Czech Republic: Significant Changes in Real Estate Law under the New Civil Code

New definition of real estate rights

The New Civil Code will introduce a new wider catalogue of real estate rights, including establishment of new legal institutes such as the right of construction and the trust of foreign property. The current encumbrances will be divided into servitudes (the owner of a burdened plot must refrain from an activity or allow an activity of a third person) and real burdens (the owner of a burdened plot must do something in favour of a third person).

The current Civil Code does not contain any definition of a thing, but legal theory considers a thing to be only material objects that are controllable and serve the needs of humans. The New Civil Code will introduce a wide definition of a thing whereby the object of legal relationships can be a material or an immaterial thing. In real estate law, certain defined rights will be legally considered as an immovable thing (eg, the right of construction).

The principle of Superficies solo cedit and the right of construction

Under the current Civil Code, a building is not part of the plot on which it was constructed. This means that the owner of the plot and the owner of the building on the plot can be different persons and may dispose of the building and the plot separately.

The New Civil Code returns to the classic Roman principle used in most European states: structures firmly connected to the plot are considered as parts of the plot. As of 1 January 2014, buildings placed on the plot will become part of the plot if the owner of the building and the plot are the same and the owner’s transactions with the plot will always also include the building on the plot.

If the owner of the building differs from the owner of the plot on 1 January 2014, the New Civil Code creates a statutory pre-emption right of the owner of the plot with respect to the building, and vice versa. The pre-emption right is effective towards all third persons; the owner of the plot will be obliged to offer the plot to the owner of the building in the case of any transfer of the plot to a third person. If the pre-emption right is not used, it will also burden the new owner of the plot in favour of the owner of the building. However, if the pre-emption right is used, the separate ownership of the plot and the ownership of the building will cease to exist.

In connection with the above new principle, a new legal institute will be introduced by the New Civil Code: the so-called right of construction, which is a real estate right declared by the New Civil Code for an immovable thing. All provisions regulating immovable things in the New Civil Code apply to the right of construction accordingly. The person owning the right of construction may build and use a structure on the burdened plot up to 99 years. The right of construction can be created against payment or free of charge, is transferable and heritable and becomes legally effective by entry into the land registry. Also, the acquisition of this right by usucapio will be legally possible.

Acquisition of ownership from a non-owner

Under the current Civil Code, the acquisition of ownership from a non-owner is legally not possible. The acquirer can only become a possessor with the possibility to acquire the ownership in the future by usucapio. As this principle also applies in real estate law, one generally cannot rely on the entry in the land registry on ownership of real property. The person inscribed owner in the land registry may not be the legal owner of the property because the ownership was not acquired according to the law.

The New Civil Code introduces the general possibility to acquire the ownership right also from a non-owner. With respect to the real estate law and the administration of the land registry, the New Civil Code changes the current partial material publicity of the entries in the land registry to full material publicity. If someone acquires real property from a non-owner that was – based on an invalid legal title – entered as owner of the property in the land registry, the acquirer will still become the legal owner of the property. This follows the new principle that everybody who relies in good faith on the entries in the land registry is protected as if the entry corresponded to the actual legal status.

The impacts of the changes introduced by the New Civil Code on the current legal relationships regarding real estate is unpredictable and still a hot topic among legal professionals.

The New Civil Code introduces the general possibility to acquire the ownership right also from a non-owner.

authors: Martin Kubánek, Pavla Šlapáková