Czech Republic: The International Comparative Legal Guide To: Real Estate - Czech Republic

1 REAL ESTATE LAW

1.1 Please briefly describe the main laws that govern real estate in the Czech Republic. Laws relating to leases of business premises should be listed in response to question 10.1. Those relating to zoning and environmental should be listed in response to question 11.1.

The main laws governing real estate in the Czech Republic are: the Civil Code – No. 40/1964 Coll. (Občansky zakonik); the Commercial Code – No. 513/1991 Coll. (Obchodni zakonik); the Act on Lease of Non-Residential Premises – No. 116/1990 Coll. (Zakon o najmu a podnajmu nebytovych prostor); the Czech Land Register Act – No. 344/1992 Coll. (Zakon o katastru nemovitosti ČR); the Ownership of Flats Act – No. 72/1994 Coll. (Zakon o vlastnictvi bytů); the Registration of Ownership and Other Property Rights to Immovables Act – No. 265/92 Coll. (Zakon o zapisech vlastnickych a jinych věcnych prav k nemovitostem); the Building Act – No. 183/2006 Coll. (Stavebni zakon); the Real Estate Tax Act – No. 338/1992 Coll. (Zakon o dani z nemovitosti); the Inheritance Tax, Gift Tax and Real Estate Transfer Tax Act – No. 357/1992 Coll. (Zakon o dani dědicke, dani darovaci a dani z převodu nemovitosti); and the Foreign Exchange Act – No. 219/1995 Coll. (Devizovy zakon).

1.2 What is the impact (if any) on real estate of local common law in the Czech Republic?

As the Czech Legal system belongs to the Continental legal culture, the role of common law is very minor. Real estate is governed with a binding force only by the statutes. Nevertheless, common law is given consideration in the interpretation of statutory law.

1.3 Are international laws relevant to real estate in the Czech Republic? Please ignore EU legislation enacted locally in EU countries.

Legal questions and problems with a link to international elements are regulated by the Private and Procedural International Law Act – No. 97/1963 Coll. (Zakon o mezinarodnim pravu soukromem a procesnim). The parties are free to choose the law that will govern their contract and the court that will decide their case. The situation is different with regards to rights in rem. These rights are governed by the law of the place where they are located, which means, in this case, the law of the Czech Republic. Therefore, international treaties and conventions are the only directly applicable international instruments for real estate in the Czech Republic.

2 OWNERSHIP

2.1 Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?

There are no legal restrictions on foreigners acquiring ownership of real estate located in the Czech Republic.

3 REAL ESTATE RIGHTS

3.1 What are the types of rights over land recognised in the Czech Republic? Are any of them purely contractual between the parties?

The most significant rights over land in the Czech Republic are: ownership (sole ownership, co-ownership or community property of spouses); possession; mortgages and sub-mortgages; easements; leases and subleases; preliminary contracts; pre-emptive rights; and rights of back purchase.

Some of the aforementioned rights are not registered in the Land Register and are, therefore, entirely contractual. Namely (a) possession, (b) leases and subleases, (c) pre-emption rights in personam, and (d) rights of back purchase, whereas the possession is a factual state.

3.2 Are there any scenarios where the right to a real estate diverges from the right to a building constructed thereon?

The superficies solo cedit principle was removed from the Czech legal system through Act No.141/1950 Coll., the Civil Code, effective 1 January 1951. Due to this fact it is quite common that the owner of real estate differs from the owner of the building built thereon. Nevertheless, the Roman law principle is to be restored by the New Civil Code that shall come into effect on 1 January 2014.

4 SYSTEM OF REGISTRATION

4.1 Is all land in the Czech Republic required to be registered? What land (or rights) are unregistered?

The entire surface of the Czech Republic is covered by the Land Register. Some of the rights over land are not registered in the Land Register (see question 3.1).

4.2 Is there a state guarantee of title? What does it guarantee?

There are no state guarantees in the Czech Republic as such. However, the restricted principle of material publicity applies under Czech law. Any person who relies on information in the Land Register registered after 1 January 1993 is in good faith that the entry in the Land Register corresponds to the real state of affairs, unless the person knew that the records are not in accordance with reality. In case of a discrepancy between the entry in the Land Register and the real state, the real state shall prevail. A person acquiring real property acting in good faith in the entry in the Land Register cannot acquire the real property from the non-owner and only becomes a holder (possession) in good faith.

