Buying an apartment in Czechia Key contract risks and attorney escrow

10.4.2026 | ARROWS law firm

Buying an apartment is one of the most important and riskiest transactions. Many people overestimate their own legal judgment or rely on a real estate agent, which leads to problems. A purchase agreement without professional assistance hides a number of risks, from invalidity to loss of money. This article explains what a legally sound agreement must contain under Czech law, how an attorney escrow protects both parties, and which risks to watch out for.

In the image, we see a lawyer consulting on the legal risks associated with purchasing an apartment.

Summary:

Why have a drafted purchase agreement reviewed by an attorney
Legal status of the apartment
Handover and acceptance
Costs and fees
Attorney escrow – a security mechanism
What attorney escrow is
Risks without escrow
The most common legal mistakes when buying an apartment without an attorney
How to proceed correctly: Step by step

A poor-quality purchase agreement leads to legal uncertainty, invalidity, loss of money, and a significant disadvantage in any potential court dispute. The absence of legal oversight is one of the most common causes of problems that we later deal with in litigation.

Attorney escrow is not mandatory, but it is the safest mechanism. It protects the buyer from the seller accepting payment and then failing to transfer the property; it also protects the seller in case the buyer later denies having paid the purchase price.

Self-interpretation of the law, lack of knowledge of legal regulations, or reliance on a real estate agent lead to errors in the application for registration in the Czech Cadastral Register, to legal mistakes regarding the seller’s freedom to dispose of the property, to insufficient verification of the property’s legal status, and to other serious issues.

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

Why have a drafted purchase agreement reviewed by an attorney

A real estate purchase agreement is not a standard commercial document. It is a legally and factually complex instrument that must contain dozens of requirements set out by Act No. 89/2012 Coll., the Civil Code under Czech law. If any of them is missing, the agreement may be absolutely invalid, or it may later prove that it does not meet the enforceability requirements or that it is highly disadvantageous for one party.

Risks that are difficult for a layperson to see

A typical apartment buyer or a real estate agent focuses on the price, the handover date, and having the document signed. An attorney 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 signing the agreement and handover? Who deals with it if a bank lien is discovered that the seller failed to disclose?
The seller’s legal capacity and authority. Does the seller have the right to sell the apartment at all? Are they truly the sole owner, or only a tenant? Is there a registered lien, enforcement proceedings, or other easement on the property? Do they have the spouse’s consent, if required?
Consistency with the Cadastral Register. It often happens that the agreement describes the apartment differently than it is registered in . This leads to complications when transferring ownership in the Cadastral Register.
Escrow terms and security mechanisms. Without a clear definition, it is not evident when the funds are released and under what conditions.
Contractual terms for dispute resolution. Which law will apply? Which court will have jurisdiction? How is withdrawal from the agreement handled and what are its consequences?

Our attorneys in Prague at ARROWS advokátní kancelář review these points systematically and flag risks before a crisis arises.

Key components of a high-quality purchase agreement drafted by an attorney

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

Identification of the parties and the subject of purchase

The agreement must precisely state:

Names, addresses, and birth numbers of both parties (for legal entities: name/company name, registered office, and identification number).
An exact description of the apartment: address, building number, unit number, floor, floor area, and, where applicable, the co-ownership share in the common parts of the building and the land.
Cadastral details (plot number, building designation, title deed number, cadastral area, and municipality).
A reference to the valid and its current status.

Common mistake: The agreement is often based only on details from an advertisement or previous documents that differ from the Cadastral Register. When transferring ownership, the authority will notice that the agreement does not match the cadastral records—and the transaction will be halted or delayed.

Price and method of payment

The agreement must clearly specify:

The purchase price (in CZK, in words and figures).
How any costs related to the transfer will be settled.
When and how payment will be made (bank transfer, via escrow).
Whether the price includes fees, the real estate intermediary’s commission, or other costs.

Common mistake: Sellers and buyers often believe they have agreed on the price, but the agreement states it ambiguously (“to be agreed later”). This later leads to disputes and invalidity due to uncertainty.

