Purchase of real property
When purchasing a house or an apartment, make sure to thoroughly check the documentation – its extract from the land registry, building permit or other appropriate official construction act, the use permit and its energy certificateWhen purchasing real property, check the ownership (title) registered in the land registry of the municipal court in which the property is located. Also, ask the property owner to provide all documents about the building and land in their possession, as well as the energy certificate.
Land registry extractA land registry extract is the only proof of ownership or other rights that can be registered in the land registry.
Energy certificateAn energy certificate is a document that indicates the energy performance of a building prepared by persons authorised for energy certification. The document is valid for ten years from the date of its issue.
The energy certificate of a building or a particular part thereof shall be issued for buildings or their particular parts in which it is necessary to use energy to maintain the indoor design temperature in accordance with their purpose, except for:
- buildings used for religious purposes
- temporary buildings with a planned time of use of two years or less, industrial buildings, workshops and non-residential agricultural buildings with low energy demand
- residential buildings used less than four months in a year
- fully detached buildings having a useful floor area of less than 50 m2.
The owner of a building or a particular part thereof for which the energy certificate is issued shall:
- obtain the energy certificate prior to selling, renting out or leasing the building or a particular part thereof
- hand over the energy certificate or a copy thereof to the buyer, tenant or lessee
- show the energy certificate to a prospective buyer, tenant or lessee
- list the energy class of the building or a particular part thereof in media advertisements when offering it for sale, rent or leasing.
Energy certification of buildings.
New buildingsIf you are purchasing an apartment under construction, the investor must present an enforceable / final and effective building permit or other appropriate official construction act.
Apart from the building permit, a use permit is equally important, and it may not be obtained if the construction work deviated from the construction requirements prescribed by the building permit or other official construction act. It is also recommended to inspect the main design, which is a part of the building permit.
It should be noted that the investor or the owner of a building is, before the issuing of a use permit, required to obtain the energy certificate.
Conclusion of a preliminary agreementWhen purchasing a real property, it is customary to sign a preliminary agreement that defines the property by indicating the land registry data on the property (cadastral municipality, plot number, and the land registry file number under which the property is registered) and describing the property (for an apartment, this means the address, floor, apartment number, description of its rooms and total surface area), and also specifies the price, the date of concluding the final agreement, and the amount of the down-payment (earnest money) paid for the property.
The down-payment is agreed as a cancellation fee – if the buyer withdraws from the agreement, the down-payment is retained by the seller, and if the seller withdraws, he must pay the buyer twice the amount of the down-payment. The usual amount is ten percent of the property’s value. The preliminary purchase and sale agreement must be certified by a notary public.
Purchase and sale agreementIn addition to everything listed in the preliminary agreement, a property purchase and sale agreement usually includes the date of handover of the property into the possession of the buyer, as well as the seller’s guarantee that the property is not encumbered by any third party rights. It is recommended to entrust the drafting of the (preliminary) agreement to a lawyer in order to make sure that you, as the buyer, are well protected.
The purchase and sale agreement is certified by a notary public in several copies. One copy of the agreement is:
- kept by the seller
- kept by the buyer
- kept by the notary public
- to be submitted to the land registry department of the municipal court when you are applying for registration of ownership rights (title)
- to be submitted to the tax administration when you are reporting the real estate transfer tax
- to be submitted to the bank if you are purchasing the property through a loan.
If you are buying the property through a bank loan, the agreement will first need to be solemnized by a notary public, and the bank will register a mortgage on the property.
Upon purchasing the property, the seller is required to give you the energy certificate or a copy thereof.
Registration of ownership rights (title)The right of ownership on the basis of the purchase and sale agreement is not automatically acquired, but by its registration in the land registry.
Real estate transfer taxYou are required to report the purchase of an apartment or house within 30 days after the tax liability occurs, i.e. the purchase and sale agreement is signed, to the tax administration office in the area where the property is located. The real estate transfer tax rate is three percent of the market value at the time of its acquisition, and it is paid by the buyer.
In some cases the buyer may be exempted from the real estate transfer tax, and you can find out more about it in our article
Real estate transfer tax.