Preparing to sell or buy a flat involves a series of consecutive steps, one of which is concluding a written agreement transferring ownership of the flat. Under time pressure, or when a quick sale is needed, people often neglect to prepare thoroughly the very foundation of the whole sale: the purchase agreement.
Agreement on the transfer of ownership of a flat
is the most important element of the entire transfer process. It has a number of distinctive features and is subject to a great many statutory requirements. Below we aim to explain at least the most basic formal and substantive requirements, which make the agreement clearer and help ensure compliance with the law.
The fundamental element the agreement must contain is a definition of the legal act it governs, and equally important is the identification of the contracting parties. Where the seller or buyer is a natural person, their first name and surname must be stated, always together with their birth surname. Further details include date of birth, permanent residence address and birth number (personal identification number). Where one of the parties is a legal entity, its registered office, company ID number (IČO) or other specific identifiers must be given.
The subject of the agreement is the seller’s obligation to hand over the property to the buyer and, conversely, the buyer’s obligation to take over the property and pay the purchase price agreed in the agreement.
The law requires the location of the property to be identified very precisely. In this article we have taken the sale of a flat as our example, so the transfer must state the flat number, the floor on which it is located and its entrance number. It is also essential to specify the block of flats in which the flat is located; the building must be identified by its land registry number and the number of the plot on which it stands. This plot number can be found in the register under either a “C” or an “E” designation. In addition, the cadastral area in which the property is located must be stated.
As regards the property itself, a description of the flat and its ancillary spaces is given, stating how many habitable rooms the flat comprises. Ancillary spaces are all parts of the flat intended for use together with it (cellar, hallway, bathroom, WC…). The floor area of the flat must also be stated, meaning the total area excluding loggias and balconies.
The specification of the flat must also include a precise list of its fixtures and fittings. The law does not define this term precisely, but it is generally understood to mean the internal installations (water and gas pipework, central heating, drainage, letterbox, and even the fitted kitchen ….)
Another element that must be stated in the agreement is the co-ownership share in the common parts and facilities of the building, in ancillary spaces, in the land on which the building stands and, where applicable, in the adjoining land. The size of the share is determined by the ratio of the floor area of the owner’s flat to the total floor area of all flats and non-residential premises in the building. In some cases, the size of the share is set by agreement between the acquirer of the flat and the owner of the building.
The common parts of the building include the roof, entrances, corridors, shared service routes, insulation structures and so on…The common facilities of the building include, for example, the lift, pram storage rooms, drying rooms, lightning conductors and all types of utility connections.
These co-owned parts must also be described and, where applicable, the agreement must state which parts are used by which owners. In our experience, however, cadastral departments do not scrutinise these details in any depth. It is purely in the buyer’s interest to be familiar with what they are buying.
Another mandatory element of the purchase agreement is provision for the rights to the land on which the building stands and to the land adjoining it. If the buyer so wishes, an expert report may also be incorporated into the agreement, assessing the technical condition of the flat and listing all repairs that will be needed in the coming year. Such a report depends solely on the buyer’s wishes; if the buyer does not want one, the agreement simply states that the buyer does not request a report on the condition of the flat. In their own interest, however, the buyer should be thoroughly acquainted with the condition of the flat. The agreement must also contain a declaration that the buyer accedes to the owners’ association agreement and the management agreement. Without this declaration, ownership of the flat cannot be transferred. The declaration means that, at the moment of signing, the new owner accedes to both agreements, so we recommend familiarising yourself with them in advance.
The law also requires provision to be made for rights to any civil protection facilities in the building, subject to the consent of the relevant authority. In practice, this concerns only older buildings with civil defence shelters. Such provision may take the form, for example, of a co-ownership right or an easement.
The most important element of the agreement from the parties’ point of view is, of course, the purchase price. The purchase price is such a broad topic that we will not examine it specifically in this article. Current legislation does not provide for a fixed or maximum price for property. There is, however, a Pricing Act which the parties must observe when agreeing the price. The purchase price should also reflect the current economic situation on the property market. Price restrictions apply only to the transfer of ownership by an entity specified by law to the current tenant.
This concludes the list of mandatory parts of the agreement, but there are other matters that are best agreed in the agreement to avoid complications in future – for example, the conditions for withdrawal from the agreement, the conditions for handing over the flat, when and how the registration proceedings will take place, and what happens if the proceedings are suspended or discontinued altogether.
Once the agreement has been drawn up, the process is not yet over: it must be accompanied by a declaration from the building manager or the chair of the owners’ association confirming that the seller has no outstanding debts relating to the use of the flat or to the operation, maintenance and repair fund. The declaration should be current as at the date the agreement is concluded, although in some cases it is sufficient if it is current as at the end of the previous calendar month.
For the agreement to serve as a proper basis for the transfer of ownership, it must satisfy a number of formal requirements in addition to its substantive content.. . The agreement must always be in writing. The law further requires the declarations of the parties to be on the same document, which means the documents must be officially bound together. The seller’s signature must be certified by a notary or a registry office. However, if one of the parties is an entity specified by law, or the agreement is executed as a notarial deed, certification of the signature is not required. The signature must be accompanied by the date and place. The agreement must be drawn up in Slovak or Czech, or in an officially certified translation. The number of copies varies from case to case, as required.
The final stage
of the transfer of ownership is registration in the land register. Only at this point is ownership of the flat acquired – not when the agreement is signed, nor when the flat is handed over, as many people assume. The exception is the transfer of a flat into the ownership of its tenant, where ownership is acquired by a final court decision.
Provided you have met all the conditions laid down by law, the district office will grant registration of the ownership right to the property within the statutory time limit. If not all conditions are met, however, the office may suspend or discontinue the proceedings. This can happen where the agreement does not contain all the elements described above. In our experience, the most common errors leading to suspension are formal ones, such as an incorrect calculation, omission of the birth surname, or failure to attach the building manager’s declaration. If the proceedings are suspended, the district office sets a deadline for remedying the defects; if the parties fail to do so, the proceedings are discontinued. In that case, if you still wish to obtain registration, you must go through the entire process again, having corrected the defects that led to the discontinuation.
Drafting an agreement
that satisfies all the requirements for successful registration and every statutory requirement is no easy task. We would therefore advise you not to rely on template forms from the internet or on agreements obtained from other people for such an important contract, but rather to entrust its drafting to an experienced lawyer, or at least have a lawyer check an agreement that has already been drawn up. That way you can be sure your agreement has been properly prepared and that nothing will catch you out in future. Where the purchase or sale of a property is handled by an estate agency, the agency usually prepares the agreement itself in cooperation with a law firm.
Finally, please note that many of the requirements set out above apply not only to an agreement on the transfer of ownership, but also to the transfer of a co-ownership share or of non-residential premises, an exchange agreement, a deed of gift, or, for example, the settlement of spouses’ joint matrimonial property. We have not covered in this article several particular requirements that an agreement on the first transfer of ownership must also meet. The transfer of ownership is governed by Act No. 182/1993 Coll. on the Ownership of Flats.
