ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN CZECH REPUBLIC]

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Note: The parties may choose to include several collateral provisions in the purchase agreement, which may be constituted as rights in rem and registered in the Land Registry. These collateral provisions may facilitate the negotiation of the sale of property by ensuring both parties’ specific requirements are satisfied. The parties may choose to include the following collateral provisions in the purchase agreement: (i) reservation of ownership right, (ii) reservation of repurchase, (iii) reservation of resale, (iv) pre-emption right, (v) purchase testing, (vi) reservation of a better buyer. A detailed description of these stipulations exceeds the scope of this article, however, their inclusion in the purchase contract may be very practical in some cases. We will gladly provide more detailed information upon request. III. Conclusion of the Purchase Agreement a. The purchase agreement has to be concluded in writing and the signatures of both parties must be on one document. As the Land Registry office investigates the authenticity of the parties’ signatures on the purchase agreement, it is advisable that the parties officially certify their signatures. For the purpose of the registration in the Land Registry (i.e., for the filing of the application for the permission to enter a record into the Land Registry), it is not required that the parties to the contract prove their identities by their officially certified signatures. IV. Transfer of Ownership a. The parties are advised to include in the purchase agreement an agreement on which party is to apply for the registration in the Land Registry. In most cases, it is stated that the seller has to apply for the registration in the Land Registry within a certain period of

time from the conclusion of the purchase agreement. b. To ensure that the purchase price is transferred to the seller after the registration of the ownership of the property in favour of the buyer, the parties usually deposit the purchase price at a notary, attorney-at-law, or bank. The parties to the contract thus usually also conclude an escrow agreement with the bank, notary, or attorney-at-law, along with the purchase agreement. Under run-of-the-mill escrow agreements, the bank/notary/attorney-at- law is obliged to transfer the purchase price after the fulfilment of the conditions stated in the escrow agreement, which usually include the registration of the buyer in the Land Registry as the owner of the transferred real estate. V. Agents a. The Buyer or Seller may employ the services of a real estate agent. The contract with the agent may be concluded as an exclusive agreement. b. The real estate agent's commission is generally determined by the market situation and is usually around 3% of the purchase price. VI. Forms of Ownership a. In general, all individuals and legal entities can invest into and own real estate assets. b. It is irrelevant if the owners and purchasers are residents or non-residents, or which country they come from. However, it is important that the Czech Land Registry recognizes the legal personality of any foreign company or individual. A. Acquisitions a. Real estate can be acquired by way of an asset deal or a share deal. The legal entities

ILN Real Estate Group – Buying and Selling Real Estate Series

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