Legal status of the apartment

The agreement should include:

The seller’s declaration that they are the sole owner of the property, free of liens, enforcement entries, restrictions on ownership, and other encumbrances, unless stated otherwise.
A note that the apartment is encumbered by a mortgage and that the seller will repay it / arrange for its deletion from the Cadastral Register as a condition for handover.
Information that the seller is not in insolvency proceedings, nor is such a situation imminent.
Confirmation that no legal disputes relating to the apartment are known.

Common mistake: Many sellers do not disclose these facts or state them untruthfully. If it is later discovered that the apartment has unpaid liabilities or is subject to enforcement, the buyer has already paid and has very limited options to protect themselves.

Handover and acceptance

The agreement must clearly state:

When the apartment will be handed over (a specific date or a time limit).
In what condition it will be handed over (with/without furniture, equipment, etc., including a description of the condition of energy and water meters).
Who carries out the physical handover and how it is documented (handover protocol).
Who bears the risk of damage to the property between signing and the transfer of ownership.

Common mistake: The agreement often fails to state this, and the buyer later finds that the seller has removed everything from the apartment, including items that were supposed to remain under an oral agreement.

Costs and fees

The agreement should state who pays:

The fee of an attorney or notary for drafting the agreement and arranging the transfer of title.
Bank fees (if the apartment is financed by a mortgage loan).
The real estate agent’s commission.
Settlement of any outstanding payments for services, utilities, energy, etc.

The mistake here: Without a clear specification, both parties may later argue, and an unclear allocation of costs can lead to problems.

Legal oversight and review

When drafting the agreement, the attorneys from ARROWS, a Prague-based law firm, also verify issues that are commonly overlooked:

The seller’s legal capacity and solvency.
The actual amount of the mortgage and how it will be repaid.
Czech Republic specifics (e.g., real estate tax payable by the buyer from the following tax period).
Risks arising from previous legal relationships affecting the property.

This is particularly important in cross-border transactions, where ARROWS, a Prague-based law firm, cooperates with its ARROWS International network and can arrange legal review under foreign law as well.

Attorney escrow – a security mechanism

One of the most important instruments when purchasing real estate is attorney escrow (in legal language, for similar instruments in an international context, the term escrow is sometimes used). 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 attorney account (not directly to the seller).
The attorney holds the money in (a special bank account designated for escrows) until all contractual conditions are met (e.g., transfer of title to the buyer).
Once title to the apartment is registered in the Czech Land Registry in 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 take the money and then fail to hand over the property or sell it to someone else.
It provides certainty that the money will be returned if the transaction does not go through (e.g., the Czech Land Registry does not register the transfer of ownership).
It provides a legal guarantee—the attorney is bound by strict .

For the seller, in turn, it means that:

It also prevents the buyer from paying and then unlawfully demanding a refund.
The seller receives the money as soon as all conditions are met and has certainty that the buyer will not unlawfully block the payment.

How it works in practice – an example

You are buying an apartment for CZK 3 million. The attorneys from ARROWS, a Prague-based law firm, will agree with you on:

Drafting the purchase agreement with instructions for attorney escrow.
Setting up a special attorney escrow account – a special bank account to which the money will be sent.
You send CZK 3 million to the attorney.
The attorney holds the money and monitors whether the conditions are met: the Land Registry registers the transfer of ownership, the mortgage is repaid, and the apartment is handed over.
Once everything is completed, the attorney automatically releases the money to the seller.
If something goes wrong (e.g., the Land Registry refuses to register the transfer because there are insurmountable obstacles recorded against the property), the money is returned to you.

The attorneys from ARROWS, a Prague-based law firm, have many years of experience with escrow and ensure that all procedural conditions are met and that none of the funds are lost.

