Insurance and Legal Protection for Sellers During Multi-Unit Building Resale
Published 8 November 2026
When selling a multi-unit residential building (činžák) unit by unit, you need building insurance until ownership transfers to buyers via registration with the Czech Land Registry (katastr nemovitostí), owner's liability insurance for construction risks, carefully drafted purchase agreements, and secure payment settlement through attorney-managed escrow (advokátní úschova). There is no single universal seller's insurance policy, so your protection consists of multiple insurance policies combined with contractual safeguards. The framework is established by the Civil Code (Občanský zákoník č. 89/2012 Sb.), particularly regarding purchase agreement terms and liability for defective performance.
Summary
- The building and partially completed units must be insured until ownership transfers via registration with the Czech Land Registry (katastr nemovitostí).
- Complement liability and construction risk insurance with mandatory insurance requirements for all contractors and intermediaries.
- Liability for defects is best limited by precise description of the unit's condition in the contract, not by concealment.
- Settle the purchase price through attorney-managed escrow (advokátní úschova), not in cash.
- Address risks during the initial audit and at project milestones, not after the first sale.
What Is Actually at Risk During a Unit-by-Unit Sale
During a unit-by-unit sale, three types of risks overlap: damage to the building itself, liability to third parties, and claims from buyers after the transfer of ownership.
The building is not sold all at once. Some units already belong to buyers, some remain yours, construction work is ongoing, and common areas have multiple users. Each situation requires different risk management. That's why it's helpful to categorise risks according to the project phase, as described in the process of eight phases and three gates.
- Property risks: fire, water damage, natural disasters, vandalism in vacant units.
- Liability risks: injury on the building site or in common areas, damage caused to neighbours.
- Contractual risks: claims for defects, disputes over scope of sale, late payments.
Building and Construction Risk Insurance Until Ownership Transfer
You must keep the building insured for as long as it remains your property, including units that have been sold by contract but are not yet registered with the land registry.
Ownership of a property transfers only upon registration with the Czech Land Registry (katastr nemovitostí) according to the Cadastral Act (Katastrální zákon č. 256/2013 Sb.). The cadastral office cannot decide before 20 days have passed since notifying the owner, and registration typically takes around 22 days. During this period, the seller bears the property risk unless the contract states otherwise. Insurance contracts are governed by the Civil Code (Občanský zákoník č. 89/2012 Sb.), §§ 2758 et seq.
Practically, verify with your insurer:
- whether the insurance policy covers the building during partial renovation and when units are vacant,
- whether the insured value reflects the building's condition after renovations,
- whether construction work is separately insured or covered by the contractor's insurance,
- how the insurance will be adjusted when buyers become owners.
Always request terms in writing; coverage scope varies between insurers.
Liability Insurance and Professional Insurance for Project Partners
Address liability for damage to third parties through building owner's liability insurance and simultaneously require insurance from all professionals working on the project.
The obligation to compensate for damage is established by the Civil Code (Občanský zákoník č. 89/2012 Sb.), §§ 2894 et seq. Liability insurance is governed by §§ 2861 et seq. If you are managing the project with a partner, verify who the insured party is and what the coverage limit is.
It is reasonable to require the following documentation from contractors and professional partners:
- builder's liability insurance,
- professional liability insurance for the architect and structural engineer,
- professional liability insurance for the solicitor or estate agent involved in the sale.
These requirements should be included in contracts. An insurance policy that cannot be documented cannot be claimed in the event of damage.
Liability for Defects and Loss Risk: What to Insure and What to Cover Contractually
Liability for defects in a sold unit can only be partially covered by insurance; the main protection is precise description of the unit's condition and good faith in the purchase agreement.
The seller is liable for defects that existed at the time of handover, as set out in the Civil Code's provisions on liability for defective performance (Občanský zákoník č. 89/2012 Sb.), particularly §§ 2161 et seq. Standard insurance products covering all financial losses from defect claims or failed sales are not commonly available. If you are interested in such coverage, verify specific terms, exclusions and conditions with your insurer; do not rely on general promises.
| Risk | How to Mitigate It |
|---|---|
| Defect claims on a unit | Technical documentation of condition, photographs, handover protocol, description of known defects in the contract |
| Defects in common areas | Building survey before sale and clear definition of what constitutes common areas |
| Damage during renovations | Building and contractor's liability insurance, contractual penalties and subcontractor's insurance |
| Price loss if sale fails | Economic verification before starting and following the milestone-based process with confirmed figures |
You cannot contractually exclude liability for deliberately concealed defects; it is therefore better to describe them. A buyer who is aware of the condition has a weaker position to make claims.
Contractual Protection Against Buyer Claims After Sale
The most effective protection against future disputes arises when drafting the contract: precise definition of the sale subject matter, description of condition, and documented confirmation that the buyer has reviewed the documentation.
- Precise scope of sale: the unit, share in common areas, appurtenances, cellars and attic spaces.
- Description of technical condition: base it on documentation and reports, not on general statements.
- Seller's declaration: state only what you can document (legal status, encumbrances, tenancy arrangements).
- Documents handed to the buyer: schedule of attachments signed by both parties.
- Escrow and payment terms: the purchase price is settled through attorney-managed escrow (advokátní úschova) and released according to the contract conditions.
- Handover protocol: meter readings, keys, obvious defects on the day of handover.
Cash payment is limited by law (Zákon o omezení plateb v hotovosti č. 254/2004 Sb.) to 270,000 CZK per day, so it is not suitable for apartment purchase prices. Professional transactions proceed via bank transfer. Tax implications of the sale (for example, holding period tests or use for residence) are governed by the Income Tax Act (Daňový zákon č. 586/1992 Sb.); check details with the Tax Office or a tax adviser.
What to Do Now
Start by compiling a list of your insurance policies and building documentation, then plan the sale accordingly.
- Gather your current building insurance policies including coverage limits and exclusions.
- Prepare extracts from the Czech Land Registry (katastr nemovitostí), tenancy agreements, inspection reports and building documentation.
- Find out what insurance your contractors and intermediaries hold.
- Have the building's technical condition assessed before describing it in purchase agreements.
- Choose your approach – an audit and plan with a six-week timeline, or end-to-end implementation where risks are managed at each milestone.
Insurance gaps are usually discovered only when a claim arises, so check them in advance. Get a non-binding quotation or assessment of the building using the form below this article. Insurance scope and contract terms should always be verified by an insurance broker or solicitor.