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We have prepared a list of frequently asked questions and their answers.

IS IT POSSIBLE TO RESERVE A SELECTED PROPERTY FREE OF CHARGE AND WITH NO OBLIGATION?

Yes. Anyone who is interested in a specific property can verbally reserve it for a period of 3 working days without having to pay any deposit or contractual amount to secure the property. Reservation can only be made subject to agreement and after having undergone an informative meeting with one of our sale agents. Once this 3-day period has expired, a written contract is concluded between the parties.
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HOW CAN I ARRANGE A MEETING WITH A SALES AGENT?

You can arrange a no-obligation individual viewing of unsold flats, family houses and plots of land by telephone any working day from 9 a.m. until 7 p.m. in any location. Telephone numbers for the sales department are 800 500 506 and 724 206 206. If the client is interested, transportation can be arranged in a company car from our company’s registered office. The client can visit several locations during the course of one viewing.
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WHAT IS THE DIFFERENCE BETWEEN CO-OPERATIVE AND PERSONAL OWNERSHIP?

In the case of personal ownership, the buyer is the owner of the purchased property. In the case of co-operative ownership, the housing association is the owner of the property and the buyer becomes a member of this. The buyer is thus the owner of a co-operative share in the housing association and the right to use a specific flat is typically associated with this share. Together with fees for electricity, water, heating and similar expenses, the member of the housing association then also gradually repays the housing association the cost of acquisition of the flat and once this has been paid off, the flat is usually transferred into the personal ownership of the member (if the member of the housing association wants this). The main advantage of co-operative housing is its greater affordability, because in our projects for example, you only have to pay 25% of the cost of acquisition of the flat when entering the housing association and the rest is repaid in rent for the flat. In terms of this, the co-operative does not check the applicant’s credit standing like a bank when evaluating a loan application. Another advantage is that a member of the housing association can easily sell their membership in the association to a third party, whereas in this case, they do not pay tax on acquisition of real estate and the contract is not filed in the Land Registry. Transfer of membership in a housing association is not even subject to the consent of the association board.
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WHAT ARE THE TYPES OF CONTRACTS, WHAT DO THEY LOOK LIKE AND WHEN ARE THEY CONCLUDED?

The type of contract is given by the stage of construction the selected product is to be found in. Either a contract is concluded which resolves the terms of construction of the apartment block and flat or family house and transfer of the property into the ownership of the client, or if the client is purchasing a flat or house which is already finished, a Purchase contract is concluded directly. Specimen contracts are available on our website in the “Financing” section.
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DOES FINEP ARRANGE MORTGAGE LOANS? AND IN COLLABORATION WITH WHICH COMPANIES? WHICH FINANCING OPTIONS DOES FINEP OFFER?

FINEP, or more specifically its subsidiary FINEP Finanční služby provides comprehensive services in the field of financial consultancy. Clients who purchase property from FINEP gain a wide range of advantages in terms of financing. For example, they don’t pay any fee for processing of the mortgage loan, they don’t pay any fee for elaboration of the expert appraisal and can also gain discounts with selected partners meaning that the client gains a lower interest rate.
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HOW DOES FINEP FINANCE CONSTRUCTION OF ITS PROPERTIES?

FINEP finances construction of its projects via loans from renowned banks. This method of financing provides the buyer the certainty that sufficient funds are secured for construction of the project from the very start. As a result of this, actual construction is not financed directly using money paid during its course by the buyers, but from funds provided by the bank. All sums of money paid during construction by the buyers are on the contrary remitted to a special account which is administered until successful completion of construction by the lending bank. The company performing construction cannot dispose of these funds during construction without the consent of the bank so there is no danger that they can be used for any other purposes not relating to the given project. This method of financing is the safest commonly used method on our market. Some developers on the Czech market finance their projects without using banks, although in these cases construction is almost always financed using money paid by the buyers, this meaning that decision about use of such funds is exclusively made by the developers. In addition to this, if a developer fails to sell enough property during construction, a problem may arise in gaining funds for actual construction.
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WHAT SORT OF WARRANTY IS PROVIDED FOR NEW FLATS AND FAMILY HOUSES? AND WHAT SHOULD YOU BE CAREFUL ABOUT AS REGARDS THE WARRANTY?

