Property sale Archivy - REMAX Alfa

How to sell a property after someone dies

AdminRadim — Fri, 16 Sep 2022 08:58:00 +0000

How to handle buyers’ questions about death

In the event that you leave the sale of the deceased’s property to a real estate agency, you will not have to worry about viewings and handling unpleasant questions with interested buyers. But if you want to arrange everything yourself, be prepared for the following questions. “Why are you selling the apartment / house?” This turns the conversation to death and may be followed by questions such as “Who died?”, “Did the death happen on the property?”, “Was it a natural death, suicide or violent death?” Interested parties may care about your situation of feelings, as they only want to buy a property and so only care about its history. Don’t blame them. For some, the idea of sleeping in a room where a person recently died or even committed suicide is unacceptable and can break any potential deal.

Is the seller obliged to inform potential buyers about a death in the property?

Simply put, the worse the cause of death which happened in an apartment or house, the worse and at a lower price it will sell. This leads some sellers to try to hide information about a death from buyers. Sometimes they even hide them from real estate agents, someone they are entrusting with the sale. However, news of a death can easily be found out.

Although, by law, the seller has no obligation to inform a buyer of a death that occured in the property, I always recommend the seller to communicate this information to all serious interested parties. It is basic human decency. After all, sooner or later they will find out from the neighbours. And if they don’t hear it from you, you’ll lose their trust, which can lead to a lost sale.

It is certainly not necessary for you to tell the buyer an elaborate story about the cause of death, just state the fact that the death occurred. Likewise, do not include information about the death directly in the advertisement or to everyone who comes for a viewing. Only tell those who show a serious interest in buying. The dignity of how you behave in such a sensitive situation will affect the atmosphere and the course of the entire sale.

Tragic death in real estate

A much more serious situation is when a suicide, fatal accident, or even a murder has occured on the property. The property thus gains a certain stigma

People are instinctively curious about death, especially if it happens in a particularly tragic manner. The media has long understood that the colourful description of tragic news can attention, readability, and viewership and thus secure higher advertising revenue. However, you are not a journalist. If you tell a colourful story about a suicide, wth specific details including the exact spot in a property where it happened, people will be interested, but will not buy. Let the details of any tragedy remain unknown.

How to proceed if the death occurred directly on the property

I have personally sold properties where someone had killed themselves. My colleagues also have experience with selling a property where a murder took place.

Selling such a property is complicated, as it will definitely have a negative effect on the price, but it is not impossible. Those interested in buying can usually accept that an old grandmother died of natural causes in an apartment, but many people refuse to buy a property where, for example, people burn died in a fire, committed suicide or were murdered. Others are willing to buy such a property only if the price is lowered. These usually include buyers who are emotionally colder or investors who will rent the property out, for example with short-term leases to foreigners or people with bad finances as they do not have the money to be choosey.

However, time heals every tragedy, so even a tragic death on a property will be forgotten after some years, and over time the price of such a property will begin to return to a normal level. Just think, in the Czech Republic are properties where shootouts with the Gestapo took place, or deported Jews lived, or other war horrors took place, sometimes marked by commemorative plaques on the side of the building or on the pavement outside. Yet today, no one cares too much about what happened so long ago.

In conclusion

Arranging the sale of a property following a death can be psychologically very demanding. The place itself carries with it a number of memories, both sad and joyful. Therefore, do not be afraid to ask for help from loved ones, or contact one of our real estate agents for advice. An experienced, sympathetic property broker will treat you with kindness and consideration of your situation, and will do their best to help you. We have real estate agents like this.

We wish you good luck in selling your property and much strength in the coming days.

Are you considering a sale? Start by finding out its market price. You can get a free estimate from us.

By obtaining an estimate of the market price of a property, you will have an overview of how much your apartment, house or land is worth. This is invaluable knowledge as it enables the children of elderly parents to protect them.

I would like to know a property’s value

Article prepared by: Bc. Petr Podlešák, manager at RE/MAX Alfa

What people say about our services

We asked our clients if they were willing to comment on the work of our brokers in front of the camera. Here are their authentic statements. For more references from clients, see references.

The post How to sell a property after someone dies appeared first on REMAX Alfa.

How to choose a real estate agent to sell your property

AdminRadim — Sat, 30 Jul 2022 10:37:00 +0000

A good real estate agent can make you a lot of money when selling your property, a bad real estate agent can cost you a lot.

And unfortunately there are more bad ones than good. Choosing a decent real estate agent who will provide you with top service when selling a property isn’t as easy as it should be. Some agents promise you a gold mine just to get the job, but then their actions fall way short of their promises. For this reason, I have prepared a guide on how to choose a good quality real estate agent.

If you follow my advice, you can find yourself a good real estate agent. With a good agent, you often sell for more money than selling yourself, and without all the worry.

Where to find a good real estate agent?

(a) Personal references

References are among the most reliable ways of finding a decent real estate agent. Simply ask friends, colleagues, and neighbours for their experiences with real estate agents to see if they can recommend someone to you. However, be careful that the advice you receive is not given purely because the real estate agent they recommend is their friend or part of their family. In the same way, be careful that they are not recommending someone just so that they get a reward or cut of the sale’s commission.

(b) Search the Internet

Good real estate agents who are conscientious about their work, promote themselves openly online. For example, they have their own websites, blogs, Facebook business pages, and video channels on Youtube. They also often widely advertise themselves and the properties they sell, so you will come across their leaflets, billboards, and banners all over town. Real estate agents who are less visible often do not pay full attention to the property they are selling or are among the least successful around. In recent years, real estate trading has moved to the Internet, so an agent’s website can give you a good idea of their skills in online selling.

Draw up a list of a few real estate agents who look competent or have been recommended to you and contact them.

What people are saying about our service

We asked our clients if they were willing to comment on the work of our brokers in front of the camera. Here are their authentic statements. For more references from clients, see references.

How not to advertise real estate
How not to advertise real estate

Personal understanding and a good first impression

You will work with your real estate agent for several months, so having somone who understands you and is on your wavelength is very important. Also gauge the first impression they make on you, as this will likely be the impression they make on people interested in buying your property. The way they act can make a sale easier or more complicated. So ask yourself, do they have a pleasant voice, how do they express themselves, and how promptly do they respond to your questions?

Personal understanding is a good basis for choosing a property broker, but the matter should not end there. A real estate agent may be on your wavelength, but that doesn’t mean that they can sell your property well. Instead, try to see what other skills they have.

Communication skills

You should get a good first impression of your real estate agent in the way that they communicate. Your real estate agent should be pleasant to speak to, helpful, proactive on the phone (i.e. you should not have to chase them down when you need something), at the same time they should not be pushy or impress their will upon you.

A property broker’s communication skills are important for a successful sale, so if you have any reservations about the way they communicate, don’t work with them.

