How to proceed with the sale of immovable property when there are multiple owners - rights and obligations, specific instructions on what I must do when I wish to sell?
In the case of sale of an immovable thing in co-ownership (spoluvlastnictví), until the end of 2014 the statutory pre-emptive right of co-owners regulated in the old Civil Code (i.e. in Act No. 40/1964 Coll.) shall apply. It therefore holds that where a co-ownership share is being transferred, the co-owners have a pre-emptive right, unless it concerns a transfer to a close person. The substance of this statutory pre-emptive right is the obligation of a share co-owner, in the case of transfer of a co-ownership share, to offer it preferentially to all other co-owners. In the case of an immovable thing, the offer must then be made in writing. The offer must state in particular the required purchase price and, where applicable, also other conditions of sale, if they are material to the offering co-owner.
If the co-owners do not agree on the exercise of the pre-emptive right, they have the right to buy out the share proportionately according to the size of the shares. The offer to utilise the pre-emptive right is utilised by the co-owner by payment of the price of the offered co-ownership share on his part (i.e. not merely by a declaration that he is utilising or intends to utilise the pre-emptive right). The period for payment of the share is, in the case of an immovable thing, two months. After its fruitless expiry, the co-owner may then deal freely with his co-ownership share.
If a co-owner is interested in realising the transfer of a co-ownership share earlier, he may agree with the other co-owners that they waive their statutory pre-emptive right. Where several co-owners transfer their co-ownership shares in an immovable thing within the framework of one contract, they may mutually waive their statutory pre-emptive right also directly in its text.
I wish to make a gift, what must I therefore do?
In brief, it may be said that above all you must conclude a gift contract. On the basis of a gift contract, the donor transfers ownership right to a thing free of charge or undertakes to transfer a thing to the donee into ownership free of charge, and the donee accepts the gift or offer.
A gift contract does not generally require written form for its validity (however suitable it may be in the case of more valuable gifts). An exception is the gifting of a thing registered in a public register (for example, immovable things registered in the land register (katastr nemovitostí)), when the gift contract requires written form. The contract also requires written form where the handover of the gifted thing does not occur simultaneously with the manifestation of will to gift and accept the gift.
Subject to certain exceptions, it then holds that ownership right is transferred by the contract itself, at the moment of its effectiveness. Exceptions are then things determined according to kind (for example, money), which are acquired at the earliest at the moment when the specific gifted thing can be distinguished from other things of the same kind, and furthermore also in particular things registered in a public register (for example, immovable things registered in the land register), when ownership right to them passes by registration in the relevant public register. For the purposes of transfer of immovable things registered in the land register, it is thus necessary, in addition to the actual conclusion of a (written) gift contract, to submit to the relevant land registry office an application for entry of ownership right to the gifted immovable thing in favour of the donee.
Death and inheritance in connection with immovable property and the NOZ
From the testator’s perspective, the NOZ brings many positive changes and enables him to decide more freely to whom and in what manner he will bequeath property.
The testator may conclude an inheritance contract (dědická smlouva) with another person. This is binding on both parties and cannot be unilaterally cancelled, which gives heirs greater certainty that they will indeed inherit the given property one day. According to the NOZ, the testator may also draw up a will with conditions or instructions (he may thus condition inheritance, for example, on completion of studies by the heir). If an heir fails to fulfil such a condition, he loses the right to inheritance.
The NOZ further enables an heir to renounce his inheritance right in advance, by means of a contract concluded with the testator. This may be practical, for example, in a situation where the testator has several children and gifts a flat to one of them during his lifetime. Given that he did not gift any more significant property to the other children during his lifetime, he will conclude an agreement on renunciation of inheritance right with the gifted offspring, and the latter will subsequently inherit nothing.
The existing Civil Code proceeded from the concept of the heir’s obligation to pay the testator’s debts only up to the amount of inheritance acquired. According to the NOZ, debts now pass in full scope. The heir must pay the testator’s debts even beyond the scope of inheritance acquired, including from his own property. However, a certain protection is provided to the heir by the so-called inventory of the estate (soupis pozůstalosti). The heir has the right to reserve an inventory of the estate if he asserts it within one month from the day on which the court notified him of this right. If he does so, he will be obliged to pay the testator’s debts only up to the amount of inheritance acquired, not in full amount.
After the testator’s death, the heir may also refuse the inheritance. If he does so, he shall be regarded as if he had not acquired the inheritance. He will not even have the obligation to pay the testator’s debts.
Are there any changes relating to SJM in connection with joint ownership of immovable property?
We consider it important and practical to draw attention generally to the strengthening of the so-called material publicity of registration in the land register (which is a public register). The principle of material publicity attributes to the conduct of persons relying on a registration in the land register and made in good faith in the truthfulness of the registration the intended legal consequences even in cases where the registration does not correspond to reality (hitherto acquirers were protected only by good faith).
Greater demands will thus be placed on existing owners of immovable property, who should continuously monitor the state of registrations in the land register in order properly to protect their rights. These changes will be effective on 1 January 2015. In this connection, we recommend to all who have acquired immovable things into SJM, but the current state of registration does not correspond thereto, where only one of the spouses is registered as owner (for example because only one of them was stated in the purchase contract), that they remedy this state (by means of a consensual declaration of the spouses (souhlasné prohlášení manželů)). Similarly, it is appropriate to remedy the state of registration in the land register also in the case of divorced spouses who have settled the SJM (whether by agreement or by decision of a court) or indeed not, but three years have elapsed since the divorce and the statutory fiction of settlement has thus occurred (and the former spouses have become co-owners of immovable things with equal shares), and this fact has not been proved to the relevant land registry office by the former spouses to date.
The issue of transfer of a cooperative flat into so-called personal ownership
When transferring flats from cooperatives to its members, it is necessary first to deal with which legal regulation will be applied. If units which arose only in 2014 will be transferred, the transfer will be governed solely by the NOZ. However, if units arising by 31 December 2013 will be transferred, the now repealed Act on Ownership of Flats will continue to apply to the transfer of ownership right. The transferred unit will therefore have to be determined as required by the Act on Ownership of Flats, and likewise the purchase contract will have to fulfil all requirements stipulated by the said Act.
When transferring, the housing cooperative will have to decide whether it will transfer the flats free of charge by gift contract, or for consideration on the basis of a purchase contract. In the case of purchase contracts, it is then customary that simultaneously with the decision on transfer, the cooperative decides that the proprietary participation of individual members in the cooperative will be reduced by an amount corresponding to the purchase price. Against the purchase price is then set off the cooperative member’s claim for return of the said proprietary participation – thus in fact even in the case of conclusion of a purchase contract, the cooperative member pays nothing to the cooperative.
JUDr. Taťána Pazourková
The article was originally published in the Real Estate Magazine of Česká Spořitelna.
This text was translated from Czech to English using an AI translator.