Risks without escrow

Without escrow, you risk:

Paying the seller directly and the seller then failing to hand over the apartment or transfer title (a common case reported in the media).
The seller concealing the true legal status of the apartment—for example, enforcement proceedings may have taken place that you were unaware of.
The apartment being encumbered in the meantime by a mortgage you did not know about.
The Czech Land Registry refusing the transfer of ownership and you already being without your money.
Funds entrusted to a real estate agent not being protected in the event of the agent’s insolvency or enforcement against the agent’s accounts, because real estate agents are not authorised to operate regulated money escrows.

Most frequently asked questions about attorney escrow

1. Will attorney escrow cost me a lot of money? Escrow has a standard fee, which is usually split between both parties (or agreed otherwise). The price depends on the amount and the duration of the escrow. Compared to the risk of losing millions, it is a negligible cost. The attorneys from ARROWS, a Prague-based law firm, will tell you the exact price in advance.

2. Is escrow mandatory? It is not mandatory by law, but it is strongly recommended. Without it, you take a significant risk. In some transactions, the bank requires it (e.g., for mortgage loans).

3. Can the attorney take my escrow money for themselves? No—the funds are held in a special, segregated attorney account designated for escrows, which is protected by Act No. 85/1996 Coll., on the Legal Profession, and by insurance. These funds do not form part of the attorney’s assets and are strictly separated from the attorney’s own financial resources. The attorneys from ARROWS, a Prague-based law firm, are insured for professional liability for damage up to CZK 400 million and are subject to strict supervision by the Czech Bar Association.

4. What happens if the seller dies during the escrow? This is a serious situation. The attorney will suspend the escrow and it can be released only in accordance with the legal solution resulting from the probate proceedings. The attorneys from ARROWS, a Prague-based law firm, will point out this risk when drafting the agreement and propose possible resolution scenarios.

Risk table: What could go wrong and how ARROWS addresses it

Potential issues	How ARROWS helps (office@arws.cz)
Invalid purchase agreement due to missing essential elements. If it lacks identification of the parties, an exact description of the apartment, the price, or signatures, the agreement may be invalid and the entire transaction may fall through.	Attorneys from ARROWS, a Prague-based law firm, check all required elements when drafting and reviewing the agreement and ensure it is legally sound and compliant with Czech law. They do this systematically.
The seller is not the true owner or has a mortgage on the apartment that they failed to disclose. Then you cannot acquire the apartment, or you acquire it encumbered.	ARROWS, a Prague-based law firm, obtains up-to-date extracts from the Czech Cadastral Register (Land Registry), verifies the legal status, and identifies all easements, liens, and mortgages. It detects risks in time.
The Cadastral Office refuses to transfer the apartment due to a discrepancy between the agreement and the register. The transaction is halted and the funds remain tied up.	Attorneys from ARROWS, a Prague-based law firm, prepare the agreement with the Land Registry’s requirements in mind—taking the apartment description directly from the register and avoiding discrepancies.
The money is paid, but the apartment is not transferred—the seller disappears, sells the apartment to someone else, or it is seized by a bailiff. You are left without the money and without the apartment.	ARROWS, a Prague-based law firm, sets up an attorney escrow. The funds are paid into a dedicated attorney escrow account and are released only after the apartment is transferred to you in the Czech Cadastral Register. You have a guarantee and insurance coverage.
A dispute with the seller over whether the apartment was handed over in the agreed condition, whether all costs have been paid, etc. Without a clear agreement, evidence is difficult and court proceedings take years.	Attorneys from ARROWS, a Prague-based law firm, draft an agreement with a detailed description of the apartment’s condition, a handover protocol, and a clear definition of obligations. In the event of a dispute, ARROWS represents clients in court proceedings.

The most common legal mistakes when buying an apartment without a lawyer

Situations that attorneys from ARROWS, a Prague-based law firm, deal with almost daily—each of them should have been addressed before signing the agreement.

Mistake 1: Overestimating your own legal judgment

Many people believe they can handle buying an apartment on their own. They read laws, browse listings, consult a real estate agent. The result: the agreement is drafted without a lawyer, contains errors, is vague, and upon transfer of ownership or in the event of a dispute it becomes clear that it is legally insufficient.

