Sale and purchase agreement

The sale and purchase agreement is concluded between the buyer and the seller. The essentials of this agreement are the following:

• Due specification of the transferred real estate, such as:

• in the case of a land plot – the land plot number (including the specification of whether it is a building land plot (stavební parcela), if applicable, otherwise it is presumed to be a plot of land [pozemková parcela]) and cadastral area
• in the case of a building not yet forming a part of a land plot or of construction right (see “What is included in the term “real estate”?”) – denomination of the land plot on which the building is located, its registration number (číslo popisné) or reference number (číslo evidenční) (or, if neither the registration nor the reference number is assigned to the building, the manner of use of the building), and pertaining of the building to the municipality district if the denomination of the municipality district is different from the denomination of the cadastral area where the land plot on which the building is constructed is located.

• Specification of the purchase price, which must comply with price regulations, if any; moreover, the contracting parties are allowed to agree on other terms and conditions, such as method of payment of purchase price including a deposit, representations and warranties by the seller, pre-emptive purchase right, or right of the contracting parties to withdraw from the agreement.

Application of registration of ownership right in the cadastral register

After the signing of the agreement, the application of registration of ownership right needs to be filed by any of the contracting parties or jointly by both contracting parties with the competent cadastral office (cadastral workplace, respectively) using the respective standard form, which is standardly completed online.

The application must be accompanied by appendices determined by the law, such as a document evidencing the right to be registered, a power of attorney (if applicable), an excerpt from the commercial register of the legal entity that is a participant of the proceedings (in cases of entities not registered in the Czech commercial register), or an officially certified translation of documents.

The range of warranties depends on the actual needs and requirements of the contracting parties and on the negotiation of the purchase agreement.

The typical warranties include the seller’s ownership of the transferred real estate, easements and other obligations related thereto, environmental issues and technical conditions of the transferred real estate, if applicable. Buyer’s warranties typically include basic corporate warranties regarding incorporation and authorization. Scope and extent of warranties are negotiable to a large extent, depending on the type of transaction and commercial circumstances.

The sale is legally binding at the moment of signing the relevant purchase contract by the last of the contracting parties. As of this moment, the seller is obligated to transfer the real estate in question to the buyer. The transfer of the ownership right is completed at the moment of the registration of the ownership right in the relevant cadastral register (please see response to ” When is title transferred?”).

The ownership title is transferred at the moment of registration of the ownership title in the relevant cadastral register in favor of the buyer. The effect of such transfer occurs retroactively as of the moment the relevant application for registration of transfer of ownership title has been received by the competent cadastral office (typically between 20 and 30 days retroactively).

Cadastral register entries previously did not constitute definitive or conclusive proof of ownership of the buyer. Therefore, if the real estate has been wrongly transferred, (e.g., on the basis of an invalid agreement), the ownership right may have been successfully challenged in spite of the completed registration of the ownership title of the buyer.

Under the Civil Code, an ownership right registered in the cadastral register may only be challenged within a limited time from registration of the ownership right into the cadastral register, unless the acquirer acted in bad faith.

Other than tax obligations, costs are not prescribed by law to be paid by one of the parties and, therefore, may be split between the contracting parties or be borne exclusively by the transferor or by the acquirer. Such costs include legal and notary costs, fees related to an escrow account and fees for registration of the transfer in the cadastral register.