Legal Conditions - Acquisition of real estates in the Czech Republic

Planning on moving to Prague ? You will need these information before looking at Prague apartments. 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 (Before looking at Prague apartments we will help you with answers on legal issues ):

• 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.

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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 (If you have any question regarding Prague apartments don´t hesitate to contact Prague real estate agents listed in our bussiness directory..)
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).

 

You will find more information connected to Prague apartments in this site. 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.

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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. When looking at Prague apartments you will need this information

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. Browse our Prague apartments situated in the city center

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

Source: GÜRLICH & Co (www.akrg.cz )

Complete survey of relevant legal provisions.

1. The acquisition of real estate in the Czech Republic, acquisition of Prague apartments by foreign persons is now treated by three legal regulations. The basic one naturally is the general regulation contained in Act No. 219/1995 Coll., the Foreign Exchange Act, as amended. This law distinguishes between two groups of parties to foreign exchange relations - residents and non-residents. The criterion is the place of permanent residence of natural persons, and the headquarters of legal entities. It must be emphasized that the citizenship of a natural person is not decisive. According to § 1 letters b) and c) of the Foreign Exchange Act, persons permanently resident or legal entities based in the Czech Republic have the status of residents, the others are non-residents. Under Czech legal regulations this means that foreign citizens and legal entities owned by them can have the status of residents and non-residents, and this is determined in individual cases on the basis of specific data. For example: a French citizen permanently resident in Brno is under foreign exchange regulations a resident, and, on the contrary, a Czech citizen permanently resident in Paris is a nonresident. Find more information about Prague apartments in Prague real estate section.

   Note: The terms under which a foreign citizen or a person without citizenship can acquire a permanent residence permit are stipulated in Act No. 326/1999 Coll., on the residence of foreign persons in the territory of the Czech Republic, as amended. We call attention to the fact that a temporary residence permit, even a long-term visa, has no influence on the status of non-resident. But a foreign person granted asylum acquires a permanent residence permit in keeping with § 76 of Act No. 325/1999 Coll., on asylum, and on this basis has the status of resident.

   The Status of Resident or Non-resident is of Fundamentals Importance in View of the Possibility of Acquiring Domestic Real Estate in Krepiny with the Foreign Exchange Law

   The foreign exchange law contains no restrictions applying to residents. In contrast, non-residents can acquire real estate in the Czech Republic, Prague apartments only in cases stipulated in § 17. Emphasis must be laid on the fact that no foreign exchange body is authorized by law to grant any exception above the framework of this provision. But the law includes a special provision applying to Czech citizens - they are free to acquire real estate in this country, Prague apartments even if they are permanently resident abroad and thus have the status of non-resident. Until the end of 2001, non-residents could acquire real estate in this country and Prague apartments only in cases included in § 17 paragraph 1, i.e:

   • by inheritance,
   • for the diplomatic representation of another state on condition of reciprocity,

   Real Estate Asquisition in the Czech Republic, buying Prague apartments

   • the property is acquired into unapportioned co-ownership of a married couple only one of which is a non-resident, or when a non-resident acquires the property from a spouse, parents or grandparents,
   • through the exchange of domestic real estate which he owns for other domestic real estate, when the usual price of the latter does not exceed the usual price of the former,
   • if he has a pre-emptive right by reason of apportioned co-ownership of real estate, Prague apartments
   • if it is a construction built by a non-resident on his own land,
   • where expressly provided by a special act

   (e.g. Act No. 403/1990 Coll., on Mitigating Consequences of Certain Property Injustices, as amended; Act No. 427/1990 Coll., on Transfers of State Ownership of Certain Things to Other Legal or Natural Persons, as amended; and Act No. 92/1991 Coll., on the Terms and Conditions for Transferring State Property to Other Persons, as amended). Amendment No. 482/2001 Coll. expanded § 17 with paragraph 2, which allows, from 1 January 2002, the purchase of real estate (except for farmland and woodland) by foreign legal entities which place their enterprise or its branch in the Czech Republic and ester it in the Czech Commercial Register. Under § 21 of the Commercial Code, this entry is a legal prerequisite for their business in the Czech Republic, but they still are a part of the legal entity based abroad - non-residents, who also are entered in the land register as owners of the real estate.

   It need be added that foreign entrepreneurs can set up subsidiaries in the Czech Republic, or enter existent legal entities, and participace in their establishment. Since all the mentioned cases apply to legal entities based in the Czech Republic, i.e. residents as described in the foreign exchange law, they could acquire domestic real estate and Prague apartments (with the exception of state-owned farmland and woodland) before the amendment took effect, and so it brought no change for them.

2. Limiting provisions, applying only to state-owned farmland and woodland, are contained in two special laws:

   1. It is primarily Act No. 95/1999 Coll, on the basis of which state owned farmland and woodland is privatized. Its § 4 stipulates that farmland can be acquired only by:
      • Czech citizens
      • municipalities
      • legal entities, which are owners or co-owners of buildings and structures belonging to an original farm, or serving agricultural production, or water management connected with it (but this applies only to sites under these buildings or structures and sites immediately adjacent to them if they are essential for their operation (§ 1 letter a) points 2. and 3., § 5 para 4)
      • and public universities and woodland can be acquired only by municipalities and public universities.
   2. Certain unimportant limitations are contained in Act No. 229/1991 Coll., Land Act as amended. Its § 3 stipulates that "land cannot be transferred to the ownership of exchange foreigners". But this law is primarily a regulation governing restitutions, and the limitation lost its original meaning on the basis of later amendments. And so this limitation of foreign persons does not apply in general, but only to land transferred under the land act, i.e. land free of restitution claims, and managed by the Land Fund of the Czech Republic.
   
   

   Source by: Linklaters v.o.s.