How to Vet a Developer Before Buying a New-Build Flat

You can vet a developer before buying a flat in four steps: verify the company and land ownership in official registers, go through the building documentation and permits, look at the developer's completed projects, and have a lawyer check the contracts and the way you pay. None of the steps requires professional training, but for contracts and financing it is advisable to consult an expert.

Why vet a developer

You often buy a flat in a new-build before the building is finished. You are therefore paying for something that does not yet exist, and relying on the developer to complete the building to the agreed quality and by the agreed date. Vetting helps you spot risks early, while you can still withdraw from the purchase without major consequences. This is not about distrusting all developers. It is about basing a decision on one of the biggest investments of your life on verifiable information, not just on visualisations and a sales presentation.

You can find a general overview of the whole buying process in our buying guide. This article focuses on the part where you assess the seller.

Step 1: Check the company and the land

Start with basic public information. Most of it is available online free of charge.

• Commercial register: find out when the company was founded, who owns and manages it, what its registered capital is, and whether it changes its name or registered office often. Frequent changes can be a warning sign.
• Collection of documents: this usually contains the financial statements. Check whether the company has been profitable over the long term and how indebted it is. Many developers build each building in a separate project company, so the statements are short. In that case it is also important to assess the parent group.
• Insolvency register: check that no insolvency proceedings have been brought against the company or its owners.
• Land register (katastr nemovitostí): the title deed extract shows who owns the land and whether it is subject to a mortgage or lien, an execution (enforcement) order or any other restriction. If the land does not belong to the developer, ask on what basis they are building on it.

If you are not sure how to read the extracts, ask a lawyer or a real estate specialist to explain them.

Step 2: Check the permits and documentation

A reputable developer will have no problem showing you that the project has the necessary permit. Ask for:

• a final and binding building permit, or its equivalent under current regulations,
• the project documentation, including a floor plan of your flat with dimensions,
• a description of the standard of finish, that is, materials, floors, windows and technical equipment,
• information on parking, cellar storage units and common areas, and on whether they are included in the price.

Compare whether the floor area and layout in the brochure match the documentation. Differences between the visualisation and reality are a frequent source of disputes. Also verify the details of the land at the building office, where it is possible to inspect the file.

Step 3: Look at references and completed buildings

The best indicator of how a developer will behave in future is what they have already built. In our overview of developers you will find individual companies and their projects. Browse specific offers in the project catalogue, or by location.

• Visit a completed building and ask residents how complaints were handled, how quickly the developer responded and whether the building was finished on time.
• Find out whether the developer has previously built a project of a similar size. Experience with a smaller building may not be enough for a large complex.
• Look for independent reviews and media mentions, but treat them with caution, as they may be one-sided.
• Visit a building under construction and compare its state with the schedule the developer gave you.

If a developer refuses to provide contact details for existing buyers or a viewing of completed buildings, ask why.

Step 4: Have the contracts and payment method assessed

The last step is the most important, and it also depends most on professional help. Before signing, have a lawyer who specialises in property go through the contract of future sale (smlouva o budoucí smlouvě kupní) or a similar document. Focus in particular on:

• how your payments are secured, that is, whether the money goes directly to the developer or is, for example, held in escrow with a lawyer or notary, or otherwise protected,
• the payment schedule and how it is tied to actual construction progress,
• the completion and handover date for the flat, and the consequences of missing it,
• contractual penalties, conditions for withdrawing from the contract and the return of amounts paid,
• warranties for defects and the complaints procedure,
• whether the developer may change the layout or materials.

Deal with financing at the same time. A mortgage specialist will advise you on which documents the bank requires from the developer and how to set up drawdown of the loan when payments are made in stages. You can get an indicative idea of repayments in the calculator, but only the bank can tell you binding terms.

Signals that call for caution

Signal	What to do
Pressure to sign a reservation or contract quickly	Ask for time to study it and consult a lawyer.
A request to pay directly into the developer's account with no protection for the money	Have an expert assess how your funds are secured.
A missing permit, or one that is not final and binding	Ask for the documents, or put the contract on hold.
Land encumbered by a lien or an execution order	Ask how and when the lien will be deleted, and check this with a lawyer.
Vague answers to questions about deadlines and prices	Ask for written answers.
Reluctance to show completed buildings or references	Look for information elsewhere, for example from existing owners.

How to proceed in practice

Make a list of the developers you are considering and ask all of them the same questions. Keep the answers in writing, by e-mail. That way you can compare them easily and have them on record. If you are still unsure what kind of flat you are looking for, you can use the housing enquiry and have offers prepared according to your requirements. Keep the documents in a single folder and go through them again calmly at home before signing, not at the sales office.

Frequently asked questions

Are register checks enough, or do I also need a lawyer?

The registers give you a good basic overview and you can manage them yourself. However, we recommend having the purchase contracts and the security for your payments assessed by a lawyer, because small details of wording can have a big impact.

Is a young company or a company with debts the worse warning sign?

This cannot be judged in a clear-cut way. A project company is common for new-builds and means nothing in itself. What matters is who stands behind it, what experience they have and how your payments are secured. Discuss your specific situation with an expert.

When is the right time to vet a developer?

Before you sign a reservation agreement and before any payment. A reservation is usually linked to a deposit and to conditions that are difficult to change later, so it is better to have the basic vetting done beforehand.