This year, Act No. 39/2020 Coll., On Real
Estate Mediation and on amendments to related acts (the Real
Estate Mediation Act) (hereinafter referred to as the “Act”) will enter into
force, which newly regulates in particular the obligations of real
estate agents.
At present, real
estate agency is not regulated in a separate act and since
2008 it has been covered by real estate activities, which are included in Annex
No. 4 of the Trade Licensing Act among
the subjects of unregulated trades. Apart from the
general terms and conditions for pursuing a trade, which
are full legal capacity and clean record, it is currently not
necessary to meet any other special conditions for the performance of real
estate agency.
According to the explanatory memorandum,
this current regulation appears to be insufficient and unsatisfactory, mainly
due to insufficient client protection, absence of requirements for professional
competence of real estate intermediaries and compulsory liability insurance,
which results in an overall insufficient quality of services provided by some
real estate intermediaries.
What changes does the
new act on mediation bring
From the point of view of real estate
intermediaries, this is an increase in their obligations in relation to the
client and the authorities, when the act introduces the following new
obligations:
- Compulsory liability insurance - the real estate agent
is now obliged to be insured for the entire period of its activity in the
event of the obligation to compensate the applicant for damage caused
by pursuing the real estate mediation with a limit of
indemnity of at least CZK 1,750,000 per insured event and at least 3,500
000 CZK in case of concurrence of several insured events in one year. The
real estate agent shall prove the fulfillment of this obligation
by submitting a duplicate or a certified copy of the insurance contract to
the Ministry of Regional Development, within 10 days of its conclusion.
- Proof of
professional competence - simultaneously with the effectiveness of
the new act, the Trade Licensing Act is being changed, when the trade
"Real Estate Mediation" is newly included
among regulated trades. Those interested in operating this trade
must now prove their professional competence by submitting proof of
education, or completed experience in connection with the level of
education, or by submitting a certificate of completion of a professional
examination in accordance with the National Qualifications Framework, for
the profession of real estate agent, code: 66-042-M. Entrepreneurs who are
authorized to provide real estate agency on the basis of
a unregulated trade are obliged to report to the Trade Licensing
Office "Real Estate Mediation" within 6 months from the date of
entry into force of the Act and to provide documents proving the
fulfillment of the condition of professional competence.
- Implementation of
a sanction - the act introduces misdemeanor liability of real
estate intermediaries in the event that it violates their
obligations under the law. Fines of up to CZK 1,000,000 can be imposed for
committing offenses under the law.
For clients, the new regulation should mean, in particular, an increase in
security when dealing with real estate intermediaries (both due to the need for
real estate intermediaries to have compulsory liability insurance and due to
the requirements for their professional qualifications). Overall, the
legislator hopes that new act will improve the services of real
estate intermediaries and increase their competitiveness on the European
market.
Contract on real
estate mediation and its requirements
A real estate intermediary may provide
real estate mediation services only on the
basis of a real estate mediation contract, the details of which are
regulated by law. In requirements that are not
explicitly regulated by law, the general regulation of the brokerage
contract according to the Civil Code shall apply.
The brokerage contract must be
in writing and contain the following mandatory requirements:
- Designation of the subject of the transfer, or the subject of use
or enjoyment (lease or usufructuary lease),
- The amount of the
purchase price, rent or other remuneration, or the method of its
determination, if the brokerage contract for pecuniary interest,
- The level of the commission or the method of its
determination.
The lack of form or absence of any of the
mandatory requirements causes relative invalidity, which can only be invoked by
the interested party.
On the day of
concluding of a brokerage contract, the real
estate agent must submit to the applicant an extract from the
public register for the subject of real estate mediation, if the real
estate, of which this subject is a part, is registered (extract from
the real estate cadastre). If the subject of real estate brokerage is not registered in
the cadastre, the real estate agent shall submit an extract from the real
estate cadastre in which the land of which this subject is a part is registered.
This abstract must not be older than 3 working days before the day of
concluding the contract. In the event of a breach of this obligation by the
real estate agent, the applicant is entitled to withdraw from
the brokerage contract within 14 days from the date of its
conclusion.
Information
obligation
The real estate broker is also obliged to
inform the interested party about specific defects and restrictions related to
the subject of real estate brokerage, which result from
public register (pledges, easements, etc.), and about those that the
real estate agent knew or should have known due to its professional
competence.
Furthermore, the real estate broker shall
provide the interested party with information on the level of the
commission or the method of its determination, which
he negotiated with a third party, for the same subject of real estate
brokerage.
The real estate agent is obliged
to provide the above information to the applicant no later than on the day of
concluding brokerage contract (if the specific subject of mediation
is not known at the time of conclusion, a period of 14 days from the day when
the object of brokerage is known). In case of breach of these obligations, the
applicant has the right to withdraw from the contract.
The obligation to
conclude a real estate contract
In the contract on real estate mediation,
it is not possible to impose on the applicant, if he is the consumer,
the obligation to conclude a real estate contract or a
contract on concluding a future real estate contract. In the case of
an applicant - entrepreneur, this is possible. However, a brokerage
contract may not ever be included in the same document as the
real estate contract.
Efficiency
The date of entry into force of the Act is 3 March 2020. However, there are professional debates about the correctness of determining the date of entry into force, with some believing that the Act will not enter into force until 1 July 2020 (due to a change or abolition of the general legislature) . However, due to caution, I recommend everyone to follow the new act from March 3, 2020.
Author: Aneta Koubková
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