Attorneys from ARROWS, a Prague-based law firm, see that a layperson does not know the subtleties of legal language, statutory links, and practical issues. Only an expert can recognize what lies behind an apparently simple wording.

Mistake 2: Insufficient review of the legal status

The seller declares that the apartment is theirs. No one even verifies whether they are truly the owner or whether the property is encumbered by a bank. Nor is it checked whether there is a record of enforcement proceedings, a lien, or another easement on the apartment.

Attorneys from ARROWS, a Prague-based law firm, obtain an extract from the Czech Cadastral Register (Land Registry), an extract from the Insolvency Register, verify the seller’s legal capacity and solvency, and assess all risks.

Mistake 3: Escrow through a real estate agent instead of an attorney

Many people believe that an agent can act as the escrow holder. That is not true—escrow through a real estate agent does not provide the same legal guarantee and insurance as escrow through an attorney, notary, or bank.

Funds in an agent’s account are not protected by the Advocacy Act and can be blocked at any time by enforcement proceedings against the agent. An attorney is bound by specific escrow regulations, and these funds are separated from the attorney’s own assets.

Attorneys from ARROWS, a Prague-based law firm, arrange escrow in a dedicated attorney account that is registered with the Czech Bar Association and insured.

Mistake 4: Lack of awareness of taxes and fees

The buyer only finds out after the purchase that the Financial Administration of the Czech Republic has sent an assessment for the real estate tax, which they did not include in their budget. Or they discover that the apartment is located in a historic preservation area and cannot be modernized without the consent of the heritage protection authority—which may not be granted.

Attorneys from ARROWS, a Prague-based law firm, highlight all of these risks and incorporate them into the agreement and the tax solution (e.g., regarding the real estate tax for the buyer or income tax for the seller).

How to proceed correctly: Step by step

If you are considering buying an apartment, you should proceed as follows:

Step 1: Making an offer and an initial review

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 an attorney from ARROWS, a Prague-based law firm, about what risks may not yet be apparent.

Step 2: Drafting or reviewing the purchase agreement

The seller or the agent sends you a draft agreement. Now is the right time: have it reviewed by an attorney from ARROWS, a Prague-based law firm, before you sign it. The attorney will describe the risks, propose changes, and ensure the agreement contains all essential terms and protections for you.

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

Step 3: Review of the legal status

Attorneys from ARROWS, a Prague-based law firm, obtain extracts from the Czech Cadastral Register (Land Registry), determine whether there are any debts, mortgages, or easements on the apartment that are not mentioned in the agreement. They also check the seller in the Insolvency Register.

Step 4: Setting up escrow

An agreement with the seller that the funds will be paid into a dedicated attorney escrow account. Attorneys from ARROWS, a Prague-based law firm, set up the escrow and explain the conditions.

Step 5: Transfer of ownership in the Cadastral Register

After the agreement is signed and the funds are in escrow, attorneys from ARROWS, a Prague-based law firm, arrange the filing of the application to register the transfer of title in the Czech Cadastral Register (Land Registry). It is a complex procedure and the attorney coordinates it.

Step 6: Release of funds

Once title to the apartment is transferred to you in the Cadastral Register and all contractual conditions are met, the attorney releases the funds to the seller.

Table: How ARROWS ensures security

Transaction stage	How ARROWS can help (office@arws.cz)
Offer and negotiations. You want to buy an apartment and want to know what risks you are taking.	Our attorneys in Prague at ARROWS can advise you on the key risks before you commit. They will ensure your offer is legally secure and that the seller cannot later ignore their obligations.
Drafting and review of the contract. You have a draft contract and do not know whether it is safe.	ARROWS, a Prague-based law firm, reviews the contract in detail, identifies risks, returns proposed changes to the seller, or prepares the contract from scratch. The contract will be legally secure and balanced.
Due diligence on the apartment’s legal status. You want to know whether the apartment is encumbered by a mortgage, enforcement proceedings, or taxes.	Our attorneys in Prague at ARROWS obtain extracts from the Cadastral Register, identify all encumbrances, verify the seller’s legal capacity and solvency, and alert you to any risks.
Setting up and administering escrow. You want your money to be safe.	ARROWS, a Prague-based law firm, sets up escrow through a dedicated attorney escrow account that is insured and registered with the Czech Bar Association. The funds are strictly segregated and protected.
Transfer of ownership in the Cadastral Register. You want the apartment to be transferred to you properly.	Our attorneys in Prague at ARROWS coordinate the transfer with the Cadastral Office, ensure all documents are filed, and monitor the process. They also handle any complications if they arise.