4.3 What rights in land are compulsory registrable? What (if any) is the consequence of non-registration?

All rights in rem are registered, because they generally begin to exist after registration in the Land Register. The list of these rights includes: (i) ownership (co-ownership, community property of spouses); (ii) mortgages; (iii) easements; and (iv) pre-emption rights in rem.

If such right is not registered in the Land Register, the right will not become legally effective, but will exist only as a contractual claim for performance (the transfer of the right).

4.4 What rights in land are not required to be registered?

There are several rights that do not need to be registered in order to become legally effective, namely (a) possession, (b) leases and subleases, (c) pre-emption rights in personam, and (d) rights of back purchase.

4.5 Where there are both unregistered and registered land or rights is there a probationary period following first registration or are there perhaps different classes or qualities of title on first registration? Please give details. First registration means the occasion upon which unregistered land or rights are first registered in the registries.

The entire surface of the Czech Republic is covered by the Land Register. Therefore, unregistered land does not exist in the Czech Republic.

4.6 On a land sale, when is title (or ownership) transferred to the buyer?

Ownership of real estate is transferred through the decision by the Land Register Authority allowing the registration of the title in the Land Register with effect from the day when the proposal is filed with the Land Register Authority.

4.7 Please briefly describe how some rights obtain priority over other rights. Do earlier rights defeat later rights?

Generally, the principle of priority applies with respect to the rights which shall be registered in the Land Registry. The Land Register Authority will register all the rights in order as the respective applications were filed with the Land Register Authority. However, as the principles and rules of priority slightly differ with respect to the different rights that may be registered in the Land Register (e.g., transfer of the ownership right or order of creditors when mortgaged land is purchased), we cannot provide a comprehensive answer regarding the general principles of priority or the defeating of later rights.

5 THE REGISTRY / REGISTRIES

5.1 How many land registries operate in the Czech Republic? If more than one please specify their differing rules and requirements.

There is only one Land Register operating in the Czech Republic, although it has 14 branches with authority over different parts of the country.

5.2 Does the land registry issue a physical title document to the owners of registered real estate?

The Land Register can issue an ownership certificate. It can also be obtained from notaries, post offices and certain other subjects having access to the Land Register.

5.3 Can any transaction relating to registered real estate be completed electronically? What documents need to be provided to the land registry for the registration of ownership right? Can information on ownership of registered real estate be accessed electronically?

All of the procedures can be partially completed electronically, because all necessary forms are published on the Internet and can be downloaded very easily. Mostly they can be sent directly to the data boxes of the Land Register. Nevertheless, some of them cannot, because the law requires certain attributes which cannot be contained in the electronic version.

To register an ownership right, the following documents have to be provided: (i) original of the title or its certified copy (e.g. purchase agreement); and (ii) certificate from the Commercial Register or other statutory register if the owner is a legal entity and the certificate is not accessible via the Internet.

The basic information from the Land Register is published on the Internet and is publicly available. There is also a paid Land Register electronic database which is more detailed and available to registered users for a fee.

5.4 Can compensation be claimed from the registry/registries if it/they makes a mistake?

Yes, it can be claimed based on the State Liability Act – No. 82/1998 (Zakon o odpovědnosti za akodu způsobenou při vykonu veřejne moci rozhodnutim nebo nespravnym uřednim postupem). State institutions and other public authorities are responsible for the damages incurred during the exercise of public services and there is a right to compensation.

5.5 Are there restrictions on public access to the register? Can a buyer obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate?

Anyone is allowed to inspect the documents or make copies of them. Certain documents are accessible only if the person's identity is proven and the purpose for which they need the information is stated. Access to the online information is free, though limited by the amount of information published.

6 REAL ESTATE MARKET

6.1 Which parties (in addition to the buyer and seller and the buyer's finance provider) would normally be involved in a real estate transaction in the Czech Republic? Please briefly describe their roles and/or duties.

