New Czech real estate law
Real Estate Act 2020
The new law on real estate brokers, which should apply from 1.1.2020 seeks to cultivate the Czech real estate market. We bring you an overview of the proposed changes.
- Obligatory professional insurance of real estate brokers with insurance indemnity limit min. 1,75 million CZK per claim and 3,5 million CZK in the event of more than one loss caused in one year.
- Qualified trade licence for brokers. It will be no longer enough to establish free unqualified trade licence. Currently anyone who has a clean criminal record can immediately open real estate agency. The condition of the qualified trade license is newly professional education, which will be verified by a professional examination. Brokers with secondary education must have 5 years of experience and brokers with university education need 3 years of experience to avoid a professional examination.
- A written mediation agreement between the broker and the seller of the property will be obligatory. Written agreement should reduce unfair practices such as unauthorized advertising of orders or takeover of contracts between individual real estate agents.
- Information duty – the real estate agent is obliged to inform those interested in buying / renting real estate about specific defects and limitations, then it is obliged to clearly inform about the amount of its commission. If the broker fails to comply with this obligation within 14 days, the candidate may resign from the contract.
- Penalties for offences – according to the severity of the misconduct, fines are introduced, for less serious offences up to 100.000 CZK
Adoption of this law will certainly reduce the number of small real estate entities, professional insurance, which costs approximately 10.000 CZK per year, introduces new barriers to market entry.