7 February 2019

New rules and duties for real property intermediaries

To protect consumers and enhance the quality of real property services, the government approved a new bill on real property intermediation and on changes to the Trade Licensing Act. Persons interested in the purchase/sale/lease/acquisition of the right to use real property should obtain a large number of new rights and, simultaneously, a large number of new duties should arise for intermediaries. The bill is proposed to be effective from 1 January 2020.

Iva Baranová
Ladislav Vajdík

The bill introduces a new type of contract into the Czech body of laws, i.e. a contract for real property intermediation, determining its mandatory written form and essentials whose absence would render a contract invalid. Nonetheless, this type of a contract’s invalidity may only be invoked by the interested person and not the intermediary.

Special protection will be provided to consumers (interested persons who enter into a contractual relationship outside their business or profession). 

Contrariwise, real property intermediaries have to prepare for new duties. The bill among other things requires that intermediaries enter into professional liability insurance, meeting the minimum insurance limits stipulated by law, and maintain it over the entire duration of their professional activity. If the intermediary does not fulfil this duty, the Ministry of Regional Development may impose a penalty of up to CZK 1 million.

Under the bill, the real property intermediary’s activity will fall into the category of professional trades whose operation is conditional upon a necessary qualification (until now it was in the unqualified trade category). This condition applies to both entrepreneurs and persons through whom the trade is carried out. The law stipulates deadlines within which intermediaries must notify the Trade Licensing Office of their professional trade “real property intermediation” and provide documentation supporting their professional qualification. If an intermediary fails to notify the Trade Licensing Office of the professional trade and/or fails to provide the required supporting documentation within the stipulated deadline, their licence to provide real property intermediation within the unqualified trade regime will cease to exist.

The bill’s wording is likely to further be amended during the legislative process. Nevertheless, real property intermediaries should pay attention to the bill as early as possible to be able to fulfil their duties in a due and timely manner.

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