  1. Real estate agents, brokerage offices, property developers

    A real estate agent may act on behalf of one party only (either the seller or the buyer or both parties). For a seller, the agent collects and assembles all pertinent information related to the property, advertises the sale of the property and looks for prospective buyers. For a buyer, the agent usually looks for available properties on the market that match the buyer's needs and then assists the buyer in making an offer.
  2. Lawyers

    Lawyers may assist a buyer or seller through the entire process of a sale. First, they may examine legal risks and financial concerns associated with the property. They may also draft and negotiate a purchase agreement. Finally, they may assist with the filing of an application for entry of the property into the Land Register. Lawyers may also act as escrow agents.
  3. Other parties

    In general, the signatures on the purchase contract will be certified; therefore, a notary public, attorney, municipal or postal office may be involved in the transaction. Sometimes the buyer will commission tax advisors, technical and environmental experts, and building engineers or architects to inspect the real estate in order to identify defects, etc.
  4. Geodesists and the Building Authority

    If the transaction entered in the Land Register is to be displayed in the cadastral map (e.g. only a part of the land will be purchased), a geometrical plan must be issued and verified by an authorised person and the Building Authority has to grant its consent with the division of the respective land.

6.2 How and on what basis are these persons remunerated?

In general, all of the persons described under question 6.1 are remunerated on the basis of specific terms negotiated with the client, with the exemptions stated below. If the remuneration for the attorney is not negotiated, it will be determined by the Decree on Attorneys' Tariff (Advokatni tarif) issued by the Czech Ministry of Justice. The notary fees are always determined by the Decree issued by the Czech Ministry of Justice (Vyhlaaka o odměnach a nahradach notařů a spravců dědictvi). In case of the municipal office, the remuneration is always determined by the Act on Administrative Fees - No. 634/2004 Coll. (Zakon o spravnich poplatcich).

6.3 How has the real estate market in the Czech Republic recovered or reacted following the global credit crunch and worldwide recession in 2008/2010? What were the most important real estate transactions in the Czech Republic in the past year? Please include both local and international investors in your answer.

In 2009, real estate investments generally dropped by 80% and prices of flats dropped by 15%, but rents increased. In certain areas, however, the prices of real property dropped only by 5% and are now stagnant or rising. Real estate investments increased slowly during 2010, reaching their peak in 2011. Compared with 2011, 2012 shows limited activity; however, the total volume of investments may still stay above the level from 2009 and 2010. The most active sector with respect to investment is the office sector followed by retail. Only a few foreign companies are entering the real estate market. The most important transactions of 2012 are the sale of the 4D Kodanska Office Centre (administrative building in Prague) by Orco's Endurance to Daramis Group, the sale of the Radio Free Europe Building in Prague to American private equity group L88 and the sale of City Green Court (administrative building in Prague) from Skanska Property Czech Republic to the German fund Deka Immobilien.

6.4 Is there a trend in the Czech Republic towards the investment in retirement homes / nursing homes due to the increased ageing of the population?

There is no such tendency on the real estate market at the moment.

7 LIABILITIES OF BUYERS AND SELLERS IN REAL ESTATE TRANSACTIONS

7.1 What (if any) are the minimum formalities for the sale and purchase of real estate?

The purchase contract has to be made in writing. The manifestation of intent of both parties must be contained in the same document. This formal requirement affects the validity of the agreement. The signatures of the contracting parties must generally be certified either by a notary public, an attorney or a municipal office. The purchase contract has to designate the contractual parties, the real estate (cadastral area and land plot number) and the purchase price. The transfer of ownership of a real estate generally has to be registered in the Land Register (except, e.g. small buildings or underground buildings). Therefore, it only may be transferred on the basis of a legal title (e.g. a purchase contract) followed by registration in the Land Register. Depending on the nature of the registration, specific documents supporting the granting, transfer or limitation of rights to be registered must be attached (e.g. contract regarding title).

7.2 Is the seller under a duty of disclosure? What matters must be disclosed?

The seller is obliged to inform the buyer of any defects in the object of purchase which are known to him. Furthermore, it is common for the seller to guarantee the correctness of any information disclosed in the purchase contract and to warrant that he did not withhold any relevant information. Effective 1 January 2013, the seller is obliged to submit to the buyer an energy performance certificate of the building prior or at the latest by the date of conclusion of the purchase agreement on the building.

