Buying an apartment in Czechia

A poorly drafted purchase agreement leads to legal uncertainty, invalidity, loss of money, and a significant disadvantage in any potential court dispute. The absence of legal supervision is one of the most common causes of problems that we later resolve in litigation.

Attorney escrow is not mandatory, but it is the safest mechanism. It protects the buyer from the seller receiving the payment and then failing to transfer the property; it also protects the seller from transferring the ownership right without receiving the purchase price.

Self-made legal interpretations, ignorance of legal regulations, or reliance on a real estate agent lead to errors in the application for registration in the Land Registry, to legal errors regarding the seller's freedom of disposal, to insufficient securing of the legal status of the property, and to other serious problems.

The right time for a legal review of the contract is always before signing. Subsequent remedies (cancellation of the contract, additional registration in the Land Registry, filing a criminal complaint) are complex, time-consuming, and often ineffective.

Why have a drafted purchase agreement reviewed by a lawyer

A real estate purchase agreement is not a standard business document. It is a legally and factically complex act that must contain the essentials stipulated by the Civil Code and cadastral regulations. If one of them is missing, the contract may be absolutely null and void, or it may later turn out that it does not meet the condition of enforceability or that it is highly disadvantageous for one party.

Risks that a layperson cannot easily see

An ordinary buyer of an apartment or an agent focuses on the price, the handover date, and getting the document signed. A lawyer sees more:

• Rights and obligations. Who bears the costs of property management, insurance, and other fees during the transaction? Who is liable for damage to the apartment between the signing of the contract and the handover? Who resolves it if a bank lien is discovered that the seller did not disclose?

• Legal capacity and authorization of the seller. Does the seller have the right to sell the apartment at all? Is he really the sole owner, or just a tenant? Is there a lien, foreclosure, or other easement registered on the property? Does he have the spouse's consent if required?

• Compliance with the Land Registry. It often happens that the contract describes the apartment differently from how it is registered on the title deed. This leads to complications during the transfer of ownership rights at the Land Registry.

• Escrow conditions and security mechanisms. Without a clear definition, it is not obvious when the money is released and under what conditions.

• Terms and conditions for dispute resolution. Which law will be applied? Which court will have jurisdiction? How is withdrawal from the contract handled and what are its consequences?

Lawyers from the Prague-based ARROWS Law Firm check these points systematically and warn of risks before a crisis arises.

Components of a high-quality purchase agreement drafted by an attorney

A proper purchase agreement contains logically structured parts. Their absence or incompleteness leads to legal uncertainty.

Identification of the parties and the subject of purchase

The contract must precisely state:

• Names, place of residence, and personal identification numbers of both parties (for legal entities, the name/business name, registered office, and identification number).

• A precise description of the apartment in accordance with cadastral regulations.

Error here: Often, the contract relies only on data from the advertisement or from previous documents that differ from the Land Registry. During the transfer of ownership, the authority will notice that the contract does not correspond to the Land Registry – and the transaction will be stopped or delayed.

Price and method of payment

The contract must clearly establish:

• The purchase price (in CZK, in words and figures).

• How any costs related to the transfer will be settled.

• When and how it will be paid (by bank transfer, via escrow).

• Whether fees, real estate broker commissions, or other costs are included in the price.

Error here: The seller and buyer often think they have agreed on the price, but the contract states it vaguely ("to be agreed additionally"). This later leads to disputes and invalidity due to indefiniteness.

Legal status of the apartment

The contract should contain:

• The seller's declaration that he is the sole owner of the property free of liens, foreclosure entries, restrictions on ownership rights, and other easements, unless stated otherwise.

• A note that the apartment is encumbered by a mortgage, and that the seller will repay it/ensure its removal from the Land Registry as a condition of handover.

• Information that the seller is not in insolvency proceedings, nor is he threatened by them.

• Confirmation that no legal disputes regarding the apartment are known.

