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  • Writer's pictureBarbora Karetová

Background check when buying real estate

When you are buying a property – a house, an apartment, or a land, one of the first steps you make is asking a lawyer to check legal documentation associated with the transaction. This typically includes a series of agreements, starting with the reservation agreement, progressing to the agreement on future purchase, and eventually the actual purchase agreements. If you require a mortgage to finance your purchase, an additional set of documents will come from the bank.


The lawyer will usually recommend you start with what we refer to as a "background check of the property." It might sound complicated, but this can actually be accomplished online and typically requires no more than one or two hours of your lawyer's time.


During this phase, your lawyer will perform due diligence on the seller. They will find whether the seller is facing insolvency or is subject to any ongoing law enforcement actions. In the case of a corporate seller, your lawyer will verify the company's existence and its financial standing by inspecting the statement of accountancy in the official register. These inquiries serve to eliminate any doubts or uncertainties that may arise during the transaction.


Your lawyer will next examine the cadastral register, paying particular attention to the ownership deed. This examination is essential to uncover any existing pledges or encumbrances on the property. If such encumbrances exist, your lawyer will ensure that the seller has appropriately disclosed them in the agreement. It's not uncommon to encounter mortgages held by banks or encumbrances in favor of utility providers such as electricity or gas companies. The key is to understand the nature of these encumbrances and whether they will persist upon property transfer or need to be cleared, including the timeline for such actions.


Your lawyer will then explain to you how these findings may impact your purchase and recommend you steps that are essential for you to make an informed decision. Furthermore, this background check provides your lawyer with information necessary to review the contract and suggest necessary adjustments to safeguard your interests.


The expenses associated with a property background check are generally quite modest. The fees payable to the relevant authorities typically amount to no more than a few hundred CZK, even in more complex cases. This, combined with the legal work involved, including explanatory emails, means that you can expect to pay somewhere around 5,000 CZK for this essential background check.


In conclusion, the property background check recommended by your lawyer ensures that you have a clear understanding of the property's history, any potential issues, and the necessary steps to protect your investment. If you are seeking for legal help when buying, do not hesitate to contact us on info@expatlaw.cz

Need More Information?

For more information please contact us via e-mail info@expatlaw.cz

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