Purchase of a flat or a house

Purchase of a flat or a house

Houses and flats in one's ownership are collectively denoted as real estate (real estate is de. ned as a building connected with the ground with a solid foundation). The issues of ownership and acquisition of real estate by foreigners are dealt with in Act No. 219/1995 of the Collection of Laws, Foreign-exchange Act. This act divides individuals and legal entities into two groups - residents and aliens.

Generally, it may be said that in the Czech Republic, a flator a house may be purchased by only Czech nationals and foreigners with a permanent residence permit or those granted asylum or a legal entity with its registered of. ce in the Czech Republic.

Participation of foreigners in Czech legal entities is regulated by the Commercial Code. Foreigners with a different type of residence are not allowed to purchase real estate in the territory of the Czech Republic. They may obtain them only in the manner stipulated by Law (see below).

A Resident is:

• an individual with permanent residence in the territory of the CZ

• a legal entity with its registered of. ce in the CZ

• an individual with asylum status granted (pursuant to the Act on Asylum, persons, who have been granted asylum, are considered to be as persons with permanent residence in the CZ).

A resident may acquire real estate in the Czech Republic (i.e. obtain the real estate in his ownership) in any legal manner.

An Alien is:

• an individual without permanent residence in the territory of the CZ

• a legal entity, which does not have its registered of. ce in the CZ.

An alien may acquire real estate in the Czech Republic only in particular ways, listed in Section 17 of the Foreign-exchange Act. For example:

• by inheriting

• if the real estate is acquired as the undivided co-ownership of spouses, and only one of them is an alien

• if an alien is to obtain the real estate from his/her spouse, parents or grandparents.

A written contract of purchase between the seller and the buyer is concluded about the purchase of a house or flat. The buyer does not become the owner of the house or flat at the point of signing the contract of purchase but by oficial registration of the ownership right resulting from the contract of purchase in the Land Registry. This fact needs to be considered when concluding a contract of purchase, particularly with respect to paying the purchase price. For negotiations concerning a purchase of a house or a flat, we recommend consultation with a solicitor specialising in the area of real estate.

The Land Registry keeps records of ownership and other property rights of all real estate in the CZ and is administered by the Land Registry Ofice. Its branches have seats in all regions. The Land Registry is public and is available for viewing in the presence of the office clerk. Before any purchase, you may check if there is any encumbrance in connection with the real estate. The real estate may perhaps be mortgaged because of a loan. A loan can relate not only to the purchase of this real estate, but also to business activities or purchase of different real estate and could also have been granted to a different person.

Note!

Thoroughly checking the legal situation of the real estate to be purchased is always necessary!

The entire process of registration of the ownership right to the real estate in accordance with the contract of purchase may last up to several months depending on local conditions. After you have been registered in the Land Registry as owners, you may apply for an abstract from the Land Registry, which shall serve as proof that you are really the owner of the real estate. You may need the abstract from the Land Registry in proceedings with authorities.

Saving in a building society or acquiring a mortgage can help inhnancing the purchase of the real estate.

More detailed information may be found in document:“Other useful informartion concerned with living.“

A real estate-transfer tax:

A real estate-transfer tax is paid when selling and buying real estate. This tax is paid by the seller, in this case the buyer is the guarantor. The tax is calculated from the price established by the of. cial estimate or from the real agreed price, depending on which price is higher.

A person, who becomes an owner of real estate on the basis of inheritance or gift, must pay inheritance tax or gift tax. An owner of real estate must pay real estate tax every year.

More details are to be found in Act No. 357/1992 of the Collection of Laws, on Inheritance, Gift and Real Estate-Transfer Taxes and in Act No. 338/1992 of the Collection of Laws, on Real Estate Tax.