities of the Building Office on issuing a Building Permit, is a legitimate and legal procedure of obtaining a permission to perform construction. This procedure, including a control mechanism by the Building Office, is regulated by legislature, especially by the Building Act.

 

In connection with purchasing a property, these two types of proceedings take place most often at the Land Registry:

• Entry

• Record

Who submits a Proposal of Entry at the Land Registry and how:

Any of the parties, in case of purchasing a new property from a developer it is mostly the developer itself (a service for a client). As a rule, the submission is carried out in person at the filing office of the Land Registry, but it is also possible to do it electronically or by mail.

How the parties are informed of the course of the proceedings:

• Individuals – by registered letter or through a paid service “Monitoring of Changes” (service provided by the Land Registry)

• Legal entities (companies) – to their data box 

What is an ENTRY:

Through an entry – on the basis of a written proposal submitted to the Land Registry – the creation, modification, limitation or recognition of the existence or non-existence of rights are entered. The most frequent property-related entries are:

• Right of ownership

• Lien

• Right of construction

• Easement

Examples of what is entered through an entry:

• Purchase Agreements

• Security Agreements (also called Pledge Agreements)

• Deletion of Lien

• Declaration of Owner

• Geometric Plan

• Occupancy Permit

• Easement Contracts

What are the processing fees of the Land Registry:

• CZK 1.000,-

Course of proceedings

Submission of a Proposal of Entry (in writing, through a required form with mandatory attachments).

The Land Registry accepts the Proposal of Entry, which is followed by sealing. The relevant Land Registry informs the owner of the property of the sealing and a twenty-day period begins, during which the proceedings do not take place (period determined for potential expression of parties, appeals against the proceedings, objections etc.). The entry proceedings follow in stages processed, depending on the course of the proceedings – Submission for Processing, Decision to Permit the Entry, Entry Making, Entry Memorandum, or the Land Registry – if the Proposal of Entry has legal defects that do not prevent from making the entry – invites the parties to remove them and determines a reasonable period for such removal. The proposer is allowed to withdraw the Proposal of Entry. However, the entry proceedings are stopped only if this act is approved by all the entry proceedings parties.

After the deadline, the Land Registry issues a Decision to Permit the Entry or a Decision to Dismiss the Entry and informs the parties of this. The legal effects of permitting the entry come into being retrospectively as of the moment at which the Proposal of Entry reached the relevant Land Registry.

How do entry proceedings take place in case of a property in relation to which more Proposals of Entries are submitted?

Generally, the entry proceedings related to the same property are always processed sequentially, not simultaneously, i.e. the entry proceedings with a later date of submission are handled only after finishing the previous proceedings. In contrast to the previous way valid until the end of 2013 – when e.g. the deletion of a lien encumbering the property being sold in the Real Estate Cadastre was carried out through a record –, nowadays these proceedings take place through an entry and if they precede the entry of the Purchase Agreement, they may influence in time the entry of the client´s right of ownership related to the property being purchased. In such a case, the entry of the right of ownership runs only after making the deletion through the entry of a previously-submitted Proposal of Lien Deletion.

If more submissions are recorded with respect to one property at a particular moment, the Land Registry processes them sequentially according to their order, i.e. the day or possibly the time of the submission of the Proposal of Entry. In such a case, the Land Registry usually interrupts the proceedings, i.e. it interrupts the period of decision until it decides on the previous proceedings. 

What is a RECORD:

A record is an entry to the Real Estate Cadastre in cases in which the owner is the state, region or municipality and if there is no change of the owner but only the registration of government departments and public organizations managing the property. Deleting a lien fell under this type of proceedings until 31 December 2013 too. Since 1 January 2014 entry proceedings have been carried out in case of deleting a lien.

Zoning comes into being as the result of the decision-making by authorities, mostly Building Offices, concerning a concrete measure, which has to be carried out in the given territory, or concerning a particular usage of the plot for the purpose suggested (e.g. a decision on the use of a territory, a decision on a protected area or a protection zone, a decision on the positioning of a building, a decision on a building ban etc.). The zoning procedure is started on the basis of the proposal by a procedure participant or of the suggestion by an administrative body and the zoning is obligatory not only for the existing proposer and other procedure participants, but also for their legal successors.

