Act No. 39/2020 on Real Estate Brokerage and on Amendment of Related Acts (hereinafter referred to as the “Act on Real Estate Brokerage”) entered into force on 3 March 2020 and introduces significant changes in the area of brokering the purchase and sale of real estate. We have prepared a summary for you in the form of questions and answers, and we believe this will help you navigate this new legislation.

What activities does the new Act regulate?
The Act on Real Estate Brokerage regulates the provision of real estate services, in particular the brokerage of the purchase or sale of immovable property and the brokerage of lease or rent of immovable property. The Act primarily sets out requirements for providers of real estate services (real estate agents and real estate agencies) and further mandatory requirements for the content of real estate brokerage contracts.

Whom does the new real estate Act concern?
The Real Estate Act primarily concerns real estate brokers, regulating the exercise of the activity of a real estate agent, and also concerns persons to whom the real estate broker provides its services. Emphasis is placed particularly on consumer protection in real estate brokerage.

If I am already engaged in real estate brokerage, what must I do and by when?
Together with the Act on Real Estate Brokerage, an amendment to Act No. 455/1991 Coll., on Trade Licensing (hereinafter referred to as the “Trade Licensing Act”) was also adopted, whereby real estate brokerage is now a regulated trade (vázaná živnost). The Trade Licensing Act thus imposes stricter requirements on the exercise of this profession. A real estate broker must have university education in certain master’s degree study programmes, or in a bachelor’s degree study programme with practice in the field for at least 1 year, or at least secondary education and 3 years of practice in the field. The real estate broker must now also be insured, with an insurance benefit limit of at least CZK 1,750,000 per insured event and at least CZK 3,500,000 in the event of concurrent multiple insured events in one year. The condition for obtaining the trade licence must be fulfilled within 12 months from the date of entry into force of the Act on Real Estate Brokerage; the real estate broker must have insurance arranged within 2 months from the date of entry into force of the Act on Real Estate Brokerage, so every real estate broker should already be insured now.

If I do not manage this in time, what will happen?
If a real estate broker fails to fulfil its obligation to notify the trade licensing office of the regulated trade “Real Estate Brokerage” and submit documents proving fulfilment of the condition of professional competence for operating this regulated trade, then upon expiry of this period its authorisation to provide real estate brokerage within the aforementioned notifiable free trade shall cease. Operating such activity without the appropriate authorisation is then an administrative offence for which a fine may be imposed.

Will there be a register and will I obtain a certificate after passing examinations which I can present to clients?
To date, it is not mandatory for real estate brokers to be members of any chamber. However, anyone can verify in the trade register whether a particular real estate broker has authorisation to provide real estate brokerage. After passing examinations of professional competence, the graduate of such examinations will receive a document of professional qualification bearing the state emblem.

How to become a real estate agent? If I want to start a business as a real estate broker, what must I do?
As this is now a regulated trade, greater demands are placed on brokers. In addition to the condition of fulfilling the required level of education or length of practice or passing the examination of professional practice, real estate brokers are obliged to be insured with the minimum limits specified in the Act.

What examinations must I undergo as a real estate broker and to whom must I submit proof of passing the examination?
To obtain the regulated trade licence “Real Estate Brokerage”, the condition of education is necessary, or the condition of lower education and concurrent practice in the field, or the condition of professional qualification (passing the examination of professional competence). In the last-mentioned case, it is necessary to submit proof of fulfilment of this condition to the relevant trade licensing office with the application for the issue of a trade licence for the trade “Real Estate Brokerage”.

Who exercises supervision over real estate brokerage?
Municipal trade licensing offices exercise control over compliance with obligations arising from the Act on Real Estate Brokerage. In matters concerning the insurance of a real estate broker, control is exercised by the Ministry for Regional Development.

May real estate brokers provide custody of money within a sale?
Real estate brokers may provide custody within a sale, but only at the request of an interested party submitted in written form on a separate sheet, and this under strict conditions set out by the Act, particularly regarding the custody account, handling of funds therein and the information obligation to the bank at which the custody account is held.

What are the new conditions for a brokerage contract between me as a real estate agency/agent and a client who is selling or buying real estate?
The real estate brokerage contract now requires written form and its essential elements are regulated by the Act, in particular the designation of the subject matter of transfer, the amount of the purchase price or rent and the amount of commission, including the manner of its payment. Furthermore, for example, the broker is obliged to inform about all defects of the subject matter of transfer (e.g. list all liens, easements, rights of use, that there is no access to the subject matter of transfer, there is no water, etc.). The real estate broker must also provide the interested party with an extract from the Land Register not older than 3 working days before the date of conclusion of the real estate brokerage contract.

What must the contract with a party interested in purchasing real estate not contain?
A brokerage contract cannot contain an obligation of the interested party to conclude a purchase contract (or a contract for a future contract). This should be possible to resolve by making the entitlement to commission arise from the creation of an opportunity to conclude a purchase contract (the interested party need not use it, but the entitlement to commission will arise).

How are the conditions for payment of a deposit on the purchase of real estate changing?
If a deposit on commission is agreed, it must not amount to more than 2/3 of the total agreed commission. With some clients, we resolve this situation in such a way that the remaining part of the anticipated commission is placed in custody and, after fulfilment of the agreed conditions, is paid out to the broker.

If you have not found an answer to your specific question regarding the new Act on Real Estate Brokerage, please do not hesitate to contact us through our online system for legal advice eAdvokacie or arrange a meeting with us at our office in Prague; you can write to us at email kancelar@eadvokacie.cz or call +420 233 375 542.

This text was translated from Czech to English using an AI translator.