Reservation Agreement for an Apartment, House or Land in the Czech Republic: What to Check Before You Sign

Why the reservation agreement decides the entire purchase

At first glance, a reservation agreement has a simple purpose. The seller undertakes not to offer the property to anyone else for an agreed period, and the prospective buyer pays a reservation fee (sometimes called a reservation deposit or blocking deposit) as proof of serious interest. The buyer gains time to arrange a mortgage, and the seller gains certainty that the buyer will not change their mind without compensation.

At the same time, however, the reservation agreement bindingly sets the boundaries of the entire future transaction, and the purchase agreement then usually stays within the framework it defined.

In practice, I often see clients ask me to review a purchase agreement at a point when they signed the reservation agreement long ago. By then, the room for negotiation is narrower. The seller has no reason to change, in the buyer's favour, the terms that were already agreed in the reservation agreement. Whatever was not agreed in it often has to be negotiated with difficulty, and the buyer negotiates under pressure - the reservation fee has been paid, the deadline is running and the bank is waiting for the final version of the contracts.

Based on my experience, I therefore recommend taking the reservation agreement as seriously as the purchase agreement.

What legal consequences signing a reservation agreement has

The Czech Civil Code does not expressly regulate reservation agreements. It is a so-called innominate contract, the content of which the parties determine themselves. Very often, however, a reservation agreement also contains an agreement to conclude a future contract, i.e. an obligation to conclude a purchase agreement within a certain period. Under Section 1785 of the Civil Code (in Czech), at least one party undertakes, upon being called upon to do so within the agreed period, to conclude a future contract whose content has been agreed at least in general terms.

This obligation carries real weight. If the obligated party refuses to conclude the purchase agreement, the other party may, under Section 1787 of the Civil Code (in Czech), ask a court to determine the content of the purchase agreement. The court bases its decision on the purpose that the future contract was evidently meant to serve, on the parties' proposals and on the circumstances under which the reservation agreement was concluded.

For the buyer, the most tangible consequences in practice are financial. Reservation agreements usually provide that if the buyer does not conclude the purchase agreement within the deadline, the reservation fee is forfeited to the seller or the real estate agency, often in the form of a contractual penalty. It is typically a few percent of the purchase price, which for a property worth several million crowns means hundreds of thousands of crowns. In its recent decision file No. 23 Cdo 491/2025, the Czech Supreme Court concluded that a prospective buyer cannot be penalised for refusing to conclude a purchase agreement with specific terms that were not agreed in the reservation agreement (I wrote about it in more detail in the article Getting Your Reservation Fee Back: Supreme Court Sides with Buyers Again). Relying on a later court dispute, however, is always a worse option than a well-drafted agreement.

Also pay attention to who signs the agreement. Only the owner of the property, or someone representing the owner under a power of attorney, can commit to selling it. If the reservation agreement is concluded only between the buyer and a real estate agency, it does not bind the seller in any way, and as a prospective buyer you have no certainty that the purchase agreement will ever be concluded.

What a reservation agreement usually contains

A well-drafted reservation agreement contains at least the following:

• identification of the contracting parties, i.e. the owner (all co-owners), the prospective buyer and, where applicable, the real estate agency, including proof of its authority to act on behalf of the owner,
• precise identification of the property according to the Land Registry (Cadastre), including appurtenances, a cellar unit, a garage space or a parking space,
• the purchase price and the method of payment, ideally through an attorney, notary or bank escrow,
• the amount of the reservation fee, to whom it is paid, whether it is credited towards the purchase price and under what circumstances it is refunded,
• the reservation period for concluding the purchase agreement, long enough to arrange a mortgage,
• the owner's representations and obligations concerning the property,
• the basic terms of the future purchase agreement,
• the cases in which the prospective buyer does not have to conclude the purchase agreement, and sanctions for breach of obligations, ideally balanced for both parties.

If a real estate agency is involved in your transaction, expect that it has drafted the agreement and done so primarily with the seller's interests in mind. It is therefore up to you to add provisions that protect the buyer.

What to watch out for in a reservation agreement

When reviewing reservation agreements, I regularly focus on four areas. These are exactly where agreements prepared by real estate agencies are most often insufficient.

When the buyer does not have to conclude the purchase agreement

The agreement must expressly state under what circumstances the prospective buyer is not obliged to conclude the purchase agreement and is entitled to a refund of the reservation fee. These cases should include, in particular, situations where the owner breaches any of their obligations under the reservation agreement, where any of the owner's representations turns out to be untrue, or where the property is substantially damaged. If the purchase is financed by a mortgage, it is also advisable to think about the situation in which the bank does not approve the loan.

The owner's representations

The owner should represent in the agreement that the property is not encumbered by a mortgage (lien), an easement, a pre-emption right or any other third-party right and that it is not leased, or expressly state which encumbrances exist. For houses, it is also important to include a representation that the current state of the building corresponds to what was duly permitted or notified to the building authority, i.e. that it has no unauthorised alterations. The main point of the representations is that, if they prove untrue, they can give the buyer the right not to conclude the purchase agreement.

