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Real Estate Due Diligence in Czech Republic

Real Estate Due Diligence in Czech Republic

Persons interested in buying an apartment or a house in Czech Republic are advised to perform real estate due diligence procedures on the property, to verify if the settlement is sold in good faith. Due diligence on areal estate propertyis performed by a team of specialists, who can check the integrity of the building, in the sense that they can verify if the property respects all the regulations imposed by the local authorities. If you want to buy a property in Czech Republic, our team of Czech lawyers can offer you assistance on this process and can help you perform due diligence procedures. Plus, foreigners interested in immigration to Czech Republic can discuss with our experts.

Due diligence in Czech Republic 

If you have found a property in Czech Republic that meets your standards and budget, you should perform due diligence procedures before signing any contracts with the seller. Our lawyers can provide you with assistance on this matter, as the procedure requires the professional help of various specialists, such as attorneys, tax advisors or accountants. As a general rule, real estate due diligence is carried out for the following: 

  • • the legal aspects referring to the property are verified by our lawyers in Czech Republic, who can attest if the documents respect the applicable law. Information registered at the Land Registry after 1st of January 1993 is considered to be in good faith; for entries before this date, it is recommended to perform in-depth legal due diligence if you buy a property on land, as the information on the real estate may not be complete. 
  • • the taxation aspects are verified by the local tax advisors;
  • • the technical and environmental aspects of the property are checked by technical advisors; 
  • • a verification if there is any construction intervention of potential hidden risks.

Real estate due diligence refers to the general state of the building, but also to possible developments that may be carried out on the property, as stipulated by the Czech legislation; our law firm in Czech Republic can provide you with an in-depth presentation on this subject. Moreover, foreigners who want to buy properties in this country can solicit information on residence from our immigration lawyers in Czech Republic.

Czech legislation for the sale of a property 

Any person interested in buying a property can request to perform real estate due diligence procedures on that certain property, but you should know that the Czech legislation stipulates that the seller is obliged to disclose information on the negative aspects of the building. This may refer to any aspect that would decrease the selling price of the property, such as the lack of an adequate construction permit for the building or technical defects.  If the seller does not disclose this information, the buyer can request compensation claims or the annulment of the ownership transfer agreement. 

Who needs real estate due diligence?

Both natural or legal persons interested in purchasing a real estate property in the Czech Republic can ask for real estate due diligence through which an in-depth verification is made. The sale-purchase or the lease contract is verified, alongside other documents to see if there are any litigations or problems involved. It is important to check the price of the property and see if it aligns with the other properties on the market and has the right value. Real estate due diligence procedures can be explained by one of our Czech lawyers who can also take your case and make the needed verifications.

In addition, we remind that immigration to Czech Republic enters our attention, as we can help foreigners purchase a property in this country.

Commercial real estate due diligence

Foreign investors interested in commercial properties in the Czech Republic should consider the importance of a due diligence procedure before making any acquisition. A due diligence investigation report can tell if the investment is safe and if the future property has problems or not. Some entrepreneurs might be interested in buying storages, old factories, restaurants, office buildings or even shopping centers, so a commercial real estate due diligence is recommended. A team of experienced real estate due diligence lawyers know how to conduct an investigation in this matter, and there are many questions to consider when interested in a property:

  1. If it offers complete access to public streets and if there is a parking space.
  2. If there are any structural improvements or are needed.
  3. If it has all the environmental licenses and permits.
  4. If there are any encumbrances or hidden litigations. 

Identifying in time the potential risks linked to a commercial property is among the targets of a real estate due diligence process in the Czech Republic. One of our Czech lawyers can provide such services and can offer an accurate and transparent report about the property you wish to acquire in this country, whether for personal or for business purposes.

Purchasing a property in the Czech Republic

The legislation in the Czech Republic does not restrict the possibility of foreigners to purchase properties in this state, as long as these are not state-owned. Houses, studios, apartments, agricultural lands, office buildings, storehouses, and any other type of structures can be purchased by foreigners in the Czech Republic.

