The Czech Republic joined the EU in 2004, which simplified many of its property-buying regulations for foreigners. Nevertheless, several restrictions still do exist on foreign investors, and they must hire attorneys in order to conduct relevant research regarding the property’s legitimacy.
Attorneys and Real Estate Agents
Foreign buyers should hire a real estate attorney when buying property in the Czech Republic. Most of the documentation is written in Czech, which is a difficult language to understand, plus this person will look out for the buyer’s best interest. The real estate laws have many residual, complicated laws of the past that are confusing to those who are not familiar with them.
Good real estate agents can be helpful in this process, but buyers should realize that there are few regulations on people in this practice, and agents may not be licensed. Foreign buyers should consult their attorneys before signing any deals with agents. Many long-established real estate companies do exist in the Czech Republic, but buyers should still be skeptical.
Rules, Regulations and Restrictions
EU citizens are allowed to freely buy real estate, so long as it is not forestry or agricultural land. Those who do not reside in the EU have to form a limited liability company with the Czech Republic, or an SRO. Forming a limited liability company will protect foreigners from assorted taxation and liability issues they may not initially realize. The government may also choose to take away the land for various reasons if an SRO is not secured.
Before settling on a property, the buyer should check if this particular piece of real estate is OV, privately owned, or DV, cooperatively owned. DV property is usually apartments or old apartment blocks; ideally, the property should be OV.
Once this is determined, the buyer should make an offer to the seller. Upon acceptance, both parties should sign an initial sales contract, and the buyer should put down a holding deposit so the property is taken off the market. The buyer should also have the attorney investigate that there are no outstanding debts or title issues with the property, and that it can legally be sold. The buyer should also arrange the rest of the funds to pay for the property.
After all of the research clears, the final purchase contract should be drawn up, signed by both parties and notarized. This document, and other necessary documents, must then be forwarded to the Land Registry office, which usually takes a few months to process. Once the Land Registry office legitimizes this transaction, the deed can be signed in the name of the buyer, who should have the rest of the money transferred to the seller. The buyer is also responsible for paying several taxes and transaction fees as a final step.