How to buy a house in the Czech Republic in Twenty four (Easy?) Steps

How to buy a house in the Czech Republic in Twenty four (Easy?) Steps
(based on our experience)

Step 1. Find a house you like

Step 2. Talk to the real estate agent.

Step 3.  He will say that the price is “x” crowns. Many people apparently either accept this asking price – or not. However even though some might consider it presumptuous or rude – you are allowed to negotiate.

Step 4.  The negotiations won’t be the same as in New Zealand. First of all you will negotiate the price before you make an offer. Secondly the normal “back and forth” doesn’t seem to exist.

We called the real estate agent, apologised, and said that we could only pay 75% of the asking price. He was quite angry with us for wasting his time.

Step 5.  Wait

Step 6.  Two days later the agent calls back and says “Yes, OK”. He does not attempt to negotiate. He just accepts the offer.

Step 7.  You go to the agents’ and sign the first of the billion pieces of paper that you are going to have to sign.

This one is a called a “contract reserving the property”. It specifies the price, but not much else. At this point you pay a (non refundable) deposit. You do this before you have organised your mortgage and before you have checked the building for structural defects etc.

If something went wrong (for example you couldn’t get a mortgage, or discovered that the building was on the verge of collapse), then you wouldn’t get your money back. Instead you would get to go “phew – that was a lucky escape”. The real estate agent would keep the deposit as bonus commission and start again.

Conditional contracts are apparently possible, but very very unusual.

The house is now “sold” and should disappear from the agents’ web pages.

Step 8.  Apply for a mortgage. We used a mortgage broker. This was a good idea as he was really really helpful.

Step 9.  Take a day off work to visit all the different government offices you need to visit in order to get bits of paper saying that your taxes are not in arrears, you are not a bad debtor, you have up to date health insurance etc.

Step 10.  Once you are feeling petty good about the mortgage, you can move to the next step. Which is were you sign a “contract about future contract”. Your mortgage won’t actually be finally approved yet, but you’ll need to sign this contract first – before your mortgage is approved. This is a bit of a catch 22, as this contract includes a deadline for settlement, and big financial penalties if you fail to settle. You’d be in big trouble here if your mortgage was declined.

We needed to sign nine copies of this contract.

Step 11.  After your mortgage is approved, go and sign the mortgage. Really friendly and helpful service, but give your signature arm a workout first.

Step 12.  Sign a contract with an attorney, who will be holding all the money until the title is registered at the land registry.

Step 13.  Pay the rest of your cash contribution (to the attorney)

Step 14.  Sign the actual purchase contract. 

Step 15.  Now you can get house insurance (you need it for the mortgage)

Step 16.   You (and – I don’t understand why – the vendor) sign a lot of notarised documents giving the bank security over the property.

Step 17.  Take all the signed documents to the Land Registry, and get a receipt from them

Step 18.  Take all the documents to the bank, who – if they are satisfied that everything is in order – will pay their part of the money to the attorney

Step 19.  After that – you take possession of the house (sometime in the next two weeks)

Step 20.  Move, relax, enjoy a bottle of wine, and be happy

Step 21.  Meet with the vendor. Do meter readings for the power, gas, water and phone and then take another day off work to visit all these organisations to transfer the utilities into your name.

Step 22.  Sign some more notarised documents for the bank.  Pay a big bank fee

Step 23.  Wait

Step 24.   Hopefully within three months the land registry will have registered the transfer and the mortgage.  (If not you will pay a 5,000 Kc penalty).  Once they do, the attorney will release the money to the vendor, and

Finally The property is yours!

I think this explains why the Torrens system of land registration (as we have in NZ – and also I believe in Canada) is a really really good idea. 

In NZ you wouldn’t need to visit any government offices or utility companies, and you’d only sign three prices of paper

•The agreement for sale and purchase
•The mortgage application,
•The mortgage itself

The whole process would take three weeks, rather than the three months (as above).

I’d be quite happy to volunteer to help the Czech State improve their system.  It would be really really good for property prices and for the economy generally.  It would simplify things for everyone, and unless I’m greatly mistaken, actually save the government money.