Cooperative flat (družstevní byt)
A flat owned by a housing cooperative, in which a member lives under a tenancy tied to their cooperative share. A buyer therefore does not buy the flat but takes over the cooperative share under the Business Corporations Act. A lien on the flat being bought cannot be entered in the land registry, so a standard mortgage secured on that flat is not possible.
Example
A cooperative share costs CZK 3,000,000. The bank lends CZK 2,000,000 over 25 years secured on the parents' flat, and at 5.00 % the payment is CZK 11,692. Buyers with no other property to pledge turn to a building savings loan or a non-purpose loan, which tend to be dearer. Assume 6.50 % over 20 years: the same CZK 2,000,000 would then cost CZK 14,911 a month.
In practice
Some banks accept a pledge of the cooperative share, which § 32 of the Business Corporations Act allows unless the cooperative's articles rule it out. More often, though, they want another property as collateral. Before buying, read the articles and find out whether the cooperative is repaying a loan of its own and whether it plans to transfer the flats into personal ownership. After the transfer the flat can be pledged and the loan refinanced with an ordinary mortgage.
How it differs
A flat in personal ownership is a separate unit entered in the land registry with its own title sheet, and the building is run by an owners' association (SVJ). A cooperative member owns only a share in the cooperative and uses the flat as a tenant. That is why no lien or transfer is recorded in the land registry for a cooperative flat.
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