7.3 Can the seller be liable to the buyer for misrepresentation?

If the seller has assured the buyer that the object of purchase is of a certain quality, especially that it has attributes stipulated by the buyer, or that it is without defects (including legal defects), and this disclosure turns out to be false, the buyer has the right to withdraw from the purchase contract. Moreover, the seller will be liable for the loss that the buyer suffers.

7.4 Do sellers usually give contractual warranties to the buyer? What would be the scope of these? What is the function of warranties (e.g. to apportion risk, to give information)? Are warranties a substitute for the buyer carrying out his own diligence?

Purchase contracts usually contain representations and warranties e.g., relating to encumbrances and third-party rights, to the dedication of the real estate according to zoning ordinances and building regulations, environmental issues, administrative and corporate approvals, taxes, etc.

The warranties are to apportion the risk, since the buyer has certain additional rights if the real estate is not of the stipulated quality (see question 7.3).

With respect to the statutory warranty, the buyer must notify the seller of defects that existed at the time of performance without undue delay once he has had an opportunity to examine the real estate, at the latest within six months from the handover of the real estate, otherwise his claim shall lapse.

7.5 Does the seller warrant its ownership in any way? Please give details.

Yes, usually the seller warrants ownership of the property and nonexistence of other encumbrances aside from those registered in the Land Register or otherwise disclosed. The seller is liable for lack of title under the relevant statutory law, described in detail under question 7.3.

7.6 What (if any) are the liabilities of the buyer (in addition to paying the sale price)?

In addition to paying the sale price (including VAT, if applicable), the buyer guarantees the payment of the real estate transfer tax provided that the seller fails to do so.

8 FINANCE AND BANKING

8.1 Please briefly describe any regulations concerning the lending of money to finance real estate. Are the rules different as between resident and non-resident persons and/or between individual persons and corporate entities?

There is no special regulation regarding the lending of money to finance real estate. The regulation distinguishes between entrepreneur and non-entrepreneur (protected by consumer law). The loan agreement is regulated for both categories in general by the Commercial Code.

8.2 What are the main methods by which a real estate lender seeks to protect itself from default by the borrower?

The lender will typically seek some form of security instrument – commonly a mortgage, but it is also possible to conclude a guarantee, bank guarantee, financial pledge, securing transfer of rights, contractual fine, or an assignment over receivables.

The mortgage to the real estate comes into effect after registration in the Land Register, or in some cases in the Mortgage Registry.

8.3 What are the common proceedings for realisation of mortgaged properties? Are there any options for a mortgagee to realise a mortgaged property without involving court proceedings or the contribution of the mortgagor?

The mortgagee can choose from two types of proceedings in order to realise a mortgage. The two options are mandatory and there is no other way to realise a mortgage. One is judicial sale of a mortgaged property executed by a court, the other is public auction executed by an authorised person. The court is not involved in the public auction. The contribution of the mortgagor is not necessary in any case.

8.4 What minimum formalities are required for real estate lending?

There are no specific requirements that must be met with respect to the conclusion of the loan agreement and/or mortgage agreement as described under questions 8.1 and 8.2.

8.5 How is a real estate lender protected from claims against the borrower or the real estate asset by other creditors?

In order to be fully effective, a contract under which real estate is encumbered must be entered in the Land Register. This is of particular importance with regard to third parties. A ranking system applies to mortgages entered in the Land Register. Therefore, prior registered mortgages will be satisfied before mortgages with a later rank.

9 TAX

9.1 Are transfers of real estate subject to a transfer tax? How much? Who is liable?

The real estate transfer tax must be paid on the transfer or transference of an ownership title to real estate for consideration. The current tax rate amounts to 3% on the tax base. In general, the tax is levied either on the purchase price including VAT (if applicable) or an administrative value under the Valuation Act (zakon o oceňovani majetku), whichever amount is higher. The seller is liable to pay the real estate transfer tax with the buyer as a guarantor.

9.2 When is the transfer tax paid?

In general, the real estate transfer tax is payable by the end of the third month following the month when registration of the transfer was made in the Land Register.

9.3 Are transfers of real estate by individuals subject to income tax?

Transfers of family houses or apartments are subject to income tax if the seller has not lived in the respective real estate less than two years prior to the transfer. In case of other real estate, residence of at least five years is necessary for the exemption. Detailed conditions are to be found in the Income Tax Act – No. 586/1992 Coll. (zakon o danich z přijmů).

