Lifelong right of residence (právo dožití, výměnek)
A colloquial name for a personal servitude guaranteeing a specific person lifelong housing in, or use of, a property (residential servitude or right of use, § 1283 and § 1297 of the Civil Code, občanský zákoník). It is typically retained by parents who give or sell a house to their children. Výměnek (a retirement settlement, § 2707 et seq.) adds provision for needs such as housing, food and care. It is entered in the land registry and ends on the beneficiary's death.
Example
A son buys a house with a market value of CZK 5,000,000 from his mother, who keeps lifelong use of it. A bank that would lend CZK 4,000,000 at 5.00 % without the encumbrance will either refuse the loan or have the valuer cut the value significantly. At half the collateral value, an 80 % LTV would allow only CZK 2,000,000.
In practice
Most banks will not take a property burdened with a lifelong right of residence as collateral. The ways round it are additional security with another property (dozajištění), the beneficiary agreeing to waive the right, or creating the right only after the lien is registered. The order of entries in the land registry decides. When giving a house away, hold off on the right of residence until you know whether a mortgage on it will be needed.
How it differs
Banks live with a standard servitude for a path or utilities; another person's lifelong residence is a different story. A lease ends by notice and is not registered as a right in rem, while the right of residence binds every subsequent owner. And unlike an heir in an inheritance, the beneficiary does not own the property.
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