A finished building, or its part which can be used separately, which required the Building Permit, can be used only on the basis of a Final Inspection Approval, which results from the final inspection procedure. The final inspection procedure is opened by a written proposal by the builder and it is executed at the Building Office which issued the Building Permit. In the course of the final inspection procedure the Building Office examines especially whether the building has been made in compliance with the building documentation and whether the terms stipulated in the zoning and in the Building Permit have been met. Should the Building Office find imperfections related to the building within the framework of the final inspection procedure which prevent the building from being used, it determines a deadline for the builder to remove them. Within this period the final inspection procedure is interrupted. The building can be used only in compliance with the purpose determined in the Final Inspection Approval and possible changes in the usage are permissible only after a prior notice given to the Building Office, which will make decision on them or order a new final inspection procedure. In contrast to the Final Inspection Approval used formerly, the current Final Inspection Approval comes into force automatically. Its distribution is carried out via a data box.

Coming into force is a formal act, by which a ruling (such as zoning or a Building Permit) becomes obligatory and unchangeable. Coming into force usually occurs after 15 days after delivering the ruling to the procedure participants unless they exercise their right of appeal within this period. In some cases a ruling comes into force immediately after being issued. A ruling without coming into force is not effective.

Easements restrict the owner of the property for the benefit of another person. The owner is obliged to allow something, to abstain from something or to do something. The right corresponding to the easement comes into existence by the entry of the concrete Easement Agreement in the Cadastre at the relevant Land Registry and it is always written on the relevant Property Sheet. Easements with which the property is encumbered are always stated in the Purchase Contract and they are usually related to the system of technologic networks, which are a part of the residence. Easements come into being also in situations in which the owners utilize equipment that is not in their mutual ownership, e.g. a house boiler room. The right of passage etc. can be handled similarly too.

The extract of the Real Estate Cadastre (the extract of a Property Sheet, “list vlastnictví”, often abbreviated as “LV”, in Czech) is a public document, which certifies the state recorded in the Real Estate Cadastre as of the moment of its issuance. It is marked by the number of the Property Sheet and as a public document it has to feature the date, a round stamp of the Land Registry with the national emblem, the name and signature of the executive of the Land Registry and a stamp or a clause of the settlement of the administrative fee. It is arranged either as a Property Sheet with properties or as a Property Sheet with flats and non-residential premises in the ownership of persons. A Property Sheet gives evidence of the ownership of the relevant property or land, e.g. of pledges, executions, easements, seals etc. The document can be obtained in return for payment at the relevant Land Registry or at the Czechpoint places (post offices, municipalities, local authorities etc.).

A homeowner association (HOA – in Czech SVJ – Společenství vlastníků jednotek) is a legal entity established for the purpose of ensuring the management of the house and of the piece of land. The new Civil Code – Act No. 89/2012 Coll. (hereinafter referred to as NOZ – an abbreviation widely used in Czech and corresponding to the Czech term "Nový občanský zákoník" – New Civil Code) has brought a number of changes to both the existing HOAs and the newly-emerging ones.
Whereas under the previous legislation an HOA came into being automatically with the registration of the property rights of the first 2 residential or non-residential units different from the original owner, now an HOA is established by approving the Statutes and comes into being on the date of the registration in a public register.  The duty to establish an HOA occurs in a house with at least five units, of which at least three are owned by three different owners. The establishment of an HOA is ensured by a rule under which it is necessary to submit the documents confirming the establishment of the HOA in the house to the Real Estate Cadastre in case of transferring ownership of the fourth unit in the house.
The supreme body of an HOA is the Assembly of Unit Owners, comprising all the owners of the units in the building. The statutory body of an HOA is the Committee; its rights and duties are determined by the HOA Statutes.
NOZ requires that existing HOAs bring their Statutes into line with NOZ within 3 years from its entry into force, i.e. by 31 December 2016. The provisions of the existing HOA Statutes that are inconsistent with the peremptory provisions of NOZ lost their force on 1 January 2014.

The notarial custody serves for depositing testaments, securities, deeds and also money with the aim of their being handed over to other persons/parties. In connection with property transfer, contracts and means, the payment of which is stipulated in the Purchase Contract or in the Agreement on Custody, are usually deposited with the notary.

Sole ownership – the property is owned by a single person who is entitled to exercise the rights of ownership. Mutual ownership – the property is owned by more persons. In this case the rights of ownership are exercised by mutual owners. The ownership share is a key term here. This share, expressed as a fraction or a percentage, represents the rate of the co-owner´s participation in rights and duties. However, it is constituted as a so-called ideal share, i.e. a share that does not correspond to a certain real part of the property. With respect to mutual ownership it is important to mention that in case of the sale of a co-owner´s share, other co-owners have the right of first refusal to this share. A co-owner is entitled to be offered the share under the terms proposed by a third party. If a co-owner meets these terms, there is a priority right to buy the ownership share of the other co-owner over the third party. If the co-owners do not agree otherwise (mostly in cases when there are more bidders for the released share), all the other co-owners can buy out the released share in proportion to their shares. Joint property of spouses – the property is owned by spouses. As opposed to mutual ownership, there is no share determined – i.e. an ideal share neither. In case of joint property of spouses, this share is specified only as of the day of the termination of the marriage and the settlement of joint property and the shares of both the spouses are assumed to be identical.