The owner's obligations until the purchase agreement is concluded

Several weeks usually pass between signing the reservation agreement and the purchase agreement. During this period, the owner should undertake in particular:

• not to transfer or encumber the property,
• to keep it in the condition in which it was presented,
• to provide full cooperation in arranging the mortgage loan, i.e. allow the bank's valuer to inspect the property and, at the latest together with the purchase agreement, conclude a pledge (mortgage) agreement with the bank,
• for an apartment, to submit a confirmation of no outstanding debts from the homeowners' association (SVJ) or the building manager no later than immediately before the purchase agreement is signed,
• until the purchase agreement is concluded and the application for registration in the Land Registry is filed, not to take any legal or factual action that would have a negative impact on the property.

Without an obligation to cooperate with the bank, the buyer can easily end up in a situation where the mortgage has been approved but the seller refuses to sign the pledge agreement, leaving the buyer with no way to pay.

The basic terms of the future purchase agreement

Since the text of the purchase agreement is often not attached to the reservation agreement, at least its key terms need to be set out. I recommend agreeing at a minimum that the purchase agreement will not limit the buyer's statutory rights, and that the purchase price will be released from escrow to the seller only after an extract from the Land Registry is presented confirming the buyer's ownership without any restrictions, notes, "plombs" (markers of pending proceedings) or warnings (except for a mortgage in favour of the buyer's bank). I describe how escrow works and when a transaction is truly safe in the article Attorney Escrow for Property Transfers in the Czech Republic. It is also sensible to agree on the date of handover of the property, for example no later than 10 days after the buyer's ownership is registered in the Land Registry.

If it matters to you in what condition you will take over the property, agree on that in the reservation agreement as well. Whether the kitchen unit, built-in wardrobes or appliances will stay, or whether the property will be cleared out, is harder to negotiate at a later stage.

What to check before you sign

Apart from the agreement itself, the property also needs to be checked, ideally before you sign the reservation agreement, while you are not yet bound by anything and have not paid the reservation fee.

As a general rule, you should have the technical condition of the property inspected, for example by a building surveyor. For an apartment or a house, also ask the seller for the Energy Performance Certificate (PENB). Under Section 7a of the Energy Management Act (in Czech), the seller must present it before any contracts relating to the purchase are concluded.

If you are buying an apartment, I recommend asking the seller for:

• the latest annual statement of advance payments made to the homeowners' association and the current monthly payment schedule. Only these documents show the real costs of the apartment, which may be higher, for example, because of high contributions to the repair fund or a loan the association is repaying for a renovation, a lift or a heat pump.
• the association's confirmation of no outstanding debts. Under Section 1186 of the Civil Code (in Czech), the seller's debts to the association pass to the buyer if the buyer could have found out about them. The confirmation is the main way to find out.
• minutes of the homeowners' association meetings, from which you can learn what is being dealt with and planned in the building. A planned facade renovation or a dispute with a construction company is information that the buyer would otherwise not find out.
• the declaration of the building owner (prohlášení vlastníka), in which you can verify the parameters of the apartment, i.e. whether the floor area, the share in the common parts or the cellar unit correspond to what you were told and what was stated in the listing.

If you are buying a house, ask for the building documentation or the building passport (pasport stavby). The owner is obliged to keep the building documentation. If the buyer does not receive it, they may later have to have it prepared at their own expense. It is also worth visiting the building authority to verify that the house in its current state corresponds to what was permitted or notified.

If you are buying land, especially land that the seller presents as building land, check the municipal zoning plan to see whether the land is actually suitable for development, under what conditions and for what kind of building. Also find out whether there is access from a public road. If the access route crosses someone else's land, the access must be secured by an easement. Check as well whether the land can be connected to utilities and whether it is burdened by easements or protection zones, for example of power lines or gas pipelines, which may restrict construction. If you are buying land with a specific intention to build, it pays to agree in the reservation agreement that you do not have to conclude the purchase agreement if it turns out that construction is not possible.

Summary: what to watch out for

🚩 The reservation agreement sets the rules for the entire purchase. Whatever is not in it, you will later negotiate from a weaker position. Read it as carefully as the purchase agreement.

🚩 Check who signs the agreement. Only the owner or their authorised representative can commit to the sale. If only a real estate agency signs on the owner's behalf without a power of attorney, the agreement does not bind the seller.

🚩 Agree on when you do not have to conclude the purchase agreement. A breach of the owner's obligations, an untrue representation, damage to the property or a rejected mortgage should mean a refund of the reservation fee.

🚩 Insist on the owner's representations and obligations. In particular, that the owner will not transfer or encumber the property, will cooperate with the bank and will prove that there are no debts to the homeowners' association.

🚩 Set out the terms of the purchase agreement now. In particular, release of the purchase price from escrow only after your ownership is registered without restrictions, and the date of handover of the property.

🚩 Check the property before you sign. For an apartment, the association's statements and minutes, the confirmation of no debts and the declaration of the building owner; for a house, the building documentation and compliance with the building permit; for land, the zoning plan, access and utilities.