Safe purchase of a flat in a divided Czech building: legal protection for the buyer

Why buying in a divided building is different

A divided apartment building differs from a flat in a long-established house in that units are newly created or being created from what was originally a single property. As a buyer, you therefore do not only consider your own flat, but also the legal foundation of the entire building: the owner's declaration, unit designation, the size of shares in common parts, and the status of the unit owners' association (společenství vlastníků).

From the perspective of the owner of the building who is offering the units, this means one thing: buyers will conduct thorough due diligence, and they have the right to do so. Those who have their documentation organised in advance close deals more smoothly. The building division project therefore passes through three gates (legal, permit, sales gate), in which the legal status is confirmed before sales begin. For details, see the page How it works.

Cash or electronic payment

Act No. 254/2004 Coll. on limiting cash payments restricts cash transactions to 270,000 CZK per day. The purchase price of a flat typically far exceeds this limit, making payment in full by cash impossible. An offer of cash payment or staggered payments over several days is therefore not standard commercial practice, but a reason for increased caution.

Electronic payment also has a practical advantage: it leaves a record of who paid whom and when. You will appreciate this in any future dispute and when you later sell the property. Moreover, the building owner can easily document the source and use of funds from the electronic transaction flow.

Lawyer's escrow: step by step

In practice, a lawyer's escrow account is a common way to resolve mutual mistrust: the buyer does not want to pay before the transfer is certain, and the seller does not want to transfer before payment is certain. The escrow is governed by a three-party agreement (buyer, seller, lawyer). A typical process looks like this:

1. The parties sign the purchase agreement and the escrow agreement, which specify exactly the conditions under which funds will be released.
2. The buyer deposits the purchase price into the account designated for escrow.
3. The lawyer submits an application for registration of ownership with the Czech Land Registry (katastr nemovitostí).
4. After registration and verification of the Land Registry extract (including confirming that no unexpected entries appear in the title deed), the lawyer releases the funds to the seller.
5. If registration does not occur, the funds are returned to the buyer according to the escrow agreement terms.

Crucially, the conditions for fund release must be clear and verifiable from public sources, not dependent on subjective assessment. Always adjust specific arrangements with your lawyer; lawyers can be verified with the bar association.

What the purchase agreement must cover

The purchase agreement is governed by the Czech Civil Code No. 89/2012 Coll. (sections 2079 et seq.). For the transfer of immovable property, it requires written form and ownership passes only by registration with the Czech Land Registry (katastr nemovitostí) according to section 1105 of the Civil Code. For a unit in a divided building, the agreement should clearly address these points:

• Exact description of the unit according to the owner's declaration and Land Registry data, including the share in common parts of the building.
• Purchase price and payment terms – electronically, with reference to escrow.
• Legal status: mortgages, real-estate encumbrances, lease agreements, potential enforcement actions. The seller should declare that the unit is not burdened by these, or explain how they will be removed.
• Condition of the unit and building: known defects, planned repairs, debts to the unit owners' association, reserve fund status.
• Handover and cost allocation at the time of transfer.
• Consequences of non-performance: withdrawal, contractual penalty, deadlines.

Regarding a co-ownership share, note that the general right of first refusal for co-owners was abolished. It applies only for six months from creation of co-ownership if the share arose by inheritance (section 1124 of the Civil Code No. 89/2012 Coll.). This should also be addressed in the agreement.

Registration with the Land Registry and verification of legal status

Ownership of immovable property transfers only by registration with the Czech Land Registry (katastr nemovitostí). Under the Land Registry Act No. 256/2013 Coll., the Land Registry office cannot decide before 20 days after notice to the owner; the average registration time is approximately 22 days. Until then, the buyer is not the owner, so funds remain in escrow until registration.

Before signing and before funds are released, verify the title deed. Focus on:

• entries on mortgages, enforcement actions, or insolvency of the seller,
• notes on pending proceedings,
• consistency of unit data with the owner's declaration.

Special caution is warranted if the seller is in enforcement proceedings or insolvency (Enforcement Rules Act No. 120/2001 Coll., Insolvency Act No. 182/2006 Coll.). Disposals of assets may be restricted and the procedure must comply with law. Properties sold at auction follow different rules; the minimum bid is two-thirds of the outcome price (section 336e of the Civil Procedure Rules No. 99/1963 Coll., applied accordingly for enforcements).

Taxes and fees related to purchase

The tax on acquisition of immovable property has been abolished (Act No. 386/2020 Coll.), so the buyer does not pay it. The seller may have a tax obligation under the Income Tax Act No. 586/1992 Coll.; it depends in particular on the holding period and whether the property was the seller's residence. Assess the specific impact individually with a tax adviser or contact the Financial Administration.

Perspective of an owner selling individual units

The owner of a divided building is in the position of a seller, and their interest is that buyers have nothing to fear. In practice, pre-prepared verified documentation, a sample purchase agreement, a standardized escrow procedure, and documented legal status of units help. The typical difference in value between selling the building as a whole and selling unit by unit is +20–40%, though the exact figure is determined by feasibility analysis; this is the output of a paid Audit and Plan within six weeks. Clean and predictable transactions are one of the conditions for this potential to actually materialise.

If you want to entrust unit sales to a single entity, see End-to-end realisation. Answers to common questions can be found in frequently asked questions.