Reliability and credibility

When you first start working together, your real estate agent will try to show themselves in their best light, but you will soon see definite signs of the real person in their reliability and trustworthiness. Did they arrive on time for your meeting? Did they send you the information they promised? Did they call on the date they promised you? Have you ever caught them lying or twisting the truth?

These are all warning signs. If it happens to you flee; from them while there is still time.

Clothes maketh the man

It is still true that clothes make a man. Selling real estate is not like selling hot dogs on the beach. A real estate agent is responsible for assets worth millions and so should dressed accordingly, to reflect decency and trustworthiness. How they dress affects credibility, which affects the smooth running of your sale.

Ask your potential real estate agents questions

At your first face-to-face meeting with your real estate agent candidates ask plenty of questions and monitor their reactions. Experienced, professional real estate agents will have full, sensible answers. Inexperienced, sub-standard ones will not know how to answer, and may be vague and evasive. The worst candidiates will simply ‘um’ and ‘er’.

Examples of questions to ask:

What will you do to sell my property?
Where and how will you promote my property?
Why should I choose you?
Describe to me how our cooperation together will function?
How do you guarantee that the whole transaction will go smoothly and that I will receive the money?
How long have you been working in the real estate industry?
Is selling property your primary job?
How many properties have you already sold?
Will you work with other real estate agents to sell my property? Cooperation between agents can significantly facilitate sales.
Can you give me some references from your previous clients?

With appropriately asked questions, you can find out a lot about how qualified your estate agent is. You can also use conflicting questions to find out if they are telling the truth. If you bombard the real estate agent with questions and they become entangled, confused, and begin to answer inconsistently, you may know that they are making their answers up. An estate agent who lies is the worst possible type, as trust between client and property broker is essential. If you find out that your real estate agent candidate is lying, do not work with them under any circumstances, even if they gets you drunk with sweet promises.

Google your real estate agent candidtate

Google

The era of secret property brokers is over. Enter any real estate agent’s name into Google and see what information appears. If there are very few or zero ‘matches’, then they are probably a novice or inactive broker who doesn’t let the world know much about them. That’s not a good sign.

The worst result is if there are a lot of negative reviews. While one or two bad incidents can happen between individuals (personality clashes, misunderstandings etc.), a long list of disappointed customers should sound alarm bells. Another bad sign is if a property broker is hiding behind a real estate agency. If this is the case then you will not find their photos or videos anywhere. Conversely, good, capable real estate agents are proactive and not afraid to put themselves and their faces in the marketplace, literally. Long-term proactivity is a great sign that they are serious about their work and enjoy it.

Today, clients can rate real estate agents and agencies on the Internet, for example via Google or Facebook. Independent reviews from clients are an excellent guide for choosing a property broker and real estate agency.

Excellent

REMAX Alfa4.9

Based on 362 reviews

See all reviews

How a real estate agent advertises property

Take a look at how your real estate agent candidate is advertising other clients’ properties. Does he have high-quality photos or a video presentation? Is the text of the adverts engaging and does it contain any grammatical or spelling mistakes. If you see advertisements like this; run.

Jak neinzerovat nemovitost
Jak neinzerovat nemovitost

Check up on your real estate agent

Don’t just rely on what your real estate agent says they will do. Check to see if they really keep their promises. For example, ask your partner to call an advert from a different phone line and see how your real estate agent candidate reacts to a prospective buyer. How friendly, positive, willing, and proactive are they? If they don’t answer the call (it can happen, real estate agents are often in meetings, conducting viewings, or negotiations), wait to see if and how quickly they return the missed call. If they do not call back or only call back on the next working day, avoid them like the plague. Would you be happy if they failed to return a call to someone who was interested in buying your property?

A huge advantage can be had when selling a property if real estate agenst cooperate with others in the industry. Property brokers who work with other brokers sell properties faster and at higher prices. Avoid real estate agents who refuse to cooperate (not wanting to share a commission or fee).

Which real estate agency does your property broker work for?

The office where your real estate agent works will tell you a lot about the overall quality of the real estate services they provide. High-quality offices offer their real estate agents better opportunities to promote your property. They provide proper facilities to help them do their jobs well and offer decent real estate training. However, do not choose a real estate agent purely on whether they work in a large or small office. Some larger agencies have poor estate agents, as do some smaller ones.

However, be aware that larger, stronger offices have more opportunities and clout to promote your property. This will bring your property to the eyes of a larger number of potential buyers, which in return increases your chances of a quicker sale for a higher price.

A real estate agent who works on their own or as part of a small team may be very likeable and capable, but they are still a pawn in the industry. They will not be able to achieve results as good as those who work in a larger team, as they do not have the same advertising and cost synergies.

I have personal experience of this, as before I joined RE/MAX, I used to work in a small real estate agency where there was little broker support and the promotion of properties was abysmal.

Do not only rely on what your property broker says, ask for written commitments from your estate agent

Don’t just rely on a property broker’s promises, get facts and commitments in writing. People selling property often like to hear unrealistic promises from property brokers about how much their property is worth.

However, reputable real estate agents will always tell you the truth, even if you won’t like it, about a property’s real market price and will back up their claims with facts. While many owners do not want to hear the truth about the real market price and are happy to have their unsubstantiated dreams supported by an ‘expert’, but are in fact just delaying their appointment with reality. As such, they often laden themselves with a bad estate agent.

For this reason, do not just rely on what a real estate agent tells you, but ask them to explain the reason and show the evidence for a property’s valuation. Also ask for any real estate agent’s commitments and promises to be in writing. This could be in the form of a sales plan or as an annex to the brokerage contract. This way, if the real estate agent does not fulfill their obligations, you will be able to terminate the contract instantly. To learn more about this read the article; “What should a quality sales plan contain?

Is your real estate agent experienced or just starting out in the industry?

Experienced real estate agents can share their experience and knowledge when selling your property.

Alternatively, novice property brokers can often offer you enthusiasm. Experienced estate agents will typically, but not always, be confident in their work and act in a well-established way, while a novice broker may let their inexperience or impatience spoil a deal. There is also the chance that they will not survive in the industry long enough to complete the sale of your property.

That said, decent real estate agencies provide novice property brokers with plenty of assistance, including a dedicated support manager to help them overcome these disadvantages. However, these are generalisations; the important thing is how to gauge how a particular real estate agent comes across to you.

Is your real estate agent looking after only your interests or are the a ‘dual broker’?

Find out if your real estate agent is solely representing you at the sale (a so-called ‘seller’s broker’) or are they also being paid by the buyer (a so-called ‘dual broker’). A seller’s broker makes every effort to ensure the best possible sale for the selling client.

By working for both parties, a dual broker has a conflict of interest. Dual brokers are the biggest problem in today’s real estate market. You cannot trust them 100%, because they are also working for the counterparty and as such cannot provide you with a comprehensive and unbiased real estate service.

The largest and most fundamental conflict that a dual broker faces is that the seller wants to sell for the maximum price possible, while the buyer wants to to buy for the minimum. This causes the dual broker to act only as an intermediary between the seller and the buyer, ensuring the smooth administration of the transaction. They therefore follow the path of least resistance, and that means the path of compromise.

Simply do not work with dual brokers, they will not defend your interests.

How much commission is your real estate agent charging?

The amount of commission is naturally very important for a client. No one wants to pay more for services than is necessary. For this reason, many sellers consider the amount of commission as the only criteria for choosing a property broker. But this is not a smart move.

Instead, always ask not only how much the commission is, but also what services the real estate agent provides for that cost. Additionally, ask your real estate agent to commit to providing those services in writing by including them in the brokerage agreement.

In this way, you should choose a real estate agent based on a comparison of the amount of commission charged and the number of services provided. Never simply except the lowest commission as it is likely to come with the lowest standard of services. At the same time, a real estate agent with the highest commission will not guarantee the best service. It’s just not that simple.

There are plenty of lazy real estate agents on the market who still charge an unreasonably high commission. All they are focused on is collecting their commission as soon as possible and do not care if they sell the property well or for the best price.

Conversely, a real estate agent who has too low a commission will be unable or unwilling to invest a lot of time and money into promoting your property. Such brokers often work by simply photographing the property themselves and then displaying it on several real estate websites, thus ending their marketing efforts. That is woefully insufficient in today’s market.

The result of such little effort is that the real estate agent will not reach as many potential buyers as they could. The sale will often take longer and the seller will receive a lower price than they otherwise could have.

If you want to sell your property for the best price, then it is important to present the property in the best way (i.e. top quality photos and video presentation, professional homestaging) in coordination with high quality marketing, which should include promoting the property not only on real estate websites but a social media campaign, targeted advertising around the property, working with a database of buyers, cooperation with other brokers, etc.

However, all of this costs time and money which is reflected in the amount of commission paid.

In my experience, in most cases, paying a higher commission is rewarded with a faster sale at a higher price which more than off sets the cost of paying your real estate agent more. A higher commission is money invested in proper marketing.

For this reason, it is advisable to ask your real estate agent what marketing activities will be provided for the commission you are paying.

Ultimately, it is up to you whether to employ a real estate agent who will sell your apartment for 3 million krowns with a 2% commission or employ a real estate agent who, thanks to his investment and skills in marketing, will sell your apartment for 3.2 million krowns with a 5% commission. In the first case, after deducting the commission, you will be left with 2,940,000 Czk in your hand, in the second case 3,040,000 Czk.

Which real estate agent costs more in the end? Amazingly, this is what is happening in today’s real estate market.

People can easily calculate how much a real estate agent’s services will cost them, but they usually cannot see the lost profit from hiring a broker who is unable or unwilling to carry out quality marketing and effectively defend your interests.

Good brokers usually do not need to underestimate themselves because they have no shortage of contracts.

Therefore, it is often the case that brokers who apply for your favor with too little commission and are relentless are brokers whose services can ultimately become more expensive for you.

The commission of real estate brokers most often ranges from 3 to 5% + VAT, depending on the price and volume of services provided.

What business skills does your real estate agent have?

Your property broker should be a good trader. Why? Because the buyer is constantly trying to get a discount and other benefits. Some buyers use all sorts of ways to lower the price. For example, they look for whether the seller is under time pressure, getting divorced, in financial difficulties, dealing with a death in the family, etc., all in order to get a discount.

The buyer knows that sellers who are in an unfavorable life situation and emotionally upset will be more likely to lower their sales price due to their weakened position. A real estate agent who represents you properly should be prepared for all situations and should be able to defend your interests in all circumstances. No buyer demand or pressure should derail him. If they do, they are not a broker worth his salt, but is someone who will cost you money.

Therefore, try to find out if your real estate agent is a good trader. There are several ways to do this. Firstly, you can ask them questions, like those mentioned in the beginning of this article, and then judge their reaction.

The easiest way is to put them under pressure to see how they react in such situations. For example, if you want concessions in the brokerage contract, ask for a reduction in the commission and watch their reaction. Do they agree to reduce their commission without a fight? How will they defend your interests if they are not even able to defend their own? Will they respond to your requests irritably or aggressively? This is also not a good sign. If they treat buyers in a similar way, they can easily lose them and so can you. Only a broker who is able to defend his interests diplomatically is able to defend your interests effectively. Therefore, do not be afraid to subject your real estate agent to these tests. There is a lot of your money at stake.

Beware of real estate agents who don’t charge VAT

With the exception of novice property brokers, good real estate agents, at least in large cities such as Prague or Brno, are always VAT payers. Every successful real estate agent who devotes themselves fully to their work will sooner or later have to comply with tax law. If there no one is paying VAT, it is very suspicious. There are only two reasons for this.

They don’t sell much and are not as successful as they claim to be. Unfortunately, many property brokers do not tell the truth about themselves, their qualifications and abilities. I do not know of a single experienced, high-quality and honest broker who is not a VAT payer.
Cheating. Unfortunately, some property brokers collect a commission in cash and officially report only a small part of their income. Selling a property can take months, during which time a real estate agent and their client can get to know each other fairly well. This enables dishonest brokers to know who he can ask for a cash commission payment without documentation in return for a discount.

In the first case, you have no guarantee that you are cooperating with a professional, in the second case you run the risk that a broker who cheats on the state is not morally honest and can easily deceive you as well. You can find out if the broker is a VAT payer at the Register of Economic Entities at wwwinfo.mfcr.cz.

Do you want to sell your property successfully and safely?

Article prepared by: Bc. Petr Podlešák, manager at RE/MAX Alfa

The post How to choose a real estate agent to sell your property appeared first on REMAX Alfa.

Sealed bid auctions – an excellent way to sell real estate

AdminRadim — Sun, 30 Jan 2022 10:23:00 +0000

A sealed bid auction is popular due to its transparency and success. Moreover, in the case of council properties, it reduces officials’ opportunities for corruption.

However, private owners, such as yourself, can also use a sealed bid auction to sell your apartment, house or land. It is suitable for anyone who wants to sell for the maximum price.

We started selling properties using sealed bid auctions in 2015. Since then, we have completed several hundred transactions at RE/MAX Alfa.

Here, I would like to share with you our four year’s of experience in organizing auctions, our observations on their success, their advantages and disadvantages.

What is a sealed bid auction?

A sealed bid auction is often described as a competition for the best offer.

It is called a sealed bid auction because bids for purchasing the property are submitted by prospective buyers to the seller in sealed envelopes.

Today bids do not have to be physically sealed in an envelope (although that is still possible), but instead can be submitted electronically via an online auction system or by email.

At Alfa, those interested in bidding on a property can choose which form is best for them. Most people choose to bid via our electronic auction system or by email, but some, especially the elderly, still prefer to deliver bids in a classically sealed envelope.

We then submit all offers to the seller.

The best offer wins

The best offer does not necessarily mean the offer with the highest price.

Other criteria may play a more important role for the seller.

And it sometimes happens that the seller prefers a bid that is not the highest in monetary value.

For example, if the seller is in a hurry, he may prefer a bidder who offers a faster payment method, albeit a lower price.

Or it sometimes happens that the winning bidder is one who offers the seller a longer time to move out.

The decision on whom to sell is solely up to the owner. The real estate agent is only an advisor during the auction. They may, for example, draw the seller’s attention to a bidder’s unrealistic promises or payment terms, etc.

Advantages of sealed bid auctions

1. Transparency and efficiency

The main advantage lies in the transparency and efficiency of selling this way.

2. Equal opportunity

All interested parties have the same opportunity to buy. It does not matter who views the property first, second or third.

3. Speed

If sealed bid auction is well organized, the property will sell relatively quickly and profitably at the same time. Additionally, because there is a fixed deadline for submitting bids, potential buyers have plenty of time to make a mature decision and are not pressured into making a quick offer.

4. Selling at the maximum price

The buyers decide for themselves which offer to make to the seller. They can offer a higher or lower price dependent on what the property is worth to them.

In the fast-growing real estate market that we have been experiencing in recent years, competition between buyers means that real estate sold this way often achieve the maximum value.

All proceeds from the sale belong to the seller. Our real estate agency is only entitled to a pre-determined fee.

Disadvantages of sealed bid auctions

Sales by sealed bid auctions are simple in principle, but more demanding in terms of preparation, marketing, and credibility of the auction organizer than regular sales. And this is the biggest drawback.

1. Preparation

A sealed bid auction organizer must prepare well by creating clear rules and predicting all potential problems. It’s more challenging than a traditional sale, such that a lack of preparation can end in fiasco.

2. Marketing

In order for an auction to be successful, the seller must make an intensive advertising campaign to attract as many interested parties as possible in a short time. If the auction is badly promoted, only a few people may come to view the property and ake bids, meaning that it will not sell as well as it should. In fact, it may not even sell at all. Making an intensive, high-quality advertising campaign requires sales and marketing experience. If the seller doesn’t possess these skills, then their chances of success drop dramatically.

3. Some people are discouraged by sealed bid auctions

Not all buyers welcome sealed bid auctions. That is a simple fact. Some people openly tell us that if the sale is organized in this way then they are not interested in buying the property.

While, this may seem like a big disadvantage, in reality, people who dislike sealed bid auctions are generally just not interested in making a competitive offer. Consequently, their loss does not have a significant impact on the final sales price.

4. Credibility of the auction organizer

Historically, sealed bid auctions have been labelled as a means for corruption in the sale of state and council property. It is a bad reputation that leads many not to trust them. It is therefore absolutely essential that the auction organizer has a good reputation, and is a trustworth guarantor that everything will be above board and take place according to predetermined rules.

Unfortunately, it still happens that a less honest potential buyer wants to bribe the real estate agent to find the value of rival offers. This includes those who have lost the auction, but then offer a bribe so that they can offer a higher price after the result has been announced. Such conduct is in violation of our auction rules. Unfortunately, there are other ways in which bidders can try to corrupt the auction.

In order for a sealed bid auction to succeed, those taking part must trust the organizers and have faith that it will be conducted according to the rules, otherwise they will not participate. No one wants to be involved in anything corrupt, even if it will not financially hurt themselves personally.

For this reason, we place great esteem and importance in the moral credibility of our real estate agents. In addition, any Alfa estate agent who would even attempt to accept a bribe would be instantly dismissed and face trial for damages.

If you entrust the organization of a sealed bid auction to us, you can be sure that everything will be done cleanly, honestly, and according to the rules.

E-systems oversee human failures

Unlike traditional envelopes, electronic systems can also monitor the moral failure of workers.

The system we use at RE/MAX does not allow the real estate agent who organizes the auction to see the offers received before the deadline. This ensures that no one can inform other bidders about rival offers received and thus influence the auction in their favour. Similarly, no employee is able to discard offers received. The evaluation of the auction often takes place in the presence of the seller, who has a perfect overview of all the offers received.

The future of sealed bid auctions

In my opinion, the sale of real estate through sealed bid auctions has a promising future.

Of course, bidding through electronic systems, which can oversee the weakness of humans, will become more and more widespread, and bidding in traditional envelopes will decline.

There are numerous countries where sealed bid auctions are a very popular way of selling real estate. For example, in Canada, the USA, Australia, and Norway. While the method is growing in popularity in Germany and other countries.

I am interested in selling my property through a sealed bid auction

Autor článku: Bc. Petr Podlešák, manažer REMAX Alfa

What our clients say about our auctions

We asked our selling clients, for whom we organized an auction, how satisfied they were with the result of the sale. To see what they said, visit the references page.

The post Sealed bid auctions – an excellent way to sell real estate appeared first on REMAX Alfa.

A building’s Energy Performance Certificate (PENB). When do you need it?

AdminRadim — Thu, 06 Oct 2022 15:20:00 +0000

The builder, the owner of the building, or a part of that building are usually obliged to ensure they have a valid energy performance certificate, for the following circumstances:

after constructing a new building;
when a building is used by a public authority;
when selling a residential property or office space from 1.7. 2015.

A building’s Energy Performance Certificate (PENB).

The owner of an individual housing unit is obliged to display the building’s energy intensity rating in information and advertising materials during the sale of the housing unit from 1 July 2015, and when renting the unit out from 1 January 2016.

The owner is also obliged to present the energy certificate to those interested in purchasing the unit before concluding the purchase contract and, from 1 January 2016, also to those interested in renting the unit. In the case of an apartment the owner can request a copy of the PENB from the building’s manager in writing. If they do not respond, then they can use the last 3 years’ of utility bills (electrcity, gas, and heating) as an alternative, but must prove that they have requested in writing a copy of the PENB from the building managers. If they have still not provided a copy by the time the purchase contract is being signed then they must report the situation to the Státní Energetická Inspekce (State Energy Inspectorate) or SEI. In failing to provide a certificate, all information and advertising materials concerning the sale must display an energy rating of class G (the worst rating).

A building’s energy performance is assessed on the basis of the total annual energy supplied, which is understood as the amount of energy supplied to the building, including energy produced in the building by renewable energy sources and consumed in the building. It is therefore mainly the amount of energy needed for heating, cooling, ventilation, humidity adjustment, hot water preparation, and lighting.

The amendment does not apply to the transfer of membership rights and obligations in a housing cooperative, however, from January 2016, the housing cooperative must also have the energy certificate processed.

The certificate is valid for 10 years from the date of issue, or until a major change is made to the completed building (which includes adjustments of more than 25% of the building’s external structure). The certificate can be processed only by a qualified energy specialist, as listed by the Ministry of Industry and Trade. The certificate also contains a graphic, which is commonly referred to as an energy label.

Energy performance certificates are seen as indicators of a building’s energy consumption, giving those interested in buying or renting a property the opportunity to assess operating costs, or the cost of possible reconstruction. It is therefore similar in nature to other ratings supplied, for example a vehicle’s fuel consumption rating or the electricity consumption rating of electrical appliances.

Selling a property

When do you need a building’s energy performance certificate?

Are you selling your apartment, warehouse, office, residential, or non-residential space? Then, as the owner you are obliged to process an energy performance certificate if:

The building is intended for housing and as a residential building it is also registered in the state’s land registry (katastra);
The building is larger than 50 m2 of what Czechs call ‘energeticky vztažné plochy’ or the energy reference area. This is basically the total floor area of all heated areas, aka not small properties;
A property is a commercial object registered as a business property or administration building;
A property that is in insolvency proceedings and subject to sale through a purchase agreement;
Apartments that are being sold (here the certificate can be obtained from the building managers).

When is a building’s energy performance certificate not needed?

The energy performance requirements of a building shall not apply to:

buildings with less than 50 m2 of what Czechs call ‘energeticky vztažné plochy’ or the energy reference area. This is basically the total floor area of all heated areas, aka small properties;
buildings for family recreation (cottages, recreational facilities);
on listed buildings (however, beware of listed facades and other exceptions for which a PENB applies, if the building is not a protected monument according to the state land registry);
buildings used for religious purposes;
properties that are not registered in the state land registry (katastra) with a prescibed number;
if the property passes from one person to another through inheritance or as a gift;
Transfer of rights from person to person (when transferring the apartment of a housing cooperative to the future owner)
industrial and production plants, workshops and agricultural buildings with energy consumption up to 700 giga joules (194,444 kwh) per year.
buildings put into operation before 1947 with the written consent of the buyer that he does not require an energy certificate and the building has not undergone changes to the exterior structure of more than 25%.

From 1 July 2015, the seller (owner) must provide an energy certificate for a property on sale to the public. In the event that the energy certificate is not processed and the property is accordingly awarded an enrgy rating G (the worst rating), the owner of the building is not protected from possible inspection by the State Energy Inspectorate and from penalities of up to 100,000 Czk.

If a real estate agent does not receive an energy certificate from the owner for use in advertising, they must label the property as energy rated G, which will naturally have a negative impact on the sale and the property’s value. In practice, any property advertised for sale without a valid PENB may receive a visit by the State Energy Inspectorate with the possibility of receiving a fine.

Renting a property

When do you need an energy performance certificate for renting a building out?

Are you looking for tenants for your apartment, warehouse, office, residential, or non-residential space? Then you are obliged to provide an energy performance certificates if:

The building is rented as a complete building;
The building is a commercial property that is rented out as a complete building and is not operated by the owner himself;
The building is a warehouse and is leased to another operator.

When does a building not need a certificate of energy performance for rental?

For industrial and manufacturing plants, workshops and agricultural buildings with energy consumption up to 700 giga joules (194,444 kwh) per year;
Furthermore, the PENB obligation does not apply to production halls, sports facilities and technical premises which are not intended for administrative activities.

From 1 January 2016, the PENB must be part of every newly concluded lease agreement handed over to the leasee at the contract signing.

Why is an energy performance certificate required?

The certificate itself is created by an assessment of the building or apartment by an energy specialist with knowledge in the field of building structures and energy, where the whole building is assessed in every detail. You may then use this energy certificate for the next 10 years for the following transactions:

The sale of a house
The rental of a whole house (complete building)
The sale of a commercial property
The sale of a housing unit
The lease of an office, warehouse, business premises (if the building as such is entirely intended for lease and the owner does not have a permanent residence or residence there)
For requiring a building permit (new buildings)
For requiring a building permit during reconstruction
Before the completion of construction (for approval or re-approval)
When replacing a heat source with a new one with higher efficiency or when installing a heat pump or solar panels
For acquiring a Green Savings Grant

If you are buying a property, make sure that you get a copy of its energy performance certificate. You are legally entitled to a copy when you purchase or rent a property and may later need it if you want to reconstruct or make changes to the property.

What will you learn about the property?

First of all, you will find out the overall state of the building’s construction from the certificate. Detail that will include the condition of:

floors and their insulation
walls of the building’s envelope, composition and insulation
windows and doors and their thermal insulation properties
ceilings and their insulation
roof structures and their method of insulation
overall dimensions of structures, windows and doors
information on structures that would be worthwhile insulating or replacing
information on the quality and efficiency of hot water or heating systems
information on how much any potential investment in insulation will be required

From this data it is possible to compile an overall picture on the condition of a property, its quality and any detected defects, such as leaks, thermal bridges, condensation and more. In addition, it is possible to learn about the heat loss from the building’s envelope and from the current heating system used. The system for heating and domestic hot water are also mentioned here including their age, type of fuel consumption and, above all, their efficiency. From this, one can assess if or when the boiler will need to be replaced or if investing in a new system will generate significant savings or improve the building’s overall rating.

At a glance of the certificate, someone can gauge a building’s quality and whether any future investment will be needed.

For each time the building is reconstructed or a reconstruction permit is requested from the local authorities, the property owner will need to provide a valid energy certificate, so make sure you get a copy from the person selling you the property when you sign the purchase contract.

What if your building your apartment is in doesn’t have a valid PENB?

If you own an apartment in a building (společenství vlastníků jednotek or SVJ) and you want to sell or rent it out you need to provide a valid PENB. But what if the building’s mangement fail to provide one?

It is, of course, best to try to explain to those responsible for managing the building that it is their duty to provide a PENB. However, if they are still unwilling to act and you want to avoid penalties from the SEI, you must ask the building’s management for a PENB in writing. This formal request should include the reason the PENB is needed and allow a period of up to 14 days from receipt of the request to when a PENB must be provided. The request should outline that the building’s management team are obliged in accordance with Act 406/2000 Coll., on energy management to provide this certificate.

If, as the owner of an apartment, you do not receive an answer from the first request, send a second call with a deadline of 7 -10 days, referring to the first request and notifying the building’s management that if the PENB is not received he will be forced to forward the issue to the SEI.

If you do not receive a PENB even after the second request, send a copy of the correspondence to the SEI with a complaint and a request that the SEI obtain it from the building’s management. In such a case, you could take advantage of the fact that you did not receive a copy of the PENB and you could instead replace it with energy bills for the last 3 years, thus avoiding your need for the PENB.

97% of all apartment buildings in the Czech Republic do not fall into the worst energy class (class G). Yet, it is necessary for an apartment owner to have an energy certificate so as to avoid negative repurcussions. For non-compliance of this legal obligation, the owner of an apartment or possibly the building’s management risk a fine of up to 200,000 Czk and will then be required to pay for a certificate to be produced.

Penalties related to PENBs

Sanctions for building owners and operators

The very introduction of energy certificates has a negative side: penalties. But who can be penalised? Any selling or leasing owner of an apartment, building or house who violates the legal obligation to present an energy certificate to the buyer when it first goes on the market (this includes in advertisements). When selling or renting out a house or commercial building, the owner (as an individual or ‘fyzická osoba’) is subject to a fine of up to 100,000 Czk. Legal entities, such as businesses (or ‘právnická osoba’) are subject to fines of 200,000 Czk.

This fine is applicable from 1.7.2015 for anyone in non-compliance. This means that each property advertisement must be marked with an energy class and a calculated value based on the certificate. If this value is not advertised, the State Energy Inspectorate can immedicately initiate inspections and administrative proceedings against the owner.

The State Energy Inspectorate and the Ministry of Industry and Trade incorporated these penalties into Act 406/2000 Coll. on energy management. As soon as you begin advertising a property for rent or sale, you (or your real estate agent) must provide a valid energy performance certificate when asked. Failure to do so will make the property owner liable for a fine.

Some people argue that if the seller and the buyer agree that neither of them want or need an energy certificate then a PENB is not necessary. This is wrong. An energy certificate is needed for every sale or rental. Adding that a PENB is not wanted into a purchasing contract only provides written proof of a failure to meet this obligation and are breaking the law. As such it is easy for the authorities to prosecute not only the property owner, but in this case also the buyer or tenant.

If the buyer decides that the newly purchased property requires immediate reconstruction or other major modification, they will need to request a building permit. If he did not receive one from the seller, then he will have to provide a new one himself.

Before paying for a new PENB to be made, the new owner may try to contact the person they bought the property from to obtain the original certificate. However, based on the purchase contract, a dispute may arise over whether the certificate was provided or not. Sometimes the dispute drags on, even though the contract stipulates that the certificate was handed over when the purchase contract was signed, as the certificate’s existence can be easily verified at the Ministry of Regional Development in the ENEX database, where the certificate is registered.

How to protect yourself against this? Firstly, it is important to have an energy certificate prepared and hand it over to the buyer when signing the purchase contract. Preferably, both the buyer and the seller sign the original certificates, which they pass to each other. This should avoid any future dispute. Especially, as no one wants to cause trouble with the threat of a 100,000 Czk fine for non-fulfillment, as well as other potential non-economic penalties.

Secondly, do not think that this issue does not concern you. If you are selling a property for hundreds of thousands or millions of krowns, do not decide that saving several thousand krowns to have an energy certificate made is a good saving. If you come across a buyer who understands the issue, it could be even more expensive or you will simply end up having to get it done anyway, delaying the transaction.

Additional risks for the seller

A building’s energy performance certificate is an important document corresponding to the technical and energy assessment of the property under Decree 78/2013 of optimal conditions.

If the property owner expressly avoids fulfilling this statutory obligation pursuant to Act 406/2000 Coll., On energy management, which states that he is required to have a permit for the sale or lease of a property drawn up, he is risking the entire transaction unnecessarily.

Every buyer has the right to full information about the condition the property is in, not only in terms of “defects and the state of the property” but also in regards to its running costs.

If these legal obligations are not fulfilled, the buyer may revoke or deem the purchase contract as partially or completely invalid for up to 5 years after signing.

An insolvency administrator representing the property owner is also obliged to ensure that a valid energy performance certificate is available for the sale or foreclosure of a property.

My advice to you is to never neglect or avoid getting an energy certificate for your building made, as you may cause major legal and financial damage when selling or renting your property.

Would you like to have an Energy Performance Certificate for a Building drawn up?

Please contact me. I am energy consultant Ing. Jarmila Bílá.

The author of this article.

I am an authorized engineer in the field of buildings’ technical equipment and a certified energy specialist. I am also a member of the Association of Energy Specialists. I have been processing energy performance certificates for buildings since 2008, with a wide range of experience in energy performance assessments and legislation. I work mainly in Prague and its surrounding area. Although, it is possible to arrange the processing of a PENB certificate for real estate further outside Prague.

I process certificates both for residential engineering properties (family houses, apartment buildings) and for properties intended for commercial purposes (administrative buildings, hotels, schools, industrial buildings, etc.).

Personal inspection of any building being assessed is a matter of course (although it is possible without it, if, for example, there is sufficient construction documentation and photos – which could even lead to a quicker assessment). Either way, I can take care of all your PENB needs. I will visit the property, take care of all documents, and then, once complete, hand over your PENB certificate.

Prices for drawing up a PENB certificate (including delivery)

Delivery times are from one to two weeks (by agreement), and if necessary within three days.

For example, the cost of a PENB certificate for a family house ranges from 3,000 to approximately 5,000 Czk. For an apartment building the price is approx. 8,000 Czk. I can also process a PENB for a commercial building. The price for any PENB is highly dependent on the size and structure of the property and on whether and to what extent there is construction documentation (i.e. whether it is necessary to redo the documentation or update it in any way). Unfortunately, due to the diverse range of properties and the varying completeness of documentation, I cannot offer you a uniform pricing structure. I work independently on my own IČ trade licence, although I am not a VAT payer.

Ing. Jarmila Bílá, energy consultant and recommended supplier by RE/MAX Alfa

Ing. Jarmila Bílá

The post A building’s Energy Performance Certificate (PENB). When do you need it? appeared first on REMAX Alfa.

Income tax on the sale of real estate in Czechia in 2023

Petr Podlešák — Mon, 12 Jun 2023 10:27:33 +0000

Tax rate on income from the sale of real estate

The sale of real estate is subject to income tax. The amount of tax depends on whether you are selling the property as an individual or a company.

Income tax for natural persons

Income from the sale of real estate is taxed according to § 10 of the Income Tax Act. Income tax is 15% or 23% for natural persons.

If in 2022 you had income higher than CZK 1,867,728 (48 times the gross salary), you are obliged to tax income exceeding this threshold at a 23% income tax rate.

In 2021, the so-called solidarity tax was abolished and replaced by a rate of 23%. The solidarity tax did not apply to income from the sale of real estate, however, the current 23% rate already applies to income from the sale of real estate.

The basis of the tax is the income reduced by the expenses demonstrably spent to achieve it. The income is therefore the price obtained from the sale. The cost is the amount you bought the property for. The other most common expenses include, for example, legal costs, assessments, repairs, technical evaluation, costs for a real estate agency, etc.

Example

In 2016, Mr. Gordon bought an apartment for CZK 3,000,000 and started renting it out. In 2019, he needed to invest capital in his business and therefore decided to sell the apartment. In the meantime, real estate prices rose, so he managed to sell the apartment to Mr. Novotny for CZK 3,500,000. With both transactions, Mr. Novák had costs associated with legal services, custody of the purchase price with a lawyer and a commission to a real estate agency. Mr. Novák’s total demonstrably spent expenses amounted to CZK 180,000. The tax basis is the amount 3,500,000 – 180,000 – 3,000,000 = 320,000 CZK. Mr. Gordon will include this amount in his income tax base according to §10 of the Income Tax Act. Income tax then amounts to CZK 48,000.

Income tax for legal entities

For legal entities, the income tax rate is 19%. Income from the sale of real estate is included in the income of the entire company and is thus also taken into account in the company’s tax return.

Are you considering selling your property? You start by asking us to estimate its selling price.

Exemption from income tax

Natural persons are exempt from income tax in the cases specified in § 4 of the Income Tax Act.

1) You have owned the property for 5 or 10 years, respectively

The exemption period depends on when you acquired the property.

If you acquired the property after January 1, 2021, you are exempt from income tax upon sale after 10 years from its acquisition, in accordance with the amendment to Act 586/1992 Coll. on income tax, which became effective on January 1, 2021.

If you sell real estate that you acquired before January 1, 2021, you are exempt from income tax for 5 years after its acquisition, according to Act No. 386/2020 Coll. Art. 4 paragraph 1.

According to §4 of the Income Tax Act, natural persons are exempt from real estate sales tax in the following cases.

2) You have owned and resided in the property for at least 2 years

If you have lived in the apartment or family house for at least 2 years immediately before the sale, you are exempt from the tax.

3) You will use the money from the sale to purchase your own housing needs

If you sell an apartment or a family house and use the funds to purchase housing needs (housing needs are defined in § 4b of the Income Tax Act) by the end of the tax period following the tax period in which you received the money, or if you use the amount corresponding to the funds obtained to purchase your own housing needs before by obtaining them, but first in the tax period immediately preceding the tax period in which the taxpayer obtained these funds. See §4 paragraph 1 a) of the Income Tax Act.

Example:

In January 2022, you received an amount of 3 million from the sale of the apartment. This amount will be exempt from income tax if, in the period from 1.1. 2021 to 31/12/2023 you invest the amount of 3 million to solve your housing needs.

You must report the tax exemption to the Tax Office

If you want to be exempt from income tax for the reasons mentioned in paragraph 3), you must, from 2021, submit a notice of receipt of proceeds from the sale to your tax authority. If you do not report this fact, the income tax exemption cannot apply. Details can be found in the article Tightening the conditions for exemption from income tax.

Exemption from income tax on the sale of a cooperative apartment

As a natural person, you are exempt from income tax on the sale of a cooperative apartment if you sell the apartment after 5 years from the acquisition, according to § 4 paragraph 1), letter s) of the Income Tax Act.

How to pay income tax on the sale of real estate

You will state income tax from the sale of real estate in your income tax return, which you must submit to the relevant tax authority in your place by March 31 for the past calendar year. You must also pay income tax by this date.

Thinking of selling and don’t know if you qualify for the exemption? Contact us, we will advise you.

I want to know the market price of my property

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How a property is sold

AdminRadim — Sat, 26 Mar 2022 10:54:00 +0000

Before the sales process begins

First, your real estate agent will visit you and your property for an obligation-free chat about your options. After inspecting the property, they will present you with:

The property’s suggested sales price
A draft property sales plan. This will explain what we will do to sell the property.
It lay out the conditions necessary for the sale and inform you about any tax obligations.
Your estate agent will also clarify with you all your thoughts and plans for the sale, including any conditions you may have. For example, eviction dates, early repayment of a mortgage or its transfer to the buyer, specific deadlines, etc.
Your estate agent will also examine further restrictions on property rights and, where appropriate, ways to terminate them, etc.

Sales progress

If you agree with your real estate agent that they will represent you in the sale of your property, they will present you with a contract of cooperation.

This contract (also called a brokerage agreement) will set out all the necessary conditions for the transaction, such as the property’s price, the sales plan, commissions, and all obligations of the parties involved.
Your real estate agent will provide you with the property’s energy certificate if it is required for the sale.
Your real estate agent will provide professionally shot photos of your property and a floor plan. They may also create a promotional video, virtual viewing presentation, or homestaging. To learn more about this, read; How homestaging will help you sell a property or What virtual viewing looks like.
Your real estate agent will ensure that the sales plan is fulfilled to the highest standard. More suggested reading is: What should a quality sales plan include.
Your real estate agent will arrange all negotiations with prospective buyers and conduct all requested property viewings. Viewings are always in the presence of your real estate agent.
In the event that someone expresses an interest in buying your property, they will, in cooperation with our lawyer, prepare a reservation contract, which is tripartite, that is it will be signed by the seller, the buyer, and your real estate agent. The reservation contract sets out the conditions of the property transaction, such as methods of payment, the purchase price, methods of financing, the process of releasing restrictions on property rights (if any), other clauses requested, for example, by a mortgage provider. The contract will also stipulate the date on which the property will be handed over and other individual arrangements between the contracting parties.
After concluding the reservation contract, your real estate agent will hand over all necessary documents to the lawyer, who will prepare a draft purchase contract (or future purchase contract if necessary). The lawyer will also make proposals for depositing the purchase contract in the state property register (katastra), and arrange any other contracts and documents as necessary.
Your real estate agent, in cooperation with the lawyer, will then coordinate any requested amendments to those contracts, conduct all negotiations between you and the buyer, and arrange for the payment of the purchase price. Some of our real estate agents entrust negotiations to a lawyer.
When handing over the property, your real estate agent will prepare a handover protocol and, upon request, will ensure the transfer of all utility bills (electricity, gas, telephone, water) to the buyer.

The transaction ends when the seller receives the sale price, the buyer takes legal possession of the property, and the utility accounts are transferred.

The actual procedure of the entire transaction may vary depending on clients’ individual requirements and the property’s specific circumstances.

Kompletní průvodce prodejem nemovitosti

Pokud chcete o prodeji vědět více, podívejte se na náš kompletní průvodce, jak prodat nemovitost. Najdete v něm postup krok za krokem od přípravy prodeje po daňové povinnosti.

Do you want to know what we can do for you? Contact us.

I want to know what you can do to sell my property

What do clients say about our real estate agents?

We asked our clients if they were willing, on camera, to comment on the work of our brokers. Here are their genuine statements. For more references on brokers, see References.

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How inheritance proceedings take place and the subsequent sale of a property acquired through inheritance

AdminRadim — Thu, 11 Aug 2022 07:25:00 +0000

Death is usually associated with grief. Especially when it comes to your parents, grandparents or other close relatives.

Emotions are all the more intense if you inherit the property in which you grew up. It naturally is linked to so many memories of your parents and your childhood.