The usual warranty for new flats on the market is 24 month. FINEP provides an above-standard warranty in this respect lasting 36 months. In relation to the warranty, you should be careful to note the moment which is decisive for the start of the warranty period. It is usual practice on the market that the warranty period starts from the moment of submission of a request for final building approval, or from the moment of final building approval itself. When the first buyers move in, approximately 3 months will thus de facto already have passed from the start of the warranty period and this means that the warranty period is in reality reduced by this period. FINEP provides a warranty which in principle starts for flats at the moment of acceptance of the unit, so the above-mentioned three-year warranty period is not reduced as compared to the regular practice of other developers. The warranty on the communal parts of the building then runs from the moment the building is set into operation, i.e. from the date on which the first buyer starts to actually use the building.
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CAN A FLAT BE PURCHASED OR LOAN BE TAKEN OUT BY ONLY ONE SPOUSE?

Yes, subject to certain conditions it can. Property relations between married couples are in particular resolved by the provisions of Section 708 et seq. Civil Code (i.e. Act no. 89/2012 Coll.). According to this legislation, it for example applies that the joint assets of a married couple can be limited by means of a notarial record (for more detailed information see the provisions of Section 716 et seq. Civil Code). In the case of such a limitation, agreement can be made in the notarial record among other things on purchase of property by one of the spouses (people who are engaged can also regulate also regulate their relations in a similar manner before they get married). However, even without limitation of joint marital assets, in certain cases one of the spouses can purchase property into their individual ownership. This in particular concerns cases when property is purchased using funds acquired by one of the spouses before they were married, or funds acquired by one of the spouses during the marriage by means of a gift, inheritance or restitution.
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HOW IS PROPERTY AND A MORTGAGE LOAN RESOLVED IN THE EVENT OF DIVORCE?

Settlement of assets in terms of a divorce always depends to a significant extent on the attitude of the couple getting divorced. Settlement may be reached by agreement between the parties, but things also frequently end in a judicial dispute (for more detailed information see the provisions of Section 736 et seq. Civil Code). In general, it applies that joint property can only become the sole property of one of the couple after the divorce, on the understanding that the other party may receive financial compensation. Other options are however co-ownership of the property in question or its sale to a third party with subsequent division of the money from its sale. At the same time, it does apply that if a married couple fails to come to agreement on ownership of the property within three years of the divorce and if within this period, they also fail to bring action for settlement of their joint assets, they become co-owners of the property by law and the share held by each of them is ½ (for more detailed information see the provisions of Section 741 et seq. Civil Code). If the married couple took out a mortgage loan to buy the property, the liability resulting from this is a joint liability of both parties to the marriage and as such, a liability which must be settled after the divorce. If neither of the couple is able to assume liability for repayment of the loan, the only possible solution is usually joint sale of the property, on the understanding that the whole loan will be repaid from the earnings from the sale and the divorcing couple will share the remaining amount.
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CAN WE BUY A FLAT FOR A MINOR?

Yes, but the valid legislation must be respected. In accordance with our system of laws, legal capacity is acquired when a person reaches the age of 18. According to the provisions of Section 31 Civil Code, it is understood that before reaching the age of 18, a person may only perform acts which are appropriate to a level of mental and moral maturity corresponding to their age. For other acts, they must be in particular be represented by a legal guardian. Purchase of real estate is not one of those acts which a child is able to cope with independently. For this reason, when purchasing real estate for a minor, you must count on the fact that the child cannot conclude the respective contract himself or herself. In accordance with the provisions of Section 32 Civil Code, it also applies that a minor must by law be represented by a legal guardian. In accordance with the provisions of Section 437 para. 1 of the same law, it does however apply that the legal guardian cannot be a person whose interests are in conflict with the interests of the party being represented.
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WHICH TAXES AND FEES ARE ASSOCIATED WITH TRANSFER OF A FLAT AND HOW DOES THIS WORK WITHIN A FAMILY?

When transferring real estate, an administrative fee is paid to the cadastral office for proceedings on permission for registration in the amount of CZK 1,000.00. This fee is a flat rate and relates to all property transferred in one contract (i.e. it is unimportant whether you transfer 10 properties or only one by means of the contract). In terms of sale of properties in our development projects, we pay this fee in full. As regards tax, it is in particular tax on acquisition of real estate which comes into consideration. This amounts to 4% of the purchase value of the sold property. However, when new buildings built by our companies are first sold, no tax is paid on flats and family houses as they are exempt from this by law. Income tax also comes into consideration. Income tax is in general paid by the seller, with which conditions for exemption have not been met and which has created a profit through sale of the property (this need not at the same time concern a contractor). Exemption from tax then in particular relates to sale of flats or family houses in which the seller had their registered residence address for at least two years before the sale. Exemption from income tax can also be claimed for by a seller which used the property being sold as their residence address for a period of less than two years before the sale if it can be proven that they used the income from the sale for acquisition of their next housing. It also applies that if the seller owned the property for more than five years, their income achieved by sale is also exempt from income tax. The income tax rate is then dependent on whether the seller is an individual or corporate entity. If this concerns taxation of so-called gratuitous income (resulting for example from property acquired by being gifted), taxation of this from 2014 onwards falls into the regime of income tax (the former gift tax has been abolished). At the same time, it applies that acquisition by gifting is exempt from tax if the gratuitous income (e.g. through gifting) comes from an immediate relative, this meaning from a sibling, uncle, aunt, nephew or niece, husband or wife, daughter-in-law or son-in-law or father-in-law or mother-in-law, and/or from a person who has lived with the tax payer (i.e. the recipient, person receiving the gift) in a common household for at least a year and who cared for the household together with them or was dependent on such a person.
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WHAT IS THE PROCESS OF REGISTRATION IN THE LAND REGISTRY AND HOW LONG DOES IT TAKE?

Purchase of property on the basis of a contract is registered in the Land Registry. This concerns administrative proceedings commenced by means of proposal for registration. Proposal for permission for registration may be submitted by any of the parties to the contract. Since 1.1.2013, it has only been possible to submit proposal for registration on the approved form which can be downloaded from www.cuzk.cz. The parties to the contract which leads to transfer of the property are then parties to the proceedings on registration in the Land Registry. As regards the duration of the proceedings, the existing Cadastral Act has not in fact since 1.1.2014 determined any period for the length of proceedings on registration. In the Czech Republic, you can however mostly count on proceedings lasting up to about two months (sometimes longer in Prague). The buyer becomes the owner of the purchased property retroactively as at the date of submission of the proposal for registration.
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CAN I DEDUCT THE MORTGAGE LOAN FROM MY TAX BASE AND UP TO WHAT LEVEL?

You cannot deduct the mortgage loan – only the interest on the loan paid in the given taxation period is deducted. A condition for this is purchase of the property for the purpose of resolving so-called accommodation needs. However, the law also regards resolving accommodation of family members as accommodation needs, so if for example parents buy a flat for their child, even this alternative can be included in so-called accommodation needs and interest on the respective mortgage loan can be taken into consideration as a deduction from the tax base. The maximum level of interest for deduction from the tax base is fixed at CZK 300,000.00.
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WHO PAYS TAX ON ACQUISITION OF REAL ESTATE?

Effective as of 1.11.2016 (the date of submission of the proposal for registration of ownership is decisive), the tax payer of tax on acquisition of real estate pursuant to Act no. 254/2016 Coll. is the buyer. This amounts to 4% of the purchase value of the property sold. However, in the case of first sale of new buildings built by our companies, no tax is paid on flats and family house as sale of these is exempt from payment of tax by law.
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WHAT IS THE RATE FOR TAX ON ACQUISITION OF REAL ESTATE?

Tax on acquisition of real estate in general amounts to 4% of the tax base, but it does apply that the first transfer of ownership of a new building for a fee sold by a development company is exempt from this transfer tax.
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WHO PAYS TAX ON THE PROPERTY WHICH IS THE SUBJECT OF SALE?

A tax return must be filed and property tax paid by the party registered as at 1 January of the given year as the owner in the Land Registry.
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WHAT IS LIEN AND WHEN IS IT ESTABLISHED?

A lien is one of the forms of securing debts. Its essence consists in the fact that if the secured receivable is not paid, the creditor can have the pledged item sold at a public auction or in another manner and satisfy its receivable from the earnings from the auction. This is one of the most widely used forms of security for mortgage loans. Also typical for a lien is that it encumbers the item (most frequently the property) regardless of who owns it. In other words, it thus applies that if property is encumbered by a lien, this lien passes to each further owner of the property and if the secured debt is not paid, the creditor can propose sale of the property regardless whether it is owned by the debtor or a third party. A lien is most frequently established by means of a contract which is subsequently filed with the Land Registry.
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WHAT IS AN EASEMENT?

An easement (right of way) restricts the owner of property in favour or a third party by the owner being obliged to tolerate something, refrain from something or do something. Rights corresponding to easements are associated either with ownership of a specific property or belong to a specific person. Easements for example include the right to walk through property, drive through property, draw water, tolerate mains cables and operation of an electrical connection etc.
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WHAT IS A SO-CALLED “DECLARATION OF THE BUILDING OWNER”?

