Cooperative flat (družstevní byt)

A cooperative flat (družstevní byt) is a flat in a building owned or co-owned by a housing cooperative, which the cooperative has let to one of its members. The member, or their predecessor, contributed to acquiring the flat with a membership contribution (Section 729 of the Business Corporations Act). The cooperative owns the flat. The member holds a cooperative share, meaning the rights and duties of membership, and the tenancy of the flat that comes with it.

How a cooperative flat is sold

Selling a cooperative flat really means transferring the cooperative share. The tenancy passes with the share to the new member with all rights and duties, including the previous member's debts to the cooperative related to using the flat; the previous member remains liable for them (Sections 601 and 736). A housing cooperative's articles cannot restrict or exclude the transfer if the acquirer meets the membership conditions. The transfer takes effect towards the cooperative on the day it receives the effective transfer agreement or a joint declaration that it has been concluded. The transfer is not entered in the land register; the cooperative keeps its own list of members.

Differences from a freehold flat

• The title sheet usually shows the cooperative as owner of the building or flat, never the member.
• The flat cannot be pledged because the member does not own it. Instead of a standard mortgage, banks therefore offer loans secured on another property or unsecured loans.
• The member pays the cooperative rent which, by law, covers only the cooperative's reasonable costs of managing the flats, including repairs and modernisation of the building and contributions to a long-term fund for repairs and investment (Section 744). For a freehold flat, the equivalent is the building management contribution.
• In an owners' association (SVJ) each member owns their flat; in a housing cooperative the cooperative is the owner.

Points to watch

Before buying, it is worth reading the cooperative's articles (conditions of membership and tenancy), checking with the cooperative that the seller has no debts to it, and asking what loans the cooperative is repaying and what repairs it plans, because these feed into the rent. The flat can become a freehold flat only once the building has been divided into units and the cooperative transfers the flat to the member. Whether and when that will happen has to be checked with the cooperative itself.