Summary

Buying an apartment is one of the largest financial transactions of your life. A common mistake is that buyers think they can handle it on their own or with the help of a real estate agent. The reality is more complex.

A high-quality purchase agreement contains dozens of legally material 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 the money and the apartment are exchanged properly without risk.

Our attorneys in Prague at ARROWS have many years of experience with apartment purchases. They know all the risks and how to address them. They draft legally secure contracts, review the legal status of real estate, set up escrow, and coordinate the transfer of title in the Cadastral Register. If a problem or dispute arises later, ARROWS, a Prague-based law firm, will represent you in court proceedings.

If you want to save yourself stress, financial loss, and legal uncertainty, contact ARROWS, a Prague-based law firm, before you sign the purchase agreement. Our attorneys in Prague will advise you and ensure your purchase is safe and legally sound. Write to us at office@arws.cz.

Most common questions about having an attorney draft an apartment purchase agreement and about attorney escrow

1. Does the purchase agreement have to be drafted by a lawyer to be valid?
The law does not expressly require it—you can theoretically draft it yourself. But it is very risky. If it lacks the statutory requirements, it may be invalid. Or it may contain provisions that disadvantage you later, and you may not notice. Our attorneys in Prague at ARROWS will either draft the agreement from scratch or review an existing draft and propose corrections. This helps you avoid these risks.

2. How much does it cost for an attorney to draft my purchase agreement and arrange escrow?
Fees vary depending on the scope of work and the property price. The usual price for drafting the agreement and providing escrow is in the low single-digit percentages of the property price—typically significantly less than 1%. Our attorneys in Prague at ARROWS will tell you the exact price after a consultation. When millions are at stake, the attorney’s fee pays for itself by preventing even a single problem.

3. What happens if, after signing the agreement, it turns out that the seller is not the owner of the apartment?
Then the agreement is effectively invalid (unless the true owner has consented) and it is not possible to register the transfer in the Cadastral Register of Real Estate on that basis. You should have verified the legal status in the Cadastral Register of Real Estate before signing. Our attorneys in Prague at ARROWS always do this. If it was not done and a crisis arises, you need to seek an attorney to represent you in court and protect your rights.

4. Is escrow really safe?
Yes—if it is administered by an attorney registered with the Czech Bar Association, a notary, or a bank. The money is held in a dedicated bank account intended for escrow and cannot be used for other purposes. Attorneys are insured for professional liability, and the statutory minimum insurance limit for an attorney is CZK 5,000,000. ARROWS, a Prague-based law firm, is insured up to CZK 400 million and has many years of experience with escrow arrangements.

5. Can an attorney arrange the transfer of ownership in the Cadastral Register of Real Estate for me?
Yes. Our attorneys in Prague at ARROWS prepare all documents for the Cadastral Office, including complex applications for registration, and coordinate the transfer with the Cadastral Office. They also handle complications if the Cadastral Office refuses the transfer or if there are entries on the apartment that need to be removed.

6. What happens if a dispute arises under the agreement—for example, the seller changes their mind and does not want to sell the apartment, or one of the seller’s creditors appears?
Our attorneys in Prague at ARROWS represent you in such situations. We handle out-of-court negotiations, file motions with the court, and defend your rights in court proceedings. In the event of a dispute, it is important that the agreement is legally secure and clear—and that is why we prepare it with potential conflicts in mind.

Notice: The information contained in this article is of a general informational nature only and is intended for basic orientation in the matter based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

Read also: