Apr 02, 2024

How to Sell a Property with a Mortgage in the Czech Republic

Wondering how to sell a property burdened with a mortgage in the Czech Republic? There’s no need to worry – it’s a common scenario in the real estate market.

Selling a property with an outstanding mortgage does come with its specifics, but that doesn’t mean it’s impossible. What are your options when selling a property with a mortgage, and what should you prepare for?

There are several ways to go about selling such a property. However, the first step is always to obtain a mortgage balance statement from your bank, detailing the remaining mortgage amount by the time of the property transfer. You might visit a bank branch, but nowadays, most banks in the Czech Republic offer remote services – a call or filling out a form on the bank’s website might suffice.

What’s crucial in this step is how high the fees for early repayment will be. If the transfer coincides with the end of your fixed interest period, the fees will be minimal. In most cases, though, the sale won’t be timed perfectly with the interest period’s end, and it’s often unnecessary.

If your mortgage contract was signed after December 1, 2016, or you renewed the fixed interest after this date, the fees for early repayment will be minimal. This is due to the Czech Consumer Credit Act, which imposes modest charges. In cases of older mortgage contracts, early repayment fees might be substantially higher and could delay the sale.

In some cases, besides the mortgage balance statement, you might also need the bank’s consent for the sale and the buyer’s mortgage. You’ll notice this if there is a “restriction on alienation” noted on the ownership document.

This means you need the bank’s permission for the sale. Alternatively, there might be a “restriction on encumbrance,” indicating you need the bank’s approval for the buyer’s mortgage if they are financing the purchase with one. Both consents are formalities, and banks usually have no issue granting them.

So, with the mortgage balance statement and consents in hand, how does selling a property with a mortgage work in the Czech Republic?

Immediate payment in full

The smoothest way to sell a property with a mortgage is if the buyer has the entire purchase price available “in cash” to pay for the property. In this case, a portion of the purchase price will be used to repay the mortgage, and the remainder will be credited to your account.

The bank will provide you with a detailed mortgage balance statement (indicating the remaining amount to be repaid) to the exact transfer date. You’ll sign the sales agreement with the buyer, and they will transfer the entire purchase price to an escrow account held by a lawyer, notary, or other entity as per your agreement. After the transfer is registered in the land registry, the amount needed to settle the mortgage will be released from escrow directly to your bank, and the remaining amount will go to your account.

However, in today’s market, it’s relatively uncommon for a buyer to have the entire purchase amount readily available. Typically, buyers finance their purchase with a mortgage.

Mortgage financing

Many property buyers in the Czech Republic must arrange a mortgage loan to acquire a property. The same applies to properties with an existing mortgage. Be prepared for a slightly extended process due to the administrative tasks involved in arranging the buyer’s mortgage (such as property valuation, verifying the buyer’s income, and the bank’s approval process).

Once the buyer’s loan is approved, you’ll request a detailed mortgage balance statement from your bank to the exact transfer date. You’ll sign all transfer-related agreements with the buyer, following which the buyer will send a portion of the purchase price to an escrow account to be funded from their own resources. Then, the buyer will register a lien agreement in the land registry, and the mortgage bank will disburse the loan amount to the buyer’s account, a portion to your bank as per the balance statement, and the rest to escrow. After the property transfer is registered in the land registry, the escrow amount will be released to your account.

Hooray, selling time!

In other aspects, selling a property with a mortgage in the Czech Republic doesn’t differ much from a “regular” sale. You’ll still need to assess the property value, determine the market price, create an ad, promote the property, enhance its appeal for potential buyers, and organize viewings and price negotiations.

As with any property sale in the Czech Republic, you have the option to carry out the process independently or through a real estate agency or agent. While some might be concerned about professional fees affecting their profit, the opposite is usually true. An experienced real estate agent familiar with the Czech market can accurately assess the property value, assist with viewings, actively seek potential buyers … And, most importantly, they’ll guide you through the administrative maze, which can be complex when selling a property with a mortgage. Professionals ensure you won’t encounter any unpleasant surprises.



Are you selling a property and want to take the hassle out of the transaction? Put the sale in the hands of our experienced real estate brokers. At Kotula Real Estate Agency, we will guide you through the entire process and make sure you get the maximum amount for your property. Contact us!

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