Czech Republic: Mortgage notes

Essential notes for purchasing property in the Czech Republic

1) Please ensure that you have full clear title to the property on completion and that the appropriate documents are available for the lender. Finance will be granted only for completed properties where the Surveyor’s Office (Stavební úøad) has issued a valid Occupancy Permit (Kolaudaèní Rozhodnutí) certifying it as habitable.

2) In the Czech Republic, although a Czech legal entity (Ltd, joint stock company, s.r.o. etc) is entitled to own titles of property, a foreign person is not unless they have residency permission. However, a foreign person may form a Czech company and use this as a special purpose vehicle to buy property. A Czech lawyer will be needed for this. Czech nationals living and working in other countries can buy in their own name.

3) It is essential that you take the appropriate legal advice before signing a preliminary purchase agreement or paying a deposit, as if purchasing in your own country. A list of Czech lawyers is available from Conti Financial Services.

4) If applying for a loan to a Czech Company of which you are the beneficial owner, you will be required to guarantee the loan. The Lender will expect you to receive independent legal advice from a solicitor in the UK concerning the guarantee and confirmation from the solicitors that they have indeed advised you independently (both documents incorporated within the Guarantee).

5) Please be aware that the Lawyer/Notary may be including, within his/her charges, costs for assigning the mortgage and you should establish with the Lawyer/Notary the total actual cost before proceeding with the loan application.

6) Note that it is common practice in the Czech Republic for borrowers to deal with the lending bank without using a solicitor. Foreign borrowers can choose to grant power of attorney to a Czech solicitor for convenience; that solicitor can then sign documents at the bank on the borrower’s behalf and deal with the Notary. The Notary must verify the signatures in the purchase contract. The signatures in the loan contract do not need to be verified by a Notary. The signatures in the Pledge Agreement do need to be verified by a Notary.

7) Please bear in mind that if you are intending to be present at the completion to sign all the relevant documents yourself and you do not understand the Czech language, a translator will be required to respond to the Notary. The translator may also be required to sign the notary deed.

8) Please note, that the lenders will not advance funds to purchase or renovate properties that are currently uninhabitable.

9) It is advisable to arrange your mortgage finance before agreeing to purchase a property.

10) Properties can be purchased either individually, in joint names or in the name of a company.

11) All loans will be in Czech Crowns.

© Conti Financial Services Limited 2006

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on +44 (0) 1273 772 811 www.mortgagesoverseas.com