9.4 Are transfers of real estate subject to VAT? How much? Who is liable? Are there any exemptions?

The transfer of real estate is subject to VAT under the circumstances set out in the VAT Act (zakon o dani z přidane hodnoty). In general, most transfers of real estate are VAT exempt. If not, they are subject to a VAT rate of 20% or 14% (solely for family houses and/or residential buildings with a limited size). VAT is paid by the buyer to the seller, and the seller must pay the VAT to the competent tax authority.

9.5 What other tax or taxes (if any) are payable by the seller on the disposal of a property?

In case of a donation from a donor having domicile in the Czech Republic to a receiver having domicile outside of the Czech Republic, the donor has to pay donation tax. In other cases of donation, the donor only guarantees the payment of the donation tax that the receiver is responsible for.

9.6 Is taxation different if ownership of a company (or other entity) owning real estate is transferred?

With respect to asset deals, a real estate transfer tax of 3% of the purchase price must be paid.

With respect to share deals, it is common (especially for acquisitions of large real estate portfolios) to avoid the land transfer tax by acquiring shares in the company holding the real estate through another company or companies. Share deals are also not levied with VAT but are subject to income tax.

10 LEASES OF BUSINESS PREMISES

10.1 Please briefly describe the main laws that regulate leases of business premises.

Lease agreements on non-residential premises are governed by the Lease and Sublease of Non-residential Premises Act – No. 111/1990 Coll. (Zakon o najmu a podnajmu nebytovych prostor) and subsidiary by the Civil Code – No. 40/1964 Coll. (Občansky zakonik) and the Commercial Code – No. 513/1991 Coll. (Obchodni zakonik).

10.2 What types of business lease exist?

The Lease and Sublease of Non-residential Premises Act does not distinguish between leases of different types of business buildings.

10.3 What are the typical provisions for leases of business premises in the Czech Republic regarding: (a) length of term; (b) rent increases; (c) tenant's right to sell or sublease; (d) insurance; (e) (i) change of control of the tenant; and (ii) transfer of lease as a result of a corporate restructuring (e.g. merger); and (f) repairs?

  1. Length of term

    The lease can be concluded either for an indefinite period or for a fixed term. Lease for an indefinite period can be terminated in writing generally without stating a reason. Premature termination of a fixed-term lease is generally possible only for the reasons stated in the Lease and Sublease of Non-residential Premises Act. However this provision is not mandatory, so the contracting parties may deviate from the statutory provisions. Lease agreements are usually concluded for a fixed term and the contracting parties usually explicitly stipulate the reasons for the premature termination of the lease in the lease agreement.
  2. Rent increases

    In general, the contracting parties are completely free to negotiate the rent price and therefore the rent increase. The rent increase is usually bound to an objective criterion, such as inflation or some kind of index (e.g. consumer price index).
  3. Tenant's right to sell or sublease

    The tenant is allowed to sublease the premises only for the fixed term and with the prior written consent of the landlord. The sublease contract must be made in writing. The tenant does not have the right to sell the premises.
  4. Insurance

    The tenant has a duty of care in order to prevent the premises from damages. The Civil Code does not regulate insurance; however, the parties usually include the respective provision in the lease agreement. The costs of insurance are usually borne by the tenant.
  5. (i) Change of control of the tenant

    (ii) Transfer of lease as a result of a corporate restructuring (e.g. merger)

    Regulation of the change of control or transfer of a lease on the part of the tenant can only be derived from the Commercial Code. If not stated otherwise in the respective agreement, it should not affect the agreement at all. The Lease and Sublease of Non-residential Premises Act prohibits the termination of the lease due to the ownership transfer of the premises leased, however, the regulation is non-mandatory.
  6. Repairs

    If not agreed otherwise by the contractual parties, the landlord is obliged to maintain the premises in good condition, to ensure the due performance of services connected with the premises, and to ensure a complete and peaceful exercise of tenant's rights. The tenant is obliged to notify the landlord without unnecessary delay about the necessity of repairs which must be made by the landlord. If the tenant does not allow the landlord to make these repairs, he will be responsible for any damages which occur from the landlord's obligation to make the repairs.

