Inherited flat with mortgage and multiple heirs: how to sell it and when you need others' consent

What happens to the mortgage when you inherit a flat

A mortgage is a debt secured by a registered charge (zástavní právo) on the property. Upon the death of the borrower, it does not become immediately due nor does it cease. The debt forms part of the estate and the bank's registered charge on the flat continues to apply, regardless of who owns it.

An heir acquires the inheritance at the moment of the deceased's death (§ 1479 of the Civil Code No. 89/2012 Coll.). However, an heir is liable for the deceased's debts only up to the value of the inherited property (§ 1675 of the same Act). You are not personally liable for more than the value of your inheritance, unless you have voluntarily assumed additional liability, such as by becoming a joint debtor.

Practical conclusion: the mortgage is not an obstacle to sale. It is a debt that will be discharged from the purchase price upon sale, and once paid, the registered charge will be removed from the Czech Land Registry (katastr nemovitostí).

When can you actually deal with the flat

Although you become the owner at the moment of the deceased's death, in practice the flat cannot be sold before the probate proceedings are concluded by a court and it is confirmed who inherited what. Buyers, banks and solicitors will not enter into a purchase agreement without this confirmation, because it is unclear who is the rightful seller and in what shares.

The duration of proceedings varies depending on complexity: the number of heirs, disputes, foreign elements, or unclear assets can extend the process. You can expedite proceedings by promptly providing documentation and communicating with the notary (notář), who conducts the proceedings as a court commissioner (soudní komisař).

For comprehensive information about selling after the proceedings are concluded, see the page Sale of an inherited property.

What each heir can do alone and when others' consent is required

After the proceedings are concluded, heirs are typically co-owners of the flat, each holding their own share. Several rules apply:

• A co-owner can transfer, gift or encumber his or her share alone, without the consent of the others (§ 1123 et seq. of the Civil Code).
• The entire flat can only be sold if all co-owners agree. Without the signature of each of them, a purchase agreement for the entire flat is not valid.
• Ordinary management of the shared property, such as decisions about rental or minor repairs, is generally governed by the size of the shares. However, fundamental changes and the sale of the whole require unanimous consent.

Right of first refusal: the general right of first refusal (předkupní právo) of co-owners was abolished by an amendment to the Civil Code. However, if the share arose through inheritance, the other co-owners have a right of first refusal for six months from the creation of co-ownership (§ 1124 of the Civil Code). When selling your share within this period, you must first offer it to the other co-owners.

Selling only your share: why the mortgage makes it more complicated

In theory, you can sell your share without the consent of the others. However, with a flat with a mortgage, this runs into practical difficulties:

• The bank's registered charge applies to the entire flat and to individual shares, so a buyer of a share purchases it encumbered by the charge if the debt is not paid off in advance.
• A buyer of a share will acquire co-owners they did not choose and cannot use the flat alone. There is therefore usually less interest in such a share and offers are typically lower.
• The bank may have objections to the transfer of the share according to the terms of the loan agreement, so it is better to consult with it beforehand.

It is usually more sensible to agree on the sale of the entire flat. The remainder of the mortgage will be paid from the purchase price and the remaining money will be distributed according to the shares. For details on paying off the bank, see the page Purchase of a property with a mortgage.

When the heirs disagree

Disagreement from the others will not stop the sale permanently, only postpone it. Consider these options:

1. Settlement agreement (dohoda o vypořádání). One heir can buy out the others or take over the mortgage if the bank approves.
2. Transfer of the share to the other co-owners, or possibly to a third party, taking into account the six-month right of first refusal.
3. Court-ordered termination of co-ownership (§ 1140 of the Civil Code). The court may order division, assignment to one co-owner with compensation, or sale and distribution of the proceeds. Such proceedings are more lengthy and involve time and costs.

One of the heirs lives abroad? Consent can be given by power of attorney (plná moc) with an officially certified signature, as shown in the case study of a flat with three heirs.

How the sale proceeds and what to watch out for

The sale of an inherited flat with a mortgage does not differ in principle from any other sale, but involves a few additional steps:

• verification of ownership and the registered charge from a land registry extract (výpis z katastru nemovitostí) and obtaining the debt amount from the bank,
• agreement of all co-owners on the sale and price,
• purchase agreement with an escrow arrangement (úschova), from which the bank is paid first and then the heirs are paid.

Ownership of the purchased flat passes only upon registration (vklad) in the Land Registry. The Land Registry Office (Katastrální úřad) may not decide before 20 days have passed from notification of the owner (Land Registry Act No. 256/2013 Coll.); the average time is approximately 22 days. Payments should be made non-cash, as cash is limited to 270,000 CZK per day (Act No. 254/2004 Coll.).

When purchasing from us, you typically receive a written non-binding offer within 24 hours. Contracts and deposit usually follow within one to three days, registration takes approximately three to four weeks, and final payment from the solicitor's escrow arrives within five days of registration. Details can be found on the page How it works.

The transfer tax on real estate was abolished (Act No. 386/2020 Coll.). As for capital gains tax on the sale, the general rules regarding the holding period and principal residence apply; assess your specific situation with the Tax Authority or a tax adviser (Act No. 586/1992 Coll.).

Things to watch out for

• Do not sign anything until it is clear who is the heir and in what shares.
• Do not ignore mortgage payments. If payments cease, the bank may proceed to enforce the registered charge and foreclose, which would severely compromise the sale. Early action is better; see quick sale before foreclosure.
• Have any agreement between the heirs and with the bank put in writing.
• Seek advice from a solicitor or notary before signing anything.

Answers to further questions can be found in the frequently asked questions.