Cooperative apartments in Czech republic

Co-operative real estate or Družstevní vastnictvi attracts with its lower prices comparing to similar properties in private ownership. There are many myths about co-operative apartments, and why it is not worth buying. In this video I will explain what are co-operative apartments, I will name the pros and cons of its acquisition. You can read the text under the video.

In Czech Republic there are three types of ownership of real estate: it is state, private and cooperative. Today I’ll speak about the private and cooperative ones.

How to find out which type of the ownership has the chosen apartment?

You would need to check the land registry (the cadastr) if the house has been divided into apartments. If it has been, the apartments in such a house are of the private ownership, or of cooperative which can be changed to the private within the next one year. If the house has not been divided into apartments, it is a cooperative ownership or it belongs to just one owner.

What is the difference between cooperative and private ownership?

The most important difference when buying a private or cooperative ownership would be what you are buying. In the first case you are buying an apartment by transferring the title to your name in the land registry. In the second case you are buying the rights to be a member of cooperative and hence to rent out an apartment in this cooperative.

What is anuita?

In all these about the cooperative apartments you will see such a word as Anuita or annuity in English. It can be completely paid out or it may state the amount of anuita. So what does that mean? The cooperative took a loan to construct or reconstruct this object. All the members of this cooperative are paying back this loan back. Each apartment has a certain part of this loan. So anuita is the remaining amount of this loan for each particular apartment. It is paid in monthly installments in form of rent.

What are the advantages of purchasing a cooperative apartment?

1. First of all it is the price. Normally the price of a cooperative apartment is cheaper of a similar apartment in private ownership.

2. Then it’s fast transfer. No need to wait for 30 days for the title change in land registry because the transfer is happening by submitting the documents to the cooperative within 1 day.

3. If for some reason you’re not eligible to take a mortgage for the apartment you want, you can buy a cooperative apartment by only paying a down payment and the rest of the amount you will be paying in the form of monthly rent. Unlikely banks, the cooperatives do not check your payment history and your ability to pay.

4. When buying a cooperative apartment you do not need to pay 4% property tax (information for May 2019) which you have to pay when buying a real estate, because you are not actually buying a real estate, but you are buying a membership in a cooperative.

What are the minuses of purchasing a cooperative apartment?

1. Among the minuses it is important to mention that the banks do not give mortgages for purchase of cooperative apartments. Or better to say that they are giving only in two cases. First is if you have another real estate as a guarantee, because basically you are not buying a property that they could take as a guarantee, in this case you are buying a membership. Second option would be a so-called pre-mortgage loan which banks give if the cooperative could give you a confirmation that the apartment will be transferred to your name within one year from now.

2. If you’re planning to buy a cooperative apartment it is very important for you to read the cooperative regulations, their Statut. Because this is the document that will regulate and may limit your ownership. For example, if you would like to sub-rent it (because you are the one renting it), you will learn there whether it’s free of charge or whether it’s even permitted. Some cooperatives even have limitations how many apartments they can sell to foreigners or companies.

As you can see buying a cooperative apartment has it’s own specifics. A competent realtor will help you to understand the differences between cooperative and private apartments and choose the best option for you.

Alexandra Kurbanova – real estate agent in Prague and suburbs.

Connect with me (Whatsapp, Viber): +420 606 171 876

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