House with mortgage and tax lien: how to sell and who gets the money
Published 22 October 2026
A house with both a mortgage and a tax lien (Czech: zástavní právo – a creditor's right to satisfy a debt from the property) can be sold. The sale proceeds are distributed to creditors in order of their liens, typically according to when the liens were created, and the remainder goes to you. The key is to establish whether the sale price will cover both debts before signing the contract.
Summary
- Creditor priority is usually determined by when their liens were created, not by their importance.
- Both the bank and the tax authority must confirm their debt and authorise removal of the lien from the Czech Land Registry (katastr nemovitostí).
- Creditors are paid from sale proceeds via lawyer's escrow; any remainder goes to you.
- If the price does not cover both debts, you may need to pay the difference from your own resources or negotiate with creditors.
- The sooner you obtain current debt statements, the better you can plan the sale.
Why creditor priority matters
When a house has both a mortgage and a tax lien (Czech: zástavní právo – a secured claim over the property) due to unpaid taxes, it raises questions about who will be paid first and how much will be left for you after the sale. The answer is not a single figure, but the rules are straightforward.
A lien is a creditor's right to satisfy a claim from the price of the pledged property if the debtor fails to pay. It is governed by the Czech Civil Code (Občanský zákoník č. 89/2012 Sb., sections 1309 onwards). A lien 'follows' the property: even if you sell it, the creditor may enforce it as long as the debt is unpaid and the lien has not been removed from the register.
For this reason, a buyer and their lawyer will never take on a house with an unresolved lien just because the parties agree. The debts must be resolved at the time of sale and the entries removed from the Czech Land Registry (katastr nemovitostí).
What is paid first
Generally, the earliest lien has priority over a later one. The bank that provided the mortgage when you bought the house usually has its lien registered first. A tax lien typically arose later, so it stands behind it in the priority order.
In practice, this means:
- The creditor with the oldest lien is satisfied first (often the bank with the mortgage).
- From what remains, the next lien in order is paid (often the state's tax claim).
- Only the remainder of the sale price goes to you.
Caution: this is a general rule. The actual priority order and debt amounts must be verified in the Czech Land Registry (katastr nemovitostí). In the public cadastral search (veřejné nahlížení do katastru), you can view the title deed (list vlastnictví) and see what encumbrances are registered on the property and when. If you are unsure about the interpretation, consult a lawyer.
In the case of enforcement or public auction, the priority is governed by the rules in the Czech Civil Procedure Code (Občanský soudní řád č. 99/1963 Sb.) and the Enforcement Code (Exekuční řád č. 120/2001 Sb.); in insolvency, by the Insolvency Act (Insolvenční zákon č. 182/2006 Sb.). There, the court or enforcement officer decides, not the parties' agreement.
How voluntary sale works: step-by-step
In a standard sale without auction, everything is handled by contract and can be planned. General procedure:
- Establishing debts. You request the bank to confirm the outstanding principal and interest, including any penalty for early repayment, and the tax authority to confirm the amount of the debt secured by the lien.
- Checking whether the price is sufficient. Compare the estimated sale price with the debts. For guidance, our property valuation tool will help.
- Purchase agreement and escrow. The sale price is deposited in lawyer's escrow (advokátní úschova) and neither buyer nor seller can use it freely.
- Registration with the land registry. Ownership passes only with registration in the Czech Land Registry (Katastrální úřad) under the Land Registry Act (Katastrální zákon č. 256/2013 Sb.). The land registry office must not decide earlier than 20 days after notifying the owner; registration typically takes around 22 days, so plan for three to four weeks in total.
- Payment from escrow. From the escrowed amount, creditors are paid, liens are removed, and the remainder goes to you.
For details on the procedure, see the page How property purchase works.
How much will you receive
The calculation is simple: sale price minus debt to the bank minus debt to the state minus any other costs associated with the sale. What remains is your proceeds.
| Situation | What it means |
|---|---|
| Price exceeds the sum of both debts | Creditors are satisfied and you receive the difference. |
| Price covers the bank's debt and part of the state's debt | The remainder of the state's claim remains unresolved; the creditor will remove the lien only with consent, meaning by agreement. |
| Price does not cover even the mortgage | You must pay the difference from your own resources or negotiate further terms with the bank. |
Also consider income tax. Under the Czech Income Tax Act (Zákon o daních z příjmů č. 586/1992 Sb.), income from the sale of a property may be exempt under certain conditions, such as after a holding period or if the property was used for your own residence. Check the specific conditions on the website of the Czech Tax Administration (Finanční správa) or consult a tax adviser. Property transfer tax was abolished by Act No. 386/2020 Sb., so the buyer does not pay it.
What to do if the sale price does not cover both debts
Such situations are not uncommon and do not necessarily mean the end of the road. Options typically include:
- Pay the difference from your own savings or from family to enable the liens to be removed.
- Negotiate with the creditor about partial settlement and consent to removal. Consent is voluntary, but a creditor often prefers to receive money immediately rather than wait for an auction.
- Avoid an auction. In an auction, the opening bid is two-thirds of the final price (Czech Civil Procedure Code § 336e č. 99/1963 Sb., applied proportionally for enforcement), which may be less than you would receive in a voluntary sale. See the page Quick sale before auction for more details.
No guarantees can be given that everything will be resolved; it depends on the amount of debt, the property price and the creditors' willingness. The sooner you start, the more options you have.
How property purchase can help
With a property purchase involving both a mortgage and a lien, the procedure follows the steps described above. The offer arrives within 24 hours, in writing and without obligation. Contracts are signed and the deposit is typically paid within one to three days. The final payment comes from lawyer's escrow (advokátní úschova) within five days of registration in the Czech Land Registry (katastr nemovitostí), and from it creditors are paid. Legal advice and escrow are provided free of charge, with no costs for repairs or vacating.
Payments are made electronically; under Czech law (Act No. 254/2004 Sb.), cash payments are limited to CZK 270,000 per day, so for higher amounts they should not be considered.
Related topics are covered on the pages Property purchase with mortgage and Property purchase with lien or debt.