Drawdown conditions (podmínky čerpání)
The steps and documents the client must complete before the bank pays out money under a signed loan agreement. Typically these are a pledge agreement and a filed application to enter the lien in the land registry, property insurance assigned to the bank, proof of own funds and a signed purchase contract or escrow agreement. The list is in the contract and varies from bank to bank.
Example
A client signs a CZK 4,000,000 mortgage for a flat costing CZK 5,000,000. The bank sends the money to the lawyer's escrow only after he proves he has transferred CZK 1,000,000 of own funds and supplies the insurance policy with assignment and the application for entry of the lien, marked with a “seal” (plomba) in the land registry (administrative fee CZK 2,000). If the insurance is missing, drawdown stops and the seller waits for the money.
In practice
Read the drawdown conditions before you sign the loan agreement, and keep an eye on the deadline for meeting them: once it passes, the bank may refuse drawdown or charge a fee. The biggest delays come from the insurance assignment and from getting signatures certified at a notary or Czech POINT (state document service point). Never promise the seller a payment date in the purchase contract without checking it against the bank's drawdown conditions.
How it differs
Approval conditions belong to an earlier stage: approval assesses the client's creditworthiness and the LTV, while drawdown conditions are met only after the contract is signed. Staged drawdown merely adds conditions for each further tranche; drawdown conditions apply to a one-off payout too.
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