Error here: Many sellers do not state these details or state them untruthfully. If it is later discovered that the apartment has unpaid liabilities or is in foreclosure, the buyer has already paid and has very limited options to defend himself.

Handover and acceptance

The contract must clearly state:

• When the apartment is handed over (specific date or deadline).

• In what condition it is handed over (apartment including/excluding furniture, equipment, etc., with a description of the state of energy and water meters).

• Who performs the physical handover and how it is documented (handover protocol).

• Who bears the risk of damage to the property between the signing and the transfer of ownership.

Error here: Often, this is not stated in the contract, and the buyer later finds out that the seller cleared everything out of the apartment, including things that were supposed to remain according to a verbal agreement.

Costs and fees

The contract should state who pays:

• The attorney's or notary's fee for drafting the contract and securing the transfer of ownership rights.

• Bank fees (if the apartment is financed by a mortgage loan).

• The real estate broker's commission.

• Settlement of outstanding balances on services, energy, etc.

Error here: Without a clear specification, both parties later argue, and an unclear division of costs can lead to problems.

Legal supervision and review

When drafting a contract, lawyers from the Czech legal team at ARROWS also verify issues that are commonly neglected:

• The legal capacity and solvency of the seller.

• The actual amount of the mortgage and the method of its repayment.

• Specifics of the Czech Republic (e.g., real estate tax for the buyer from the following tax period).

• Risks arising from previous legal relationships on the property.

• Outstanding debts towards the building manager.

This is particularly important in cross-border transactions, where ARROWS Law Firm cooperates with its ARROWS International network and can secure legal review under foreign law as well.

Attorney escrow – a security mechanism

One of the most important instruments when buying real estate is attorney escrow (in legal language, the term escrow is sometimes used for similar institutions in an international context). Too few buyers understand and use it, even though it protects both parties.

What is attorney escrow

Attorney escrow works as follows:

• The buyer sends the money to a special account of the attorney (not directly to the seller).

• The attorney holds the money in a custody account (a special bank account designated for escrows) until all conditions of the contract are met (e.g., transfer of ownership rights to the buyer).

• As soon as the ownership right to the apartment is transferred in the Land Registry to the buyer's name, the attorney releases the money to the seller.

Why escrow is important

Escrow is important for the buyer because:

• It prevents the risk of losing money – the seller cannot receive the money and then fail to hand over the property or sell it to someone else.

• He has the certainty that the money will be returned if the transaction fails (e.g., the Land Registry does not transfer the ownership).

• He has a legal guarantee – the attorney is bound by strict professional regulations.

For the seller, on the other hand, it applies that:

• It also prevents the buyer from paying and then unjustifiably demanding the return of the money.

• He will receive the money as soon as all conditions are met, and he has the certainty that the buyer will not unjustifiably block the payment.

How it works in practice – an example

You are buying an apartment for 3 million CZK. Lawyers from ARROWS Law Firm will arrange with you:

• Drafting of the purchase agreement with instructions for attorney escrow.

• Securing a special attorney escrow account – a special bank account where the money will go.

• You send 3 million to the attorney.

• The attorney holds the money and monitors whether the conditions are met: the Land Registry transfers ownership, the mortgage is repaid, the apartment is handed over.

• Once everything is done, the attorney releases the money to the seller.

• If something goes wrong (e.g., the Land Registry refuses to transfer the apartment because unsolvable obstacles are registered on it), the money is returned to you.

Lawyers from ARROWS Law Firm have years of experience with escrow and ensure that all procedural conditions are met and none of the money is lost.

Risks without escrow

Without escrow, you risk:

• Paying the seller directly, and he fails to hand over the apartment or transfer ownership (a common case in the media).

• The seller concealing the actual legal status of the apartment – for example, a foreclosure took place that you did not know about.

• The apartment being encumbered in the meantime by a mortgage you did not know about.

• The Land Registry refusing the transfer of ownership, and you are already without money.