10.4 What taxes are payable on rent either by the landlord or tenant of a business lease?

The income from a business lease is subject to the income tax on the part of the landlord.

10.5 In what circumstances are business leases usually terminated (e.g. at expiry, on default, by either party etc.)? Are there any special provisions allowing a tenant to extend or renew the lease or for either party to be compensated by the other for any reason on termination?

In most cases the business leases are terminated upon expiry or upon agreement of the contracting parties.

Pursuant to the Civil Code, if the tenant uses the subject of the lease after the termination of the lease and the landlord does not file a claim with the court within 30 days from the termination, the lease agreement shall continue under the same conditions for the period of one year (or shorter if the term in the lease agreement was shorter than one year). It is also common for the lease agreement to contain clauses in this respect.

Under Czech law it is not possible to put a contracting party under penalty for withdrawing from or terminating the lease agreement since the termination/withdrawal represents an execution of its right.

10.6 Does the landlord and/or the tenant of a business lease cease to be liable for their respective obligations under the lease once they have sold their interest? Can they be responsible after the sale in respect of pre-sale non compliance?

If the landlord sells the subject of a lease, the new owner of the subject of the lease automatically enters all the rights and duties under the eventual lease agreement thereto. The lease agreement passes onto the buyer with all (even past) obligations, hence the seller ceases to be liable for his obligations under the lease towards the tenant and the buyer is obliged to fulfil even the obligations towards the tenant that arose prior to the transaction.

However, the seller may be liable towards the buyer under the purchase agreement (for the subject of the lease) for all the obligations that have arisen prior to the transaction, if agreed.

10.7 Green leases seek to impose obligations on landlords and tenants designed to promote greater sustainable use of buildings and in the reduction of the "environmental footprint" of a building. Please briefly describe any "green obligations" commonly found in leases stating whether these are clearly defined, enforceable legal obligations or something not amounting to enforceable legal obligations (for example aspirational objectives).

Effective from 1 January 2013, builders, building owners, and in certain cases landlords of residential as well as non-residential premises are subject to a list of new obligations under the Energy Management Act (Zakon o hospodařeni energii). However, these obligations have to be fulfilled prior to the conclusion of a lease agreement and they do not affect the current leases.

As waste originators, entrepreneurs must follow the regulations of the Waste Act (Zakon o odpadech).

11 PUBLIC LAW PERMITS AND OBLIGATIONS

11.1 What are the main laws which govern zoning and related matters concerning the use and occupation of land? Please briefly describe them and include environmental laws.

The Czech Republic has comprehensive land-use planning and building regulations set out in the Building Code - No. 183/2006 Coll. (Zakon o uzemnim planovani a stavebnim řadu - stavebni zakon). Based on these rules, municipalities enact a zoning plan (uzemni plan) setting out a basic development concept of the municipality's area, the protection of its values, its layout plan, landscape arrangement, public infrastructure conception, built-up areas, etc. For certain public and private projects, which are likely to have significant effects on the environment, a statement from the authority focusing on environmental protection on the assessment of their effects on the environment is required. The relevant proceeding is governed by the Environmental Impact Assessment Act – No. 100/2001 Coll. (Zakon o posuzovani vlivů na ~ivotni prostředi).

11.2 Can the state force land owners to sell land to it? If so please briefly describe including price mechanism.

Real estate may only be expropriated if the conditions of the Expropriation Act – No. 184/2006 Coll. (Zakon o vyvlastněni) are met. In general, significant public interest must exist and monetary compensation must be paid to the owner. The amount of compensation corresponds to the amount set under the Valuation Act or under the price provision, whichever amount is higher, and shall also cover expenses connected with the expropriation.

11.3 Which bodies control land/building use and/or occupation and environmental regulation? How do buyers obtain reliable information on these matters?

Such control is generally provided through a Building Authority, but also other authorities are involved in the decision making. Information of this nature can be obtained from a Building Authority operating under the Building Act.

11.4 What main permits or licences are required for building works and/or the use of real estate?

The construction of new buildings is generally possible after a planning permit (uzemni rozhodnuti) and a building permit (stavebni povoleni) have been issued.

