Public Auctions in a New Guise

Since the current act is already outdated half of all auctions are conducted without any rules at all, as the statistics show. But now after more than 20 years of effectiveness of the current legislation, a new act on public auctions has been adopted, which shall enter into force in January 2025.

The main goal of the new act is to finally harmonize the rules for conduct of auctions with the legal regulation contained in the Civil Code. The new act is intended to unify the respective legal concepts and to simplify the rules for conduct of public auctions. It modernizes the legal regulation of public auctions and eliminates unnecessary paperwork, which will simplify the whole process and also make it cheaper.

The new act also introduces detailed rules for electronic auctions and a simplified auction regime for movable things with a bidding price under CZK 300,000.

Under the current act a sanction for breach of auctioneer’s obligations doesn´t exist, which leads to deliberate breach of the auctioneer’s duties. From 2025 it will be possible to impose a penalty of up to a million-crowns for violation of substantial statutory obligations.

Newly, a publicly accessible Central register of auctions to be administered by the Ministry of Regional Development shall allow the auctioneers, instead of sending documents in paper form, to enter relevant information online into the register. It will be linked to the register of residents, register of persons, which will secure automatic continuous data update.

The new legislation brings with it also changes in other related acts, e.g. the trades licensing act. Public auctions initiated by the owner shall be moved from the current concession regime to a more relaxed regime of a regulated trade titled „Conducting of public auctions other than involuntary auctions“. Involuntary auctions will remain in the most restrictive concession regime.

As with any new law, there are voices for and against its new wording. Only time and practice will tell what its flaws really are.

Giese & Partner

Mgr. Denisa Molnár