What could go wrong and how ARROWS solves it

Most common legal errors when buying an apartment without a lawyer

Situations that lawyers from ARROWS Law Firm resolve almost daily – all of which should have been resolved before signing the contract.

Error 1: Overestimating one's own legal judgment

Many believe they can handle buying an apartment on their own. They read laws, look at advertisements, consult with a real estate agent. The result: The contract is drafted without a lawyer, contains errors, is vague, and during the transfer of ownership or in the event of a dispute, it turns out to be legally insufficient.

Lawyers from ARROWS Law Firm see that a layperson does not know the subtleties of legal language, statutory links, and practical problems. Only an expert can recognize what lies behind a seemingly simple formulation.

Error 2: Insufficient check of the legal status

The seller declares that the apartment is his. No one even verifies whether he is truly the owner or whether his property is encumbered by a bank. No one checks whether there is a record of foreclosure, a lien, or other easement on the apartment.

Lawyers from ARROWS Law Firm obtain an extract from the Land Registry, an extract from the insolvency register, verify the legal capacity and solvency of the seller, and all risks.

Error 3: Lack of information about taxes and fees

The buyer finds out only after the purchase that the Financial Administration of the Czech Republic has sent him an assessment for real estate tax, which he did not include in his budget. Or he finds out that the apartment lies in a historical conservation area and cannot be modernized without the consent of the heritage care authority, which is not granted.

Lawyers from ARROWS Law Firm point out all these risks and incorporate them into the contract and tax solution (e.g., regarding real estate tax for the buyer or income tax for the seller).

How to proceed correctly: Step by step

If you decide to buy an apartment, you should proceed as follows:

Step 1: Making an offer and basic check

You want to buy an apartment you like. You make an offer. At this point, legal assistance is not yet mandatory, but you should consult with a lawyer from ARROWS Law Firm about what risks are not yet obvious.

Step 2: Drafting or reviewing the purchase agreement

The seller or agent sends you a draft contract. Now is the right time: have it read by a lawyer from ARROWS Law Firm before you sign it. The lawyer will describe the risks, suggest changes, and make sure that the contract contains all essential conditions and protection for you.

This is the moment when you prevent 90% of later problems.

Step 3: Checking the legal status

Lawyers from ARROWS Law Firm obtain extracts from the Land Registry, find out if there are debts, mortgages, or easements on the apartment that are not mentioned in the contract. They also check the seller's insolvency register.

Step 4: Setting up escrow

Agreement with the seller that the money will go to a special attorney escrow account. Lawyers from ARROWS Law Firm set up the escrow and explain the conditions.

Step 5: Transfer of ownership in the Land Registry

After the contract is signed and the money is in escrow, lawyers from ARROWS Law Firm secure the filing of the application for registration of ownership rights in the Land Registry. It is a complex procedure and the lawyer coordinates it.

Step 6: Release of money

Once the ownership right to the apartment is transferred to you in the Land Registry and all contractual conditions are met, the attorney releases the money to the seller.

How ARROWS ensures security

Final Summary

Buying an apartment is one of the largest financial transactions in life. A common mistake is that the buyer thinks they are able to handle it on their own or with the help of a real estate agent. However, the reality is more complex.

A high-quality purchase agreement contains dozens of legally essential elements that a layperson often does not see. The absence of an attorney leads to invalid contracts, loss of money, legal disputes, and liability. Attorney escrow is the only safe way to ensure that money and the apartment are correctly exchanged without risk.

Lawyers from the Prague-based ARROWS Law Firm have years of experience with apartment purchases. They know all the risks and know how to solve them. They draft contracts that are legally secure, check the legal status of properties, set up escrow, and coordinate the transfer of ownership rights in the Land Registry. If a problem or dispute arises later, ARROWS Law Firm represents you in court proceedings.

If you want to save yourself stress, financial loss, and legal uncertainty, contact ARROWS Law Firm before you sign a purchase agreement. Our lawyers will advise you and ensure that your purchase is safe and legally correct.