The purchase of newly built condominium flats often takes place at an early stage of the construction. In such cases the buyer frequently pays a significant amount while the flat has not yet been physically completed, is not yet recorded in the land registry as a separate unit, and the ownership can also be registered only later.
The new legal institution of the condominium building right is intended to make this situation safer. The aim of the rules is that buyers of newly built condominium flats should be able to obtain a stronger legal position, appearing in the land registry as well, already during the construction period.
The land registry rules relating to the condominium building right apply from 1 March 2026.
Why were new rules needed?
When buying a newly built flat, one of the buyer’s greatest risks is that part of the purchase price is paid during the construction, while the final acquisition of ownership can take place only later. If the construction drags on, the developer runs into financial difficulties, enforcement proceedings are started against it or it even becomes subject to liquidation proceedings, the buyer’s legal position may become uncertain.
The condominium building right can reduce this risk by making the buyer’s position appear in the land registry as well. This means not merely a contractual promise, but a right of pecuniary value attached to the future flat the buyer wishes to acquire.
What is the essence of the condominium building right?
The condominium building right is a legal institution attached to newly built condominium flats which can provide a stronger legal position to the buyer of a flat that has not yet been built or has not yet been registered as a separate unit.
In practice this means that on the basis of the sale and purchase contract for the flat to be built, the buyer acquires not only a contractual claim but a right that can also be recorded in the land registry. This right is attached to the flat that comes into being later, and after the completion of the construction it can serve as the basis of the buyer’s acquisition of ownership.
It is important to emphasise that the condominium building right is not the same as ownership. The buyer’s ownership can still be registered only once the building is completed, the condominium can be finally registered and the given flat comes into being as a separate property.
When can a condominium building right be established?
The condominium building right does not automatically accompany every purchase of a newly built flat. Several conditions must be met together for it to be applied.
It is particularly important that the fact of the preliminary establishment of the condominium is recorded in the land registry. In addition, an appropriate contractual background relating to the flat to be built is required, together with a provision of the parties to that effect and the fulfilment of the conditions of land registry registration.
When buying a newly built flat it must therefore be examined in every case whether the condominium building right can be applied at all in the given development and, if so, with what content it can be registered.
What protection can it give the buyer?
One of the most important effects of the condominium building right is that the buyer’s legal position can become stronger during the construction period.
The registered right indicates to the buyer that, in respect of the flat to be created later, it holds a legal position connected to the final acquisition of ownership. This can be particularly important if an enforcement or insolvency situation arises in relation to the developer.
The condominium building right can also play a significant security role with regard to the instalments of the purchase price already paid by the buyer. The essence of the rules is that the buyer should not hold merely a civil law claim against the developer, but an entitlement that also appears in the land registry.
What does this mean in the case of bank financing?
The condominium building right can also be important for purchases financed from a loan. Since the right has pecuniary value and can be registered in the land registry, it may be capable of creating a security structure that is easier to handle for the financing bank as well.
One essential element of the arrangement is that the condominium building right can be encumbered with a mortgage. This means that the security of the bank financing can be attached to the buyer’s right relating to the future flat already during the construction.
After the construction is completed and the flat is registered as a separate property, with the termination of the condominium building right the legal position can continue to be attached to the final ownership of the flat. This can be a more transparent solution for the buyer and for the bank alike.
What happens if the buyer does not pay?
The condominium building right serves not only the protection of the buyer, but can also provide an orderly framework from the developer’s point of view. If the buyer fails to meet the payment obligations undertaken in the contract, this may amount to a serious breach of contract.
In such a case the developer may apply the legal consequences of breach of contract under the conditions set out in the contract and in the legislation. The deletion of the condominium building right, however, may be subject to further conditions in particular where it is encumbered by a bank mortgage or another security.
The questions of the buyer’s non-performance, of withdrawal, of the deletion consent and of the bank’s approval should therefore be regulated in detail and unambiguously already when the contract is concluded.
Can the condominium building right be transferred?
The condominium building right is attached to the buyer’s position, and its transfer cannot therefore simply be treated like the sale of a completed flat. If the buyer wished to pass its right on before the construction is completed, this may require a separate agreement and an appropriate legal structure.
In practice not only an agreement between the original buyer and the new buyer may be needed, but also the developer’s consent. If the right is encumbered by a bank security, the consent of the financing bank may likewise be indispensable.
Anyone buying a newly built flat for investment purposes and considering a resale before the completion of the construction should therefore clarify in advance on what conditions the contract permits the transfer of the buyer’s position.
What happens after the building is completed?
When the construction is completed and the condominium can finally be settled from a land registry point of view, the individual flats can be registered as separate units. At that point the buyer’s ownership of the given flat can be registered.
In this process the condominium building right plays a transitional role: during the construction period it secures the buyer’s legal position, and upon the final acquisition of ownership it loses its function. The securities previously attached to it, such as a bank mortgage or a prohibition on alienation and encumbrance, may continue to be attached to the final ownership of the flat in accordance with the rules.
Does duty have to be reckoned with?
The condominium building right is a right of pecuniary value, so its acquisition may also be significant from the point of view of duty law. The assessment of the specific duty liability always depends on the content of the given transaction, on the contractual structure, on the value of the right acquired and on the applicable duty rules.
When buying a newly built flat it is therefore advisable to review in advance not only the purchase price and the payment schedule, but the duty consequences as well. It may be particularly important to examine whether the buyer is entitled to any duty relief, for example in the case of a replacement purchase or a first home acquisition.
What should a buyer look out for before purchasing a newly built flat?
When buying a newly built condominium flat it is not enough to check only the floor plan, the technical content and the purchase price. The detailed examination of the legal background is at least as important.
The buyer would do well to have checked in particular:
- the developer’s ownership and right of disposal,
- the land registry status of the preliminary establishment of the condominium,
- whether a condominium building right can be established,
- the consistency of the payment schedule with the degree of completion,
- the contractual consequences of delay and of failure of the transaction,
- the securities of the bank financing,
- the conditions of withdrawal, termination and deletion,
- the precise conditions of handover of possession and of registration of ownership,
- the duty consequences.
The introduction of the condominium building right may be an important step forward in protecting buyers of newly built flats, but in itself it does not make the purchase risk-free. Developers’ contracts are often complex and may contain numerous conditions that the buyer would do well to review with a lawyer before signing.
Legal assistance with buying a newly built flat
Our office provides full legal support in property law matters for the purchase of newly built condominium flats as well. In this framework we take part in reviewing the sale and purchase contract and the related documents, in checking the land registry situation, in examining the buyer’s securities, and in the preliminary review of duty law questions.
If you are about to buy a newly built flat, or would like to have the draft contract sent by the developer checked, please contact our office with confidence.
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