A flat is understood as a room or a set of rooms, which are – in compliance with the ruling by the Building Office – intended for living. Unless a flat including accessories exceeds the area of 120 m2, the VAT rate of 15% applies, for a larger flat 21%. Accommodation units are specific units (especially suites and studios), which do not have a character of a standard flat because of e.g. a lower amount of sunshine, higher noise or on the grounds of the functional determination of the piece of land according to the zoning plan. As regards the legal aspect, accommodation units are non-residential units. However, otherwise they comply with all the parameters of living and they contain a bathroom and a kitchen part, same as flats. The VAT rate of 21% applies to accommodation units. A substantial circumstance on buying an accommodation unit by a VAT payer is the possibility to deduct the 21-percent VAT, which results in the decrease in the paid purchase price by 21%. A non-residential unit is a room or a set of rooms, which are – in compliance with the ruling by the Building Office – intended for other purposes than for living (e.g. office, studio, garage place or shop). The accessories of a flat, non-residential premises or a common part of a house are not non-residential premises. A 21-percent VAT applies to non-residential unit. There is no VAT in case of a piece of land. The total price of a property is usually stated to make it simpler. However, in reality is such a price usually composed of several properties with various VAT rates (e.g.: a flat unit of up to 120 m2 with a 15-percent VAT, a garage place – if it is a part of a non-residential unit – with a 21-percent VAT, a piece of land with a 0-percent VAT).

Project funding is based on providing a project credit by a bank for an investor (developer) with the aim of realizing a building, as a rule flat or commercial. The investor at the same time establishes a purpose company, a so-called SPV (Special Purpose Vehicle). The credit, which was provided by the bank for the SPV, is paid out by the SPV´s revenues and it is usually secured by the assets of the given subject (the subject of the pledge can be building plots and subsequently the building itself).

An escrow account (also called a trust account) is a special bank account serving above all to settle the purchase price between the seller and the buyer, while the bank as the third party guarantees the payout of money in compliance with the preset terms. These accounts can be opened both by individuals and legal entities. Within the framework of project funding, our clients always send their money to an escrow account.

A 15-percent VAT rate applies to flats of up to 120 m2 including accessories, in case of flats exceeding 120 m2 it is 21%. For houses there are two rates too, the lower one (15%) is valid for houses of up to 350 m2, the higher one (21%) for houses exceeding 350 m2. There is no VAT in case of land. Properties which underwent final inspection more than 3 years ago are exempt from the VAT.

Company SATPO Na Malvazinkách, a.s.

The new Civil Code – Act No. 89/2012 Coll. (hereinafter referred to as NOZ – an abbreviation widely used in Czech and corresponding to the Czech term "Nový občanský zákoník" – New Civil Code) brings a new definition of a unit in the provisions of § 1159. A unit is defined as an immovable thing, whereas it comprises an apartment as a spatially separate part of the building and a share in the common areas of the building. The new feature therefore consists in the share in the common areas of the building being a part of the unit.

The provisions of § 1158 Paragraph 2 of NOZ stipulates that the provisions in this part that apply to an apartment also apply to non-residential premises.

The legislation in NOZ does not apply to units created under the Flat Ownership Act (Act No. 72/1994 Coll.). Existing legislation applies to these units.

Real estate tax is a property tax. This tax taxes the ownership of real estate every year. Municipalities are the sole recipients of tax revenues, while the state administers the tax through tax authorities.

The taxpayer of this tax is the property owner.

The subject of the tax are real estate (land, buildings, units), which are located in the Czech territory and which are registered in the real estate cadastre.

A calendar year is calculated for the tax period and the taxpayer is obliged to file a tax return with the competent authority by 31 January for the tax period (ie if real estate tax is paid for 2018, the tax return must be filed by 31 January 2018). The decisive period for calculating the tax is 1 January of the relevant year. If the return was filed in previous years and there has been no change since then, the return is not filed. The tax is paid regardless of the taxpayer's income level. The place determined by the tax revenue are the budgets of the towns and municipalities in whose territorial district the taxed real estate is located.

The average monthly fees related to using a unit vary substantially in practice and they depend on a lot of factors. The basic one is the number of flats inside the residence, furthermore the services provided, such as reception, security, scope of cleaning etc. The price of all these services is divided among the owners. The approximate sum of monthly fees in our residences fluctuates around CZK 60-70,-/m2 of an area (the consumption of electricity in a flat is not included in this calculation).