purchase contract

Purchase of a real estate (new building), what is kolaudace, why do you need it?

Kolaudace is a final inspection, an official approval to use the building, or in other words, an official confirmation of the conformity of the property with the specified objectives, in the case of residential premises – the suitability of the house / building/ apartment for housing or living.

Paragraph 119 of the Law on Spatial Planning and Building Regulations (Building Law, Stavební zákon) No 183/2006 Coll., amended to 1.1.2018, defines colaudation/final inspection in this way: „the completed construction, or part of the building intended for separate use … can only be used on the basis of the approval: consent (kolaudační souhlas) or decision (kolaudační rozhodnutí). The builder will ensure that all tests and measurements are carried out in accordance with special legal acts“.

That is, the building authority (stavební úřad), having received the application, within 30 days checks the project documentation and the condition of the premises for compliance with technical standards, norms, legal requirements, and stated in the documents, and issues permission to use. This is not only documentation, real estate must meet all standards, requirements and rules. All legislative changes, safety rules (fire detector, fire extinguisher, stair railings, fire-resistant drywall, control measurement of radon values, etc..) ​​in the house must be observed. The building must have completed walls, floor, bathroom and kitchen, and at least one living room. However, if within 30 days the construction department will not issue an approval/ deny your application, then in this case it is valid: “what is not prohibited is permitted”.

From 1.1.2018 kolaudace is subdivided into consent (kolaudační souhlas, §122 of Law No 183/2006 Sb) and decision (kolaudační rozhodnutí). Consent will be applied, in the event that you yourself build a house (family house / rodinný dům), but in case you purchase from a developer, you need kolaudační rozhodnutí.

It is interesting to learn about § 123 of this Law, which refers to the possibility of early use of the building/real estate. It often happens that a person buys a house from a developer, even if it has not been completed. Moreover, buying a new house, (for financing purposes) is selling an old one, and at the moment, when kolaudace/approval has not yet been issued, the person already wants to move to its new sweet home. Paragraph 123 states that the building authority may issue a time-limited permit for early use of the building before its completion, unless it has a significant impact on the use of the building, does not endanger the safety and health of people or animals or the environment.

Often in contracts for the purchase of real estate in a new building, namely, in the preliminary (purchase) contract, it is said about the obligation of the seller to provide a confirmation of the final inspection/kolaudace before paying the entire purchase price for the property. However, in practice, this clause is often not contained, and the purchaser “receives” confirmation of approval for use of the building only in words. You can say “well, no, I buy from a trustworthy developer”, however, unscrupulous representatives, wanting to get their commissions, may not comply with a couple of points, hoping for your trust for them. Always ask for a copy of the confirmation of the final inspection/kolaudace.

On the other hand, some people may decide on the purchase of incompleted building/family house. It is cheaper and more convenient, when a person wants to complete by his own design. However, Why is kolaudace/final inspection so important?

In addition to the fact that, as mentioned above, this is a fundamental check of the building being consistent and in accordance with technical and legal norms, and approval of the absence of a threat to life and safety, also the absence of colaudation can lead to fines. Obtaining permission to use the building or real estate is not a joke, because there is a fundamental verification of compliance with technical standards, and the building department may request such seemingly absurd documents as confirmation of an archaeological inspection. Therefore, pay attention to this clause in the contract, and point out to this obligation of the seller / developer to provide confirmation of the final inspection/kolaudace.

(c) Elmira Lyapina, LL.M., Ph.D.


Disclaimer about the nature of the information contained in this article.

The information provided in this article is the general information, and does not constitute legal advice, and may be not valid in a particular situation. To obtain qualified legal consultancy, you should contact a lawyer with the provision of the necessary documents regarding the case. For example, by email: juristpraha@gmail.com.

