Legal Conditions - Acquisition of real estates in the Czech Republic

By means of this article we would like to start series of information summary devoted to the acquisition of real estates in the Czech Republic as well as connected questions with the special regard to the foreign element. Gradually we shall be concerned with the following subjects:

• who may generally acquire real estate in the Czech Republic and specific conditions for members of EU countries and foreigners outside EU
• conditions for legal entities that locate locally the enterprise or organizational branch of the enterprise and they are entitled to make business locally
• acquisition of real estates, generally
• finding of real estate condition and legal risks related to purchase of real estates
• deposit of property right in the cadastre of plots
• acquisition of agricultural and forest real estates
• contractual types used during process of acquisition of real estates in the Czech Republic (booking contract, contract about future purchase contract, purchase contract)
• apartments in the Czech Republic (contract about assignment of housing unit, contract about house construction, declaration of the owner, community of the owners, housing association and membership in it)
• purchase by means of legal entity
• construction of real estates.

For determination who may acquire the plots it is necessary to deal with Foreign Exchange Law (No: 219/1995 Coll., in valid wording, hereinafter only as "Foreign Exchange Law"). Foreign Exchange Law differentiates real estates on so called agricultural plots and so called non-agricultural plots.

So called agricultural plots may be acquired according to Foreign Exchange Law by:

1. physical entities with permanent stay on the territory of the Czech Republic or legal entities located in the Czech Republic, with the exception of entities stated in clause c) below
2. persons with Czech nationality
3. foreigners with identity card showing the permission of stay for the member state of European Union, provided they are filed in record of agricultural entrepreneurs with related municipal office with the extended local competency according to the Law about agriculture and their permanent stay lasts at least 3 years
4. other foreigners only by means of:
   
   1. hereditary succession
   2. for diplomatic representation of the state under conditions of reciprocity
   3. into joint property of married couple, one of them being the Czech resident or national
   4. from the relative in direct line, sibling or husband/wife
   5. exchange for other local agricultural plot the price of which ascertained according to special legal regulation does not exceed the price of the original agricultural plot ascertained according to Law about property assessing
   6. on the basis of pre-emption right by virtue of share divided co-ownership
   7. provided it is agricultural plot that forms one functional unit with real estate in their ownership, or
   8. provided it is explicitly stipulated by special law (e.g. laws about restitution).

 

Special arrangement is then valid for acquisition of the agricultural and forest plots from property of the Government.

So called non-agricultural plots may be acquired by:

1. above mentioned entities under letters a) and b)
2. foreigners with identity card showing permission for stay for state member of the European Union
3. foreigners – legal entities that locate locally the enterprise or organizational branch of the enterprise and they are entitled to entrepreneur locally
4. other foreigners only
   1.   under conditions as so called agricultural plots (see above, letter d, items 1 to 8)
   2.   by construction on the own plot, or
   8.   provided it is agricultural plot that forms one functional unit with real estate in their ownership.

The above mentioned foreigners may conclude contracts about acquisition of real estates under the same conditions as citizens of the Czech Republic. Provided the foreigners do not fulfil the above stated conditions, they cannot be recorded in the cadastre of real estates. Nevertheless the Law does not forbid that foreigners may become the owners of legal entities located in the Czech Republic that may without limitation acquire real estates in the Czech Republic.

Among so called agricultural plots we classify agricultural land resources in the sense of § 1 clause 2 and 3 of the Law No: 334/1992 Coll., about protection of agricultural land fund, in wording of later regulations (arable land, hop gardens, vineyards, gardens, orchards, meadows, pasture lands, soil having been and will have to be cultivated but presently not cultivated, ponds with fish breeding or water poultry and non-agricultural soil necessary for provision of agricultural production, as rural roads, plots with equipment necessary for field irrigation, irrigation water reservoirs, drainage ditches, dams serving for protection against water-logging or flood, protective terraces against erosion, etc.) and plots intended for fulfilment of function of forest in the sense of § 3 clause 1 of the Law No: 289/1995 Coll., Forest Law, in wording of later regulations.

§ 4 of the Law No: 95/1999 Coll., about conditions of assignment of agricultural and forest plots from the property of the Government to other entities, in wording of later regulations.

All real estates that do not belong to so called agricultural plots.

 

Source: GÜRLICH & Co (www.akrg.cz )