New Real Estate Brokerage Act
The year 2021 has brought many legal changes effecting the real estate market in the Czech Republic. Abolition of the property acquisition tax and a major amendment to the building act are just a few examples. However, for many players on the market the all new Real Estate Brokerage Act has brought the most important changes. As a result, real estate brokerage has become a regulated profession and agents must now fully comply with brand new rules and conditions. What is the impact on real estate brokers and their clients?
Agents have to provide evidence of education and professional experience within a certain period to obtain the now necessary trade licence. Further, professional liability insurance shall be arranged. The breach of these obligations shall be deemed an offence and thus a fine may be imposed.
The interest of clients shall be protected more efficiently by the new act. First of all, the brokerage agreement must be in writing, otherwise its invalidity can be claimed. The amount of brokerage fees or the manner of their determination shall be stipulated. Moreover, the real estate agent has to notify the client of any defects, which the agent either learned of from a public register or should have known of in the light of his expertise. The client also has to be provided with an excerpt from the public register regarding the respective object. If the real estate agent fails to do so, the customer may withdraw from the agreement.
Another novelty brought by the real estate brokerage act is the prohibition of escrow offered by the real estate broker unless specifically required in writing by the client. Further requirements such as e.g. the necessity to hold the escrow on separate accounts must be met.
Finally, but surely not the last aspect in the count of changes brought by the act, is the regulation of exclusive brokerage. Such exclusive representation with the consumer may be arranged for a maximum of 6 months with the option to prolong such agreement.
Remarkably, there were several opinions on the actual date of effectiveness of the act. One was March 3, 2020, which has been proclaimed by the Ministry of Interior, the other was July 1, 2020, both depending on the interpretation of an amendment to the collection and international treaties act. This has a significant importance for real estate agents as they have to comply with the rules within certain periods. However, some of the periods have been prolonged due to COVID-19 regulations until March 3, 2021 and the act has already been amended several times. Thanks to these changes it is now clear that the earlier effective date shall apply.
Mgr. Bc. Karolína Szturz