This article was prepared on the basis of an analysis of legislative regulations for 04.12.2018. Therefore, while using such information, should be considered the changes to be made to the legislation after that. This article was published the first time on December 4, 2018, on the web page www.juristpraha.cz

Purchase of a real estate, what to pay attention for and what steps to undertake.

It would be a mistake to say that someone is not being serious when purchasing a property. There are several phases as a search of the proper real estate, checking and assessment, contractual phase, and purchase itself, all this together with the negotiation process with the seller, real estate agent, developer, lawyer, banker, financial adviser, technical expert. Nevertheless, I often come across the fact that the same mistakes are made, when buying real estate, although it would seem that the process is quite common, and many interested parties in this process are involved more than once.

Of course, there are different features of buying a property, whether it is commercial real estate, or residential, whether it is a new-build or a resale property, an apartment or a house, part of the house, or a townhouse, whether it is purchase with a mortgage, a bank loan or with the own financial funds, as well as whether there is an easement (věcné břemeno – the burden to be taken, for example, the obligation to bear a nearby siren), or if there is a lien of the seller’s bank on the property.

In this article, I will only consider some introductory points that need to be considered in the preliminary phases of purchase.

Importance of technical checking assessment.

Often I come across the fact that a purchaser does not pay appropriate attention to the importance of technical checking assessment of the real estate before its purchase. The reasons are many, it could be the trust to the seller, especially if it is a large developer or construction company, or the fact that the seller is represented by a real estate agent, or even the absence of visible signs of technical defects. However, when accepting a real estate in a property, fulfilling the handover protocol (in Czech language it is “předávací protokol”), it is important to indicate all defects and deficiencies of the particular real estate, including the technical side (especially if it is a new-building).

It is also necessary to check the technical side with an expert before purchase. For example, after buying a property in a new building, family A encountered a faulty water supply system, and they when informed about it the builder/seller, referring to the part in the agreement regarding the guarantee, the builder/seller denied to repair it, referring to the wrong use of the real estate by the purchaser. And also clarified that if the problem was on the side of the seller, this would be mentioned in the handover protocol, and since it is not a hidden defect, the financial burden of repairing this defect lies with the purchaser (here also comes to the aid of the seller/builder §2629 of the Civil Code of the Czech Republic). Another example is the situation in the family B, who bought a “resale property” – a beautiful two-store house, or rather a townhouse (these are several identical houses connected by one common wall). Without preliminary checking of the technical documentation and the technical side of the real estate, the family was faced the fact that they can not insulate or even rebuild its own (but at the same time common) wall, besides, when the neighboring house/townhouse was demolished, the wall itself not only deformed itself , but also influenced the construction of the whole house. The third example is quite often case in the new building construction and underexposure plan by geodesists. As a result, you can buy real estate in a much smaller metrage than indicated for this real estate both in the land plan and in the cadastral chamber itself. How can this be? There are standards of measurement and there are inaccuracies that accumulate.

What would happen if the expert checked the property?

First, it could significantly affect the price, and secondly, a guarantee for fixing the defects, including possible ones; thirdly, it is your calmness and knowledge of what can happen and what to expect during the ownership or use, and, also how much the documentation of the real estate corresponds to the reality.

 

Communication with the seller, the developer, the real estate agent. Main contracts related to purchase of a real estate.

Each agreement, which was reached between the purchaser, seller, builder, real estate agent must be reflected in the contractual documentation. Often there are 3-4 contracts. This is a reservation agreement, the so-called non-binding agreement, where real estate is “reserving” the real estate for the purchaser, or, in other words, undertaking not to offer this real estate to the other possible purchaser, for some short period of time (from 5 to 14 days) in return for a small amount (often from 50,000 to 150,000 Czech crowns) as a part of the total purchase amount. In a case the purchaser is serious, and wants to buy this real estates, this period is enough to prepare the entire purchase amount and the necessary documentation for the purchase.

Often it also happens that the reservation contract includes two parts – the reservation contract itself and the intermediation contract, where the third party of the contract, the intermediary, is the real estate agent. There have been cases when some real estate agents included in the total purchase amount their provisions, for example in the contract you could find this phrase “Provision is 200,000,-CZK and it is included in the total amount of the purchase.” Why is this condition, to put it mildly, not good for the purchaser? The fact is that the buyer pays 4% of the tax on the purchase of real estate (the relevant regulation of the Senate No. 340/2013 Coll.) from the entire “purchase price”, and of course, such a phrase would mean, that the amount of paid tax would be increased by the intermediary’s provisions.

The next contract is a Preliminary contract, or an agreement on a future contract of sale (Smlouva o uzavření budoucí smlouvy kupní, according to § 1785 of the Civil Code of the Czech Republic). It has more power than the reservation agreement, and this contract is favored by the developer and construction companies, who by this preliminary contract oblige purchasers to pay the entire amount BEFORE concluding a contract of purchase. Why this contract could be dangerous? Despite the fact that, this is a preliminary agreement, however on the basis of this contract – you will be unlikely (or, to be more precise, will not be) registered in the cadastral register as a new property owner. In addition, it is likely that the object may be unfinished, or the Building authority will not issue an opinion on the possibility of using this property (kolaudační souhlas), and so in the demanding of the paid amount purchase, connected to it costs, and, in the case of financing by the bank, fines, it can be very costly and unpleasant.

The related to it issue is payment of the whole purchase price of real estate, as prescribed in the preliminary contract and the contract of purchase, namely, the provisions in the contracts, that the amount should be transferred immediately to the seller’s account. I don’t recommend you to follow this provision, and if it is contained in the contract (and it is contained in 99.9% of cases), then the better choice is to find a third party where this purchase price could be kept. It can be either a “cell” of a lawyer (and a related storage agreement – smlouva o úschově), or a notary, or a special bank account (,jistotní účet‘- however, not all banks are able to provide this account). For a small (relatively) payment, you save the the whole amount, and also will be able to mention the terms and conditions transfer of this purchase amount to the seller’s account, so you will be calm that this amount, in case of problematic situations, will return to you intact.

The last main contract is a contract of purchase itself (Kupní smlouva §2128, Civil Code No. 89/2012 Coll.). Do not be scared if after a 20-pages preliminary contract you will receive a two-page contract of purchase. What should be mentioned there? The main terms and conditions are: the handover of the real estate from the seller to the purchaser, the seller’s obligation to provide the insertion of the new owner property rights to the cadaster register, the seller’s statement that there are no additional obligations, security rights and third party rights on this real estate, and that the purchaser has been informed of all defects, and also the purchaser’s obligation to pay the whole purchase amount and tax on the acquisition of real estate and take over the real estate on time.

This, of course, is not a complete list, but only some points. It is worth to mention, that one of the copies of the given contract should be with the notary authorized signatures of all parties, all for granting to a cadastral register. If the parties of the contract are only the seller and the purchaser, then three copies are sufficient, one for each party, and one copy is provided to the cadastral register.

In the following articles, I will consider in more detail the contracts that accompany the acquisition of real estate, the acquisition of new-build real estate, the related to it importance of the  decisions of the land register and building authority, the cadastral register and its significance, the contracts related to the construction, the lien, the right of building upon the land of another, and the sale of a real estate and its pitfalls.

 

(c) Elmira Lyapina, LL.M., Ph.D.


Disclaimer about the nature of the information contained in this article.

The information provided in this article is the general information, and does not constitute legal advice, and may be not valid in a particular situation. To obtain qualified legal consultancy, you should contact a lawyer with the provision of the necessary documents regarding the case. For example, by email: juristpraha@gmail.com.

This article was prepared on the basis of an analysis of legislative regulations for 24.09.2018. Therefore, while using such information, should be considered the changes to be made to the legislation after that. This article was published the first time on September 24, 2018, on the web page www.juristpraha.cz