By means of a Declaration of the building owner (Section 1166 Civil Code), the owner of a building declares that they define individual residential or non-residential units in the building. Units then also include a share in the communal parts of the building and the plot of land. The Declaration of the owner is filed with the Land Registry.
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WHAT IS AN “ASSOCIATION OF FLAT OWNERS” AND HOW IS IT CREATED?

An Association of flat owners (hereinafter referred to only as “Association”) is a special type of legal entity which is established for the purpose of ensuring administration (see the provisions of Section 1194 et seq. New Civil Code). An Association must be established in buildings where there are at least five units, at least three of which are owned by different people. The Association is created by entry in the public register. There are several ways to establish an Association (in particular in terms of a Declaration of the owner, or subsequently by means of notarial record with the consent of all of the flat owners in the building). The peculiarity of this legal entity consists in the fact that its competence to perform legal acts is limited by law in essence to only the field of administration of the building (see the provisions of Section 1195 Civil Code). Membership in the Association is strictly bound to ownership of a flat (it is automatically created on acquisition of ownership and when ownership is lost, membership is cancelled).
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HOW IS MEMBERSHIP CREATED? IS IT VOLUNTARY OR OBLIGATORY?

Membership in the Association is strictly bound to ownership of a flat (it is automatically created on acquisition of ownership and when ownership is lost, membership is cancelled).
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WHAT IS THE STRUCTURE OF THE ASSOCIATION OF FLAT OWNERS?

The basic bodies of the Association are determined by law and are:
a) Meeting of flat owners
b) Statutory body – Chairman or Committee, the actual form depends on the articles of association of the Association. The Association may also have other bodies (e.g. supervisory bodies).

Continuity of building administration.

The advantage of this solution is that immediately after transfer of flats, a legal regime is ensured in the building similar to the relations for example in a co-op and it is assured for the new flat owners that continuation of building administration will be ensured in this manner, as will accounts for it, decision-making on communal issues and similar and for this reason it will not be necessary to establish a new Association or other form of legal entity which would administer flats transferred into ownership on behalf of all of the owners. By law, this should not concern a commercial entity.

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WILL HEAT METERS BE INSTALLED FOR INDIVIDUAL RESIDENTIAL UNITS?

Yes. We automatically install heat meters in all of our residential units.
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WHAT ARE STUDIO FLATS?

Accommodation units (apartments, studio flats) – are specific units which do not have the character of a standard flat, for example due to a lower level of daylight, higher noise levels or due to the functional determination of the plot of land according to the development plan. From a legal point of view, these residential units are non-residential units. Other than that, they meet all of the parameters required for housing, they include a bathroom and kitchen area just like flats. An important fact to consider when purchasing an accommodation unit by an entrepreneur – VAT payer, is the possibility of deducting VAT if the unit is used in terms of their commercial activity.
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IS IT POSSIBLE TO HAVE PERMANENT RESIDENCE IN A STUDIO FLAT?

Yes, it is. Permanent residency for citizens is regulated for in Act no. 133/2000 Coll. Registration of the population and personal ID numbers. In accordance with the provisions of Section 10 para. 1 of this Act, a citizen may have permanent residency in a building which is identified by means of a land registry number or registration number, or a house number and which pursuant to the special legislation is designated for the purpose of housing, accommodation or individual recreation. Special legislation means the Building Act. Designation of the building for the given purpose is given by the occupancy permit. It is evident from the text of Section 10 para. 1 of the Act on Registration of the population that if a unit has an occupancy permit as an accommodation unit, it is possible for a person to register their permanent residency there without any restrictions whatsoever. To simplify matters, standard flats and accommodation units are sometimes referred to in commercial materials uniformly as flats. In the contracts which are concluded (reservation contract, preliminary contract or purchase contract) the category is always specified precisely with the client.
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WHAT CAN I EXPECT FROM THE SERVICES OF A “HOUSING CONSULTANT” AND ARE THEY REALLY FREE OF CHARGE?

The services of a housing consultant really are free of charge for clients of FINEP and you can expect no only initial consultation about the floor plan of your flat, but also proposal for a suitable design, 3D visualisation, comprehensive consultation and meetings relating to the fixtures and fittings in your flat, a sales presentation, visits to partner stores and preparation of a pricing offer. Services also include arrangement of the full range of logistics relating to moving, actual implementation and technical supervision during implementation.
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