86 | Investor Guide to Europe 2014
aCQuISITIon PRoCESS:
KEY STaGES
Foreign investors wishing to carry out real estate transactions do
not need any prior authorisation.
However, there are some restrictions for foreign investors regar-
ding acquisition of land that belongs to the agricultural land fund
or forest land fund.
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negotiations
•
At first, a non-disclosure agreement can be signed between
the contractual parties, which allows for full access to the real
estate and respective documentation.
•
The contractual parties can also conclude a letter of intent,
which may be of informative nature (declaring understanding
between the parties) or binding, depending on the agreement
of the contractual parties.
•
Due to historical reason, which resulted in complicated (and
often unclear) ownership relationships and due to the fact the
information registered in the Slovak Land Registry does not
necessary reflect the actual ownership status, a proper due
diligence process is recommended.
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Preliminary contracts
•
The contractual parties can enter into preliminary contracts,
which regulate their rights and obligations during the transac-
tion.
agreement on future contract
(zmluva o budúcej zmluve)
•
Is an agreement, in which the contractual parties agree on
essential terms of the future transfer agreement (e.g. property,
purchase price etc.) and agree that they will conclude such
agreement with the agreed time period. It commonly contains
conditions, fulfillment of which entitles one or both parties to
call upon the other to enter into the transfer agreement.
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Purchase agreement
•
Is an agreement on basis of which the ownership of a real
estate property is transferred from the seller to the buyer; it is
necessary that it is concluded in written form and that signa-
ture of seller is notarized.
•
Generally, there is no re-negotiation of the terms and condi-
tions of the sale which have been agreed at the agreement
on future contracts (unless the parties agree upon different
terms).
•
The transfer of title to the real estate becomes effective upon
its registration with the Slovak Land Registry.
•
In practice, escrow account mechanism (with a bank or a
notary) is commonly used by the parties for payment of the
purchase price.
•
Can be concluded with conditions precedent
(odkladacími pod-
mienkami)
, whereas the transfer remain subject to fulfilment
of these conditions.
Contract for work
(zmluva o dielo)
•
Can be used for acquisition of buildings that have not yet been
constructed.
•
It is a common practice that the purchaser pays the price step
by step along the construction steps until completion.
CoMMERCIaL LEaSES
In Slovakia, a lease of a real estate property is governed by several
legal regulations depending on the subject of lease (e.g. ware-
house, flat, parking spaces, whole building).
Leases of non residential premises (e.g. premises used for com-
mercial purposes) are regulated by the Act on Lease and Sublease
of the Non Residential Premises.
The contract for lease of the non residential premises shall
include following essential terms, otherwise it could be considered
invalid:
- clearly defined leased premises;
- purpose of lease, which shall comply with the construc-
tion documentation of the leased premises;
- amount of the net rent (excluding the service charges);
- due date for the rent and the method of its payment;
and
- the duration of lease.
Generally, the parties are free to determine the conditions of the
lease (such as amount of rent, term of lease, notice period, etc.)
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Duration of the lease
•
In general, the lease of non residential premises for business
purposes can be agreed for (i) a definite period of time; or (ii)
an indefinite period of time.
•
The lease agreed for a definite period of time can be termina-
ted by landlord’s termination notice, unless otherwise agreed
by the parties, if:
- the tenant uses the premises in breach of the lease
agreement;
- the tenant is in delay with payment of rent or accompa-
nied services for more than a month; or
- the tenant subleases premises without prior consent of
the landlord.
•
The lease agreed for a definite period of time can be termina-
ted by tenant’s termination notice, unless otherwise agreed by
the parties, if:
- the tenant ceases to hold the license for conducting
business, for purposes of which the premises were leased;
- the leased premises become unfit for the agreed
purpose of use through no fault of the tenant; or
- the landlord is in breach of its material contractual obli-
gations.
•
The lease agreed for a definite period of time can be prolonged
by an agreement of the contractual parties, automatic prolon-
gation is generally possible.
•
The lease agreed for an indefinite period of time can termi-
nated by landlord or tenant by a simple written termination
notice with three months notice period, unless the parties have
agreed otherwise.