The acquisition of a property in the Czech Republic starts with a reservation contract and a first deposit that should not exceed 30% of the value of the asset. If the first sale contract is made, this means that a real estate due diligence was made, although, this isn’t a mandatory request, but recommended. As for the taxes involved, one should know that the real estate acquisition tax of 4% of the property price is imposed. Our Czech attorneys can verify the sale-purchase contracts of properties you wish to buy and can also provide support for tax matters and compliance.

Do I need a technical due diligence procedure?

Yes, a technical due diligence procedure is recommended for individuals interested in purchasing a commercial property, but some might ask for such procedure for other types of assets. A technical due diligence procedure can reveal several factors like environmental risks, or if there is a need for particular repairs or replacements in the building.

If you would like to know more about technical due diligence procedures that can be made for properties in the Czech Republic, we invite you to talk to one of our Czech lawyers. You can also ask for our immigration lawyers in Czech Republic if you need legal advice in this matter.

Facts about environmental due diligence in Czech Republic

There are real estate projects for which environmental due diligence is needed. This process is even imposed by the authorities, to issue the necessary licenses and building permits. With the help of environmental due diligence in Czech Republic, it is possible to discover if there are problems with the contamination of the respective land, of the water in the area or if there is a risk of contamination.

If such problems are discovered, the buyer can be the one to invest in fixing them. In this direction, the probable costs will be determined, not before analyzing the respective land, in order to be able to highlight environmental risks, if any. You can discuss more about environmental due diligence with our Czech lawyers.

Czech cadastre

Ownership of a property can be verified with the cadastre. This document contains all the information about the owner, former and current, and this type of verification comes to the attention of those who want to buy the property. Here, a Czech lawyer can carry out rigorous checks with the Real Estate Cadastre and inform you if the respective owner has the legal right to sell the property he owns, which is evidenced by the property title.

It is also important to mention that you need to check if the property is owned by a married couple or not if it was purchased before or after the marriage. Thus, if there are two owners, then both are involved in the sale-purchase process. Therefore, this type of verification also comes under the attention of our specialists, so if you want to purchase real estate in Czech Republic, please contact our lawyers.

Identifying risks through transactional advisory

Even if, normally, a property in the Czech Republic can be purchased without problems, real estate due diligence and a series of checks are needed before anything else. Transactional advisory involves checking properties of any type before buying them. Any potential client is entitled to make such checks, and our experts provide complete services in this sense. The verification is not limited only to the verification of the former owners, but also to the financial-accounting ones, in order to be able to discover the potential risks to which a future owner may be exposed. There are cases in which property owners have not paid the taxes on time, as a result, a house cannot be sold.

Therefore, whether you are a Czech citizen or come from other countries to buy real estate in the Czech Republic, it is recommended to ask for complete investigations about the property you want to purchase. You will thus ensure that the building is free of legal problems and that it can come into your possession without difficulty. We remind you that you can call on our Czech law firm for real estate due diligence.

How can a Czech attorney help you in the real estate sector?

Our team of Czech lawyers has experience in the real estate sector and can help you with the checks related to the purchase of a property in the Czech Republic. Real estate due diligence is an essential process that can reveal the legal problems of a property if they exist. Our experts know the legislation in force and know what kind of complexities can appear in real estate transactions.

So, to benefit from complete legal services when buying a house, land, or office space, you can rely on the support of our Czech lawyers.

Making investments in Czech Republic

The appealing business environment offered by the Czech Republic attracts numerous investors from abroad in sectors like manufacturing, infrastructure, real estate, tourism, IT and many more. Being among the largest FDI recipients in Europe, the Czech Republic sustains all investors with varied incentives and stimulations. Many greenfield projects have support from international entrepreneurs in Czech Republic, and for more details about the investment direction in this country, we present you the following facts:

  • • for investments of at least 1.9 million, foreigners can receive Czech long-term residency. 
  • • the 2020 Doing Business report presented by World Bank ranks Czech Republic 41st out of 190 worldwide economies.
  • • the total FDI stock for 2021 stood at around USD 200,587 million;
  • • most of the foreign investments are directed to car manufacturing, metallurgy and energy.

If you need further information on the due diligence in Czech Republic, please contact our Czech law firm for assistance or representation in this matter.