The planning permit is valid for two years. The planning permit is not sufficient for the erection of a building, and the building permit is necessary.

The building permit expires if construction was not commenced within two years from the date when the building permit came into force.

A completed building may be used on the basis of notification to the building authority (oznameni stavebnimu uřadu) or occupancy permit (kolaudačni souhlas). An occupancy permit is required for specific buildings, such as structures for assembly of a larger number of persons or business and industrial buildings.

11.5 Are building/use permits and licences commonly obtained in the Czech Republic? Can implied permission be obtained in any way (e.g. by long use)?

In the Czech Republic building and usage permits have to be obtained in order to be able to erect and use a building (see question 11.4).

If a building is erected or used without a permit, the Building Authority can, at any time, order to demolish the building. Hence implied permission is not possible.

11.6 What is the appropriate cost of building/use permits and the time involved in obtaining them?

An application for the planning permit is subject to a stamp duty of CZK 1,000 (approximately EUR 40).

An application for the building permit is subject to a stamp duty of up to CZK 3,000 (approximately EUR 120), depending on the nature and size of the project.

The usage permit is not subject to stamp duty.

The timeframe of the whole procedure of obtaining the permits varies considerably depending on the nature and size of the project. Permission for a simple building (or an extension to a building) can be granted within a few weeks. A major project can take several months or even years.

11.7 Are there any regulations on the protection of historic monuments in the Czech Republic? If any, when and how are they likely to affect the transfer of rights in real estate?

The protection of historic monuments is provided mainly through the State Landmark Care Act No. 20/1987 Coll. (zakon o statni pamatkove peči). The Act does not restrain the transfer of rights in real estate as such; however, it imposes a notification duty on the owner of the landmark to notify the State Landmark Care Authority about changes in ownership, administration or use of the landmark.

11.8 How can e.g. a potential buyer obtain reliable information on contamination and pollution of real estate? Is there a public register of contaminated land in the Czech Republic?

Relevant information of this nature can be obtained in the record of old ecological burdens kept on the website of the Ministry of Environment. Registration is necessary in order to be able to enter the application.

11.9 In what circumstances (if any) is environmental clean up ever mandatory?

Within the permit (order) to remove a construction, the Building Authority may order the owner to submit the proposed technological process concerning works relating to the demolition of the structure, including the proposed measures for the elimination, limitation or compensation of negative impacts on the environment in the area surrounding the construction.

11.10 Please briefly outline any regulatory requirements for the assessment and management of the energy performance of buildings in the Czech Republic.

Effective from 1 January 2013, an amendment to the Energy Management Act imposes a list of new obligations on builders, building owners, as well as landlords of residential and non-residential premises.

A building should comply with the energy performance requirements set out in an implementing regulation to the Act. In numerous cases an energy performance certificate has to be ensured (prior to the issuance of a building permit or a transaction of a building).

12 CLIMATE CHANGE

12.1 Please briefly explain the nature and extent of any regulatory measures for reducing carbon dioxide emissions (including any mandatory emissions trading scheme).

Measures for reducing carbon dioxide emissions are regulated by the EU Regulation on certain fluorinated greenhouse gases, the Air Protection Act and the Act on Conditions for Trading with Permits of Greenhouse Gasses Emissions. The operator of a facility emitting carbon dioxide needs a licence and is obliged to measure the emissions. In accordance with international guidelines, in particular the United Nations Framework Convention on Climate Change and its Kyoto Protocol, and European Union law, a certain amount of carbon dioxide, which may be blown off, was reserved for the Czech Republic in the period 2008-2012. This amount was distributed on the basis of the National Allocation Plan (Narodni alokačni plan) to individual producers of emissions. Trading with permits is carried out through individual permit accounts within the permit register.

12.2 Are there any national greenhouse gas emissions reduction targets?

On the basis of the Kyoto Protocol, emissions shall be reduced in the period 2008–2012 by 8% in relation to the year 1990.

12.3 Are there any other regulatory measures (not already mentioned) which aim to improve the sustainability of both newly constructed and existing buildings?

There are also general technical requirements on constructions or regulation of waste water disposal which must be followed.

This article appeared in the 2013 edition of The International Comparative Legal Guide to: Real Estate; published by Global Legal Group Ltd, London. www.iclg.co.uk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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