Acquisition of property in Slovakia

In the Slovak Republic acquisition of real estate and related issues are regulated by several legal regulations the most important of which are:

• Civil Code – Act No. 40/1964 Coll.,
• Foreign Exchange Act No. 202/1995 Coll.,
• Act No.182/1993 Coll. on Ownership of Apartments and Non-Residential Premises,
• Act No. 162/1995 Coll. on Land Registries and Registration of Ownership Titles and Other Rights to Real Estate (so called Land Registry Act) as well as
• Implementing Regulation No. 79/1996 Coll. to the Land Registry Act.

Whilst the Civil Code as one of the main pillars of Slovak law contains the general regulation on legal acts and contracts including the purchase contract applicable to acquisition of real estate, the other acts comprise specific regulation of all relevant issues.

The most important change which initiated the development on the Slovak real estate market and moved it to a different direction after the accession of the Slovak Republic to EU was the amendment to the Foreign Exchange Act No. 456/2002 Coll. By this amendment  the strict restrictions regarding acquisition of real estate by foreigners have been abolished. The presently valid wording stipulates clearly the foreigners are allowed to acquire real estate in Slovakia with a few very limited exemptions which forbid acquisition. The exemptions include:

• certain categories of agricultural land and forests;

• acquisition of real estate which is restricted by certain special regulations such as e.g. Act on Protection and Exploitation of Mineral Resources, Water Act, Act on Health Care, Act on Protection of Nature and Land, Act on Surface Communications, Act on Protection of Relics and Historical Monuments.

The Act on Ownership of Apartments and Non-Residential Premises is a detailed regulation dealing not only with the acquisition of ownership titles to apartments and non-residential premises in multiple dwelling houses but also with the rights and duties of the owners of  these houses as well as rights and duties of the owners of apartments and non-residential premises, their mutual relationships and the rights to land. This Act is therefore an important law applicable not only during the process of acquistion itself but also for further regulation of relationships among the owners. The owners may either establish an Association of Owners and execute the administration and management of the house themselves or they may conclude a management contract with an administrator of the building.

The Land Registry Act describes land registry in a detailed manner and regulates the proceedings regarding the registration of ownership titles and other rights to real estate.

In Slovakia the ownership title to immovable assets is being transferred to the respective acquirer by the registration of ownership title based upon the acquisition contract, executed by the relevant land registry. The smooth and fast registration process requires a perfect contract meeting all the legal requirements of general as well as specific legal regulations. The registration of ownership is made based upon an application which must be accompanied by relevant documents and payment of an administrative fee of 2,000 SKK. It is possible to apply for accelerated proceedings with a payment of 8,000 SKK which results in registration of  ownership title within 15 days.

Practically speaking, the process of acquisition varies in details depending upon the fact whether a respective person intends to acquire an existing property or a property under construction. In the latter case the process is more time-consuming, acquisition more sophisticated and the risk of potential problems is higher. Moreover, newly built apartments are offered and sold in a state which requires further finalization of details – walls, floors, kitchen equipment, sanitary conveniences, etc. and this of course means related expenses, including prolonged time for the economic return.

For a steady completion of any contemplated investment the potential acquirers of real estate should obtain assistance not only with regular legal work such as verification of relevant title, drafting relevant purchase or other acquisition agreements, communication with land registries, including the registration of title, but also additional services such as  representing investors before banks, other financial institutions, construction and management companies become more and more important. In practice close relationships of an experienced law office with a reputable real estate agency proved to be an ideal solution and safeguard satisfaction of the client seeking for an investment on a real estate market offering interesting opportunities.