[BUYING AND SELLING REAL ESTATE IN CZECH REPUBLIC]
VII. Financing a. The usual method of financing real estate deals is by way of a bank loan/mortgage for at least a part of the purchase price. A bank generally insists on being provided with collateral beforehand. b. Usually, the buyer has to cover a certain portion of the price from their own sources. For large development projects, banks usually require a pledge on all possible claims which the buyer can gain in connection with the real estate. c. In connection with this, the buyer often has to present the seller with an irrevocable acceptance of loan financing by a reputable bank or show proof of sufficient funds before signing the purchase agreement. d. Normally, the mortgage/loan is provided for about 60%, up to 70%, of the purchase price. e. For special transactions such as large individual properties or real estate portfolios, a common alternative to a bank loan is the use of capital market products, for instance, bonds, receivables, or credit derivatives. VIII. Payments and Costs a. The costs and taxes are normally borne by the buyer. However, usually the seller has to bear the costs of deletion of old mortgages from the Land Registry. b. Usually, the purchase price is transferred to an escrow account maintained by a notary, a bank, or an attorney-at-law, whereafter the money gets transferred to the seller following the successful registration of the transfer in the Land Registry. c. The tax on acquiring real estate was abolished. No notary or important
registration fees are necessary. The necessary official registration stamp is only EUR 100. d. Agent fees are usually around 3% of the purchase price. IX. Examinations before closing a. The buyer is advised to check the title to the property for any potential or actual deficiencies and the financial condition of the seller as well. b. Commercial buyers should also check if there are any planning restrictions imposed upon the property, since a construction or alteration as well as change in use or the demolition of a building requires a building permit. The building project has to comply with the content of the local (or regional, as the case may be) development plans. Therefore, with regard to prospective plans of construction, the development and land use should be reviewed very carefully before the closing of the contract. c. In addition to this, environmental issues should be checked before closing too. Note: It is highly recommended to undertake a due diligence review before the closing of the contract.
ILN Real Estate Group – Buying and Selling Real Estate Series
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