Tenants During Apartment Building Conversion: How to Handle Tenancies and Income

How Conversion Changes a Tenant's Legal Status

Converting an apartment building (Czech: činžák) means dividing the building into separate units and selling them. From a tenant's perspective, the lease agreement does not change, but the person of the landlord does once a unit is sold. Under Section 2221 of the Czech Civil Code No. 89/2012, the buyer automatically assumes all rights and obligations from the lease, so a tenant does not lose their tenancy simply because a new owner acquires the apartment.

Ownership passes only when registered with the Czech Land Registry (Katastr nemovitostí). Until then, you remain the landlord and are liable for honouring the lease. Under the Czech Land Registry Act No. 256/2013, the Land Registry must not decide earlier than 20 days after notifying the owner; average registration takes about 22 days. Plan this timeline when informing tenants of the change.

It is important that the tenant receives written notice of the landlord change and the new bank account number in good time. This prevents disputes over where the rent should be paid.

Conversion Phases From a Tenant's Perspective

The project goes through eight phases and three gates (legal, permit, sales gate); details can be found on the page How It Works. Progress to the next phase only with confirmed figures. For tenants, this practically means the following:

• Audit and Plan: tenants usually feel no impact, but you assess the lease portfolio, lengths, and unit conditions. Output within 6 weeks.
• Legal and Permitting: documentation is unified and permits are obtained under the Czech Building Act No. 283/2021 depending on the scope of work. Tenants should be informed if apartment alterations are planned.
• Construction Works: the most sensitive period due to noise, dust, and potential service interruptions.
• Unit Sales: tenants encounter viewings by prospective buyers and new owners.

The earlier tenants learn about the plan from you, the less room for rumours.

Rights and Obligations During Construction

The landlord must ensure the tenant can properly use the apartment, and the tenant must pay rent and tolerate necessary works. The statutory rules for residential tenancies are set out in the Czech Civil Code No. 89/2012 and obligations depend on the individual agreement. If construction restricts apartment use, the tenant may be entitled to a rent reduction or alternative remedy, so it is advisable to document the scope of any restrictions and agree them in writing.

What This Means for You

• Do not access or alter an apartment without agreement or legal grounds.
• Give written notice of work schedules and service interruptions in advance.
• Document the apartment condition before and after any works.
• For disputed matters, consider legal advice, ideally before work begins.

How Rental Income Will Change

Rental income typically declines during conversion. Units vacated for renovation generate no income, and units with ongoing works may see reduced rent. Conversely, units sold after registration with the Land Registry cease to be your income, as rent goes to the new owner.

Economically, the rental shortfall is weighed against the gains from unit-by-unit sale. The typical value difference between selling a building as one and selling it unit-by-unit is +20–40 %, but the exact figure depends on feasibility. The calculation must include cash flow during construction, not just final returns. You can get a rough idea from the building potential calculator, and a detailed plan with financial backing from audit and plan.

Sale proceeds are subject to the Czech Income Tax Act No. 586/1992. We recommend verifying conditions such as holding periods or principal residence exemptions with the Czech Financial Administration or a tax adviser.

Tenants Reluctant to Leave

A residential tenancy may be terminated only on grounds set out in law (Section 2288 of the Czech Civil Code No. 89/2012). Intention to sell the building unit-by-unit is not such a ground, so plan on the tenant staying and design your project accordingly.

Practical Strategies

1. Open Communication. Explain what will happen, when, and how it will affect the tenant.
2. Lease Termination Agreement. Offering a settlement payment or assistance in finding alternative accommodation is often cheaper and faster than litigation. Always document the agreement in writing.
3. Move Within the Building. If possible, offer the tenant an alternative apartment in the building.
4. Sale With the Tenant. A unit can be sold with an existing tenancy, for example to an investor; this will be reflected in the price.
5. Right of First Offer. Some tenants may be interested in purchasing the apartment they occupy.

Make payments, such as settlement, by bank transfer; cash payments are capped at 270,000 CZK per day (Czech Cash Transactions Act No. 254/2004). Pressure, threats, or service restrictions are unlawful and may lead to legal disputes.

Keeping the Peace During Construction

Keeping peace in the building is primarily a matter of organisation. Designate a single contact point, issue regular brief written updates on work progress, and meet announced deadlines. Schedule noisy work during pre-announced time windows and arrange alternative solutions for water, heating, or power interruptions.

It also pays to document apartment conditions before and after construction and address tenant complaints promptly before they escalate. This often determines whether unit sales proceed without delay.

You can assess which collaboration method suits your building on the page Who Is Činžáky.com For.