Inheriting this property may actually be one of the most difficult times in your life. You are faced with the difficult task of participating in inheritance proceedings, agreeing with other heirs, and eventually selling the property.

Inheritance proceedings can be all the more complicated if they are accompanied by disputes over inheritance and family wrongs.

Let me get rid of the emotional side of inheritance and let’s look at how inheritance proceedings and the possible subsequent sale of real estate are purely legal.

In inheritance proceedings, the deceased is referred to as the testator.

What is an inheritance contract?

It is a special type of contract in which the testator and the heir agree on what the heir will inherit from the testator.

Inheritance may also come in the form of a will, which is a unilateral declaration by the testator of whom he has chosen as heir.

If the testator has written neither a contract of inheritance nor a will, the person designated by law becomes the heir. Typically, the closest relatives (husband, children, parents) take precedence. If the testator does not have any such relative, a “co-habitant” may have claim to inherit a property. A “co-habitant” is someone who has lived in the testator’s property for at least 1 year, looking after the property or treating it as their own during that time. They might also need to be dependent on living in that property (that is, they have no where else to live), for their claim to be upheld. Other more distant relatives may also inherit.

What happens during inheritance proceedings

Inheritance proceedings are initiated upon the death of the testator. A notary, who is called a court commissioner in this situation, entrusts a court to conduct inheritance proceedings.

Although the right of inheritance arises from the death of the testator, it is as yet unclear which specific heir will inherit which specific thing – this will be decided later in the inheritance proceedings. This is because, at the time of the testator’s death, it is not yet clear what property the testator has left.

As part of inheritance proceedings, it is necessary to find out whether a contract of inheritance has been concluded or a will is drawn up, etc. In inheritance proceedings, heirs can also agree on who will acquire what part of the property – cases where the testator had debts.

As part of inheritance proceedings, property (real estate) belonging to the inheritance is valued. The notary will ask you to submit an estimated value of the property for inheritance proceedings. In this case, you can contact our real estate agency.

You can get an estimate from us for free if you later sell the property with us.

Having considered everything necessary, the notary issues a decision. An appeal may be lodged against this decision. If no party exercises the right to appeal within the prescribed period, the decision becomes final and the heirs become owners of the inheritance as specified in the decision.

The right to appeal against the decision may be waived by the participants in the inheritance proceedings directly at the hearing. If there are no irregularities regarding the settlement of the inheritance, this is the most likely event. If all parties to the proceedings do so, the period for appeal closes immediately, and the inheritance decision takes effect from that moment. In this case it is not necessary to wait for the appeal period (typically 15 days) to expire.

It is important to realize that only once the notary’s decision has been declared final and the inheritance proceedings have terminated, that the heirs can then act as owners of the inherited property towards third parties.

If a property is acquired by inheritance, the notary will also ensure that the heir is registered as the owner in the state land registry (katastra). In this way, it is important to note that the heirs become the owners of the property when the inheritance decision is final, and not when the state land registry has changed.

The authorized heir can thus validly conclude a purchase contract for the transfer of real estate before they have been registered as owners in the state land registry. From a practical point of view, however, it is advisable to wait until the heir is listed in the land registry as the owner, before submitting a deposit for buying that property.

How to sell a property following inheritance

If an heir plans to sell an inherited property, a few more steps need to be taken.

Once a prospective buyer has been found, it is necessary to write a purchase contract. The seller who will inherit the relevant property according to the decision on inheritance will be listed on the purchase contract as the seller.

As mentioned earlier, the purchase contract can be signed only at the moment the inheritance decision becomes final. If the parties want to commit to signing the purchase agreement in advance, it is recommended to first sign a future purchase agreement contract, which stipulates the obligation that the property will be transferred to the applicant when the presumed heir becomes the rightful owner of the property.

In inheritance, it is very common for several heirs to co-own a property. For example, each of the three children will acquire 1/3 of a property from the inheritance. In such a case, the purchase contract must be signed by all co-owners (if the property is to be sold as a whole), and it is therefore necessary for the heirs (co-owners) to agree on all practical issues (purchase price, date of handing over the property to the buyer, etc.).

On the other hand, property acquired from inheritance is not part of the ‘joint property of the spouses’, so the heir does not need the consent of the spouse to sell the property.

If an agreement on co-ownership (for example, among the brothers) is not possible, the cancellation and settlement of the co-ownership can be demanded in court through legal means.

It is recommended to write a purchase contract for real estate with the help of an expert, such as a lawyer or notary, who specialize in this field. Alternatively, use a real estate agency to provide a comprehensive range of services.

Similarly, it is recommended to contact a lawyer or notary to request the safekeeping of the funds used to purchase a property. Legal custody protects both the seller and the buyer by placing the purchase funds in a separate holding account immediately after signing the contract. The funds are kept their until ownership is changed in the land registry to the buyer. The funds are only released once the buyer becomes the official owner as listed in the land registry.

After the seller and the buyer agree on the content of the purchase contract, such as who will be custodian and other related issues, it is then possible to proceed to the signing.

The signatures on the purchase contract of all contracted parties must be officially verified for the land registry. After signing the purchase contract and paying the purchase price to the holding account for safekeeping, the purchase contract is submitted to the office of the state land registry.

About a month later, the state land registry will transfer ownership to the buyer, meaning that the parties can physically hand over the property and at this moment transfer the funds from custody in the holding account to the seller (unless the parties agree otherwise).

What are the tax obligations from inheriting real estate

Finally, some tax aspects need to be highlighted in connection with the sale of an inherited property.

In general, income from inheritance is exempt from income tax (following the abolision of the inheritance).

If the value of the inherited property exceeds 5 million Czech krowns, it is necessary to notify the relevant tax office. As part of inheritance proceedings, property (real estate) that is part of the inheritance must be valued.

If the property is subsequently sold at a price exceeding the valuation in question, the difference is subject to income tax (15% for natural persons), unless one of the statutory exemptions from income tax applies when the property is sold.

Typically, tax must be paid on any property that is sold within 5 years of its aquisition. However, in the case of inheritance, an exemption is possible, as the period of when the testator owned the property is also included as part of this 5 years. However, this is usually only the case if the property is inherited by a direct relative, such as a husband or wife.

Detailed information on taxes on the sale of inheritance can be found in the article Income tax on the sale of real estate from inheritance.

In general, it is recommended to always discuss tax matters with an expert when transferring real estate from inheritance.

Mgr. Jan Zajíček, lawyer cooperating with RE/MAX Alfa

Mgr. Jan Zajíček

We can take care of all matters related to the sale of a property. Start by obtaining an estimate of any property included in an inheritance procedure, which a notary will require from you. You can have it prepared for free if you later sell the property through our real estate agency.

We will prepare an evaluation for inheritance proceedings

What people are saying about our service

We asked our clients if they were willing to comment on the work of our brokers in front of the camera. Here are their authentic statements. For more references from clients, see references.

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