Overview of types of financial safekeeping and the risks

If you are buying a property sooner or later, you will ask yourself a question if you should be using any financial safekeeping, and if so, you will want to consider what kind of safekeeping to choose. We will show you a basic overview of various safekeeping and rating of each option, based on risk.

When transferring a property ownership, you can choose to transfer funds, such as your mortgage loan, from the bank to the buyer's bank account in five basic ways: direct transfer without the use of any safekeeping, using  your real estate agent's facility for safekeeping, using a lawyer or a notary, or through a tying account in the bank. Let's take a closer look at these possibilities.


1) Direct transfer without the use of safekeeping
Risk: high I Costs: none I Administration: none

If you decide to directly transfer funds from your bank (from your current account or from a contracted mortgage account) directly to the seller, you are at a high risk.

There may be a situation, for example, where the cadastral office refuses to register a change of owner, because of a poorly defined purchase agreement, and therefore the cadastre rejects the proposal and returns the contract for rewriting. At this point, however, the seller will have your money already. It will then be solely on his goodwill if the property will be transfered to you.

In the worst case scenario, the seller may stop communicating with you, and you would lose your money while not owning the property. Of course, you could deal with this situation the legal way, but before you have any solution, it could be several months or even years. To prevent this from happening, various types of third-party accounts are being used to transfer funds that pay the money to the seller only when you are the registered owner of the purchased property.


2) Real estate agency
Risk: medium I Costs: none I Administration: low  

If the sale of the property is being done through a real estate agency, you will probably be offered a free use of the safekeeping as part of the purchase fee or commission. Certainly, this is a safer option than not to use any safekeeping, however it matters a great deal which real estate office you use. Indeed, a large and well-established real-estate office with a national reputation is less risky than a small regional real estate agency.


3) Lawyer deposity
Risk: medium I Costs: units of a thousand crowns I Administration: medium

The use of lawyer deposity as an impartial business participant is again a bit safer than the previous option, but at the same time it is the same as in the case of a real estate agency. It is very important that you make a good choice of a lawyer and basically know whether the lawyer has any experience with financial safekeeping. The lawyer's fee is determined by the attorney, and it is ranging in units of thousand of CZK.


4) Notarial safekeeping
Risk: low I Costs: units of a thousand crowns I Administration: medium

Notarial safekeeping is a safer alternative to lawyer custody and it is considered a very safe solution. The notary's fee is based on a fare value, which is the same for all notaries and depends on the amount you intend to keep with the notary. For example, if the amount of CZK 3 million is deposited, the notary's remuneration amounts to CZK 9,600.


5) Tying bank account
Risk: low I Costs: units of a thousand CZK I Administration: medium

You can also use this, very secure way to transfer money in the form of a tying bank account. Some banks, however, offer a security or tying account only for clients who, at the same time, negotiate a mortgage loan with them. The cost of this type of  account varies from bank to bank, and for example, the amount of CZK 3 million would cost approximately CZK 6,000-6,900.


If you deal with a real estate expert, he will surely be able to explain the different types of safekeeping in order to make it easy for you to choose the option that suits you most in terms of risk, expense and administration.