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Accommodation in the Czech Republic – Part 3 – Buying real estate in the CR – foreigners

 
photo:  (sxc.hu)
 

Have you made a decision to buy real property in the Czech Republic? Ask a lawyer for assistance. In some cases the rules are different for foreign citizens. In addition, Czech legal regulations are difficult to find in English (usually only hardcopy versions are available).

 
 
If you want to buy real property, you should ask for assistance from a lawyer’s office. The best way is to choose a legal company that normally provides services in other languages, which is no big problem nowadays. Big legal companies are normally available as they have branch offices abroad.
   

Foreigners and buying real property in the CR

You can find  regulations related to acquiring  of real property by foreign citizens, in particular,  in the X3 Foreign Exchange Act X3. The rules for citizens and legal entities from EU member states and from countries beyond the EU are different.

Foreign legal entities registered in the EU have a right to acquire real property in the CR. Legal entities not registered in an EU member state may purchase real property only if they establish a branch office or a legal entity within the Czech Republic. 

Citizens from EU member states may buy Czech real properties directly. Citizens from other countries who are not permanent residents in the CR, except for exceptions (for example, USA and Switzerland) cannot directly acquire realties in the Czech Republic.

For any foreigner without exception, both citizens and legal entities, pursuant to Sec. 17 ( 1) of the Foreign Exchange Act, acquiring of agricultural land and forests from private ownership is regulated. Transfers of agricultural land and forests owned by the state is governed by the act on conditions relating to the transfer of agricultural land and forests from the state ownership to ownership of other entities.

Purchase contract

There are two basic conditions for real estate acquisitions in the Czech Republic: the contract of the real property transfer must be concluded in written form; and the right of ownership must be recorded in the Land Registry, whose operation is governed by several legal regulations, e.g. Act on the Land Registry of the Czech Republic and the Act on Registration of Proprietary and other Material Rights to Real Estates.

The most frequent form of the contract is the purchase contract, defined by the Civil Code. Other types of contractual transfer are, for example, a deed of gift, a contract of exchange, or an agreement on family settlement between divorced partners. Otherwise, real property may be transferred in a non-contractual manner, e.g. by inheritance proceedings.

It is obligatory that any contractual transfer of real property is done in written form. Signatures of all parties of the contract must be present on the only document and certified by a notary public.

Land Registry

A transfer of legal title to real estate is not effective until the right of ownership has been registered in the Land Registry. Otherwise, the transfer is not valid. By law, the registration must be completed within 30 days from the date of the submission.

Most of the data recorded in the Land Registry has been digitalised and made available for the public on the Land Registry website Český úřad zeměměřický a katastrální (ČUZK).

Practical tips when buying realty

Just before you sign the purchase contact, check with the Land Registry that the Seller really has the right to dispose of the real estate. It may happen that within a short period the real estate is sold to multiple buyers or, just a day before the contract is signed, the property is put into pledge. The extract from the Land Registry is provided on payment by the respective Land Registry Office or at a contact office within the Czechpoint.

Normally, the price is not paid to the seller at the conclusion of the purchase contract  but  the money is deposited with the notary public or lawyer, being payable as to the date on which the decision of the Land Registry on the registration of the right to the property becomes effective.  

Do not forget the tax. Pursuant to the act on inheritance taxes, gift taxes and real estate transfer taxes, it is the duty of the heir to pay the tax if they inherit real estate; the inland donator pays the tax if the real estate is donated to a foreign legal or physical person; in the case of real estate transfer, the transferor (seller) pays the tax or, in the case of exchange, both the transferor and the acquirer shall pay.

Pursuant to the act on real estate tax, the acquirer (i.e. the buyer or the heir) must submit the declaration of taxes in relation to the real estate tax, i.e. tax on the land or the building, by 31 January, provided that they owned the property as of 1 January of the said year. The tax payment is usually due by 31 May (every year). In the subsequent years, the declaration of taxes is not required unless changes are made in terms of the circumstances significant for the assessment of the tax.
 
Author: Dana Jakešová
 
Added: 15.06.2010
 
 
 

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