A purchase agreement (kupní smlouva) for a flat bought with a mortgage differs from a cash purchase in one respect: the price is paid in two parts, your own funds straight away and the bank's money once its drawdown conditions are met. The agreement must say that part of the price comes from a loan, by when, through which escrow, and what happens if the bank does not pay.
Without that you risk a contractual penalty, or losing both the flat and your deposit. Escrow (úschova), held by an attorney, a notary or a bank, keeps both your money and the bank's until the land registry registers the new owner. It usually costs CZK 3–10k, which makes it the cheapest safeguard in the whole purchase. Below are the seven clauses the agreement must contain, the types of escrow compared, the right order of steps with the land registry and the bank, and the warning signs.
Seven clauses an agreement with a mortgage needs
- How the price is paid: how much comes from your own funds and how much from a mortgage at a named bank, both through escrow.
- Deadline for the bank's money: realistically at least 6–8 weeks from signing, because the bank draws down only once the application for registration and the pending-change flag (plomba) have been documented.
- Consent to the lien: if the bank wants its lien registered at the same time as the transfer, or even before it, the seller must consent to this in the agreement or sign the pledge agreement as the current owner.
- Withdrawal if the loan is not drawn: if the bank does not pay within the agreed period for reasons the buyer did not cause, either party may withdraw without penalty and the escrow returns the money.
- What happens if registration is refused: an obligation to fix the defects in the application and file a new one, or else cancellation of the agreement and return of the money from escrow.
- Seller's declarations: no debts to the SVJ (owners' association), no leases, enforcement proceedings or disputes, and no defects beyond those stated in the agreement.
- Handover and vacating: the date, a contractual penalty for delay and the meter readings.
Before you sign, send the draft to your bank. It checks whether the text matches its drawdown conditions; if not, the agreement has to be rewritten and signed again.
Attorney, notary or bank escrow: which should you choose?
| Attorney | Notary | Bank | |
|---|---|---|---|
| Legal framework | Act on the Legal Profession, § 52e–52n; supervised by the ČAK (Czech Bar Association) | Notarial Code; supervised by the Chamber of Notaries | contract with the bank |
| Who usually drafts the agreement | the same attorney | the notary, in the form of a notarial deed | the parties or their attorney |
| Price (approx.) | usually CZK 3–10k for the escrow, depending on the price and complexity; bank escrow tends to be cheaper with a mortgage from the same bank | ||
| Where the money is held | the attorney's special account | the notary's escrow account | a blocked bank account |
| Advantage | flexible, quick communication | most formal, a public instrument | the bank itself controls the drawdown |
Functionally all three are equivalent: the money is released only once a title sheet (list vlastnictví) extract showing the buyer as owner has been produced. What matters is the escrow agreement itself, meaning who pays out or returns the money, on what conditions and by when. Escrow held by an estate agency without an attorney, notary or bank behind it is not an equivalent.
Attorney escrow has its own rules in § 52e–52n of the Act on the Legal Profession (No. 85/1996 Coll.), which have replaced the repealed § 56a since 1 January 2026.
The order of steps with the land registry and the bank
- You sign the purchase agreement and the escrow agreement, and pay in your own funds.
- You sign the pledge agreement with your bank.
- The applications to register your ownership and the bank's lien go to the land registry (CZK 2,000 each), and the registry marks the pending-change flag.
- The bank receives the extract showing the flag and sends the loan into escrow.
- Ownership is registered no earlier than 20 days after the seller is notified, followed by the bank's lien.
- The escrow agent checks the entry and pays out the price: first any loan of the seller's, then the rest to the seller.
Both registry proceedings run in parallel. The lien is registered against your ownership, so most often it is you, as the future owner, who signs the pledge agreement. Some banks want the lien created before the transfer; then the seller signs it, and the purchase agreement must include this consent.
When the seller still has a mortgage
- At signing, the buyer pays CZK 1,100,000 into escrow.
- Once the applications for registration are filed, the buyer's bank sends CZK 4,400,000 into escrow, so the full price is now held there.
- After ownership is registered, the escrow agent sends CZK 1,800,000 to the seller's bank, which undertakes to issue consent to deletion of its lien.
- The remaining CZK 3,700,000 goes to the seller.
Until the seller's lien is deleted, your bank would be only second in line. That is why banks' drawdown conditions require the escrow agreement to repay the seller's loan first and to document the deletion.
Who drafts the purchase agreement and who pays for escrow?
The purchase agreement is usually prepared by the seller's or the estate agency's attorney, often the same person who handles the escrow. Who pays for drafting and escrow is a matter of agreement. Splitting it 50/50 is common, and in a sale through an estate agency the drafting is often included in the commission. The property acquisition tax was abolished in 2020, so the agreement does not deal with it.
If the other side drafts the agreement, it pays to have your own attorney check it, above all the deadlines, the penalties and the conditions for paying out from escrow rather than the wording. The documents the bank needs next are covered in our article Signing the mortgage agreement.
Warning signs
- A request to pay part of the price (“for the furnishings”, say) directly to the seller, outside escrow.
- No right to withdraw if the bank does not pay.
- A deadline for payment from the loan shorter than four weeks.
- Payout from escrow as soon as the application for registration is filed, rather than after registration.
- A lien, enforcement order, pre-emption right (předkupní právo) or easement (věcné břemeno) on the title sheet that the agreement says nothing about.
- A seller who cannot produce the SVJ's confirmation that there are no arrears.
- An escrow agent who is not an attorney, notary or bank.
Buying from a developer works differently
With a new build you usually sign not a purchase agreement but an agreement on a future purchase agreement (smlouva o smlouvě budoucí kupní). Payments go on a schedule directly to the developer or its project account, the purchase agreement itself is signed only after occupancy approval (kolaudace), and escrow is rarely used. The questions you put to the contract are therefore different: who bears the risk of delay, how your advance payments are protected and when the bank may draw down. Details are in our article Mortgage for a new build from a developer.
Sources
- Act No. 89/2012 Coll., the Civil Code, § 2079 et seq. (purchase agreement), § 2128 et seq. (purchase of immovable property), § 1309 et seq. (lien)
- Act No. 85/1996 Coll., on the legal profession, § 52e–52n (holding money in escrow, as in force from 1 January 2026)
- Act No. 256/2013 Coll., the Cadastral Act (registration, pending-change flag, protective period)
- Act No. 257/2016 Coll., on consumer credit, as amended with effect from 1 Sept 2024 (early repayment on sale)