Rented flat with long-term tenant and mortgage: how to sell urgently

Can you sell a flat where a tenant lives?

Yes, you can sell an occupied flat and the tenant does not need to leave. There are usually fewer interested buyers and the conditions differ from selling an empty flat, but the sale itself is possible.

Under § 2221 of the Civil Code No. 89/2012 Coll., the lease does not terminate upon transfer of ownership: the buyer enters into the rights and obligations under the lease agreement. The tenant therefore continues to pay rent, now to the new owner. The contract terms, including rent amount and lease period, remain unchanged.

In practice, prepare the lease agreement, any amendments, payment history, and details of the security deposit (kauce) paid. The buyer will want to know the conditions under which the tenant uses the flat and whether the tenant pays reliably.

What does notice to terminate a lease mean and when can it be given?

Notice to terminate a lease from the landlord is not unrestricted; it requires a legal reason and written form. This is a common source of misunderstanding in long-term leases.

The reasons for notice to terminate a lease by the landlord are set out in § 2288 (1) of the Civil Code No. 89/2012 Coll. The need for money or the intention to sell the flat is not among them. Moreover, the tenant can challenge the notice in court to examine whether it is justified. If the tenant does not voluntarily vacate, they cannot be evicted without a court judgment and its enforcement.

If the notice is given by the tenant instead, the lease ends after the notice period and the flat will be returned to you. This is favourable for the sale, but you cannot rely on it if the tenant does not want to leave.

In a time-critical situation, it therefore makes sense not to rely on the flat being vacated and to consider selling with the existing lease. More on the page buying out property with a tenant.

How is the mortgage dealt with in the sale?

The buyer will pay the mortgage from the purchase price directly to the bank, and the bank then confirms the removal of the lien. You do not therefore need your own money to repay early.

The flat is secured by the bank and the lien is registered in the Czech Land Registry (katastr nemovitostí). The usual procedure:

1. You ask the bank for the current debt level on a specific date and conditions for early repayment, including any fees under your contract.
2. The purchase agreement states that part of the price will be used to pay the bank.
3. The purchase price is deposited into lawyer's escrow (advokátní úschova) and from there the bank is paid.
4. The bank issues consent for removal of the lien and this is submitted to the land registry.

Also check whether the mortgage contract contains restrictions on renting or an obligation to inform the bank. More details on the page buying out property with a mortgage.

Realistic timescales

From signing the contracts to final payment, expect roughly a few weeks; the longest is registration at the land registry. No deadline is fixed; it depends on the cadastral office and the bank.

Ownership transfers only upon registration in the Czech Land Registry (katastr nemovitostí) and the cadastral office cannot decide before 20 days from notifying the owner (Cadastral Act No. 256/2013 Coll.). Average registration time is about 22 days. The deposit at signing can help bridge the period until final payment if you need the money for a specific due obligation.

What happens to the tenant after the sale?

After the sale, the tenant continues to live on the same terms; only the landlord changes. The new owner can only give notice based on legal reasons, just like you.

It is advisable to inform the tenant of the change in writing and give them the new owner's bank account. If the tenant paid a security deposit, its transfer is dealt with in the purchase agreement so they don't lose it. The tenant's consent to the sale is not required, but calm communication helps with the handover.

If the tenant is worried about their accommodation, explain that the contract continues. This often eases tensions.

Taxes and payment

Real estate acquisition tax is no longer paid, but the seller may have a tax obligation on income. Real estate acquisition tax was abolished by Act No. 386/2020 Coll.

Whether income from the sale is exempt depends mainly on the time test and whether you lived in the flat. The conditions are set out in the Income Tax Act No. 586/1992 Coll.; verify your situation with the Financial Authority or a tax adviser.

Payment must be made cashless via lawyer's escrow (advokátní úschova). Cash payments are additionally limited to CZK 270,000 per day (Act No. 254/2004 Coll.).

What to do right now

Most helpful is having the documents ready and knowing the exact debt level at the bank.

1. Request the current mortgage balance and early repayment conditions from the bank.
2. Prepare the lease agreement with amendments, security deposit details, and rent payment history.
3. Obtain the title deed and basic flat information.
4. Check whether a notice period is running or court proceedings are underway and what stage they are at.
5. Review the purchase procedure step by step.

You'll get a non-binding written offer or situation assessment via the form below the article. The offer arrives within 24 hours and the decision is entirely yours.