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Real estate companies cannot sanction buyers for not concluding a purchase contract

Real estate agencies or other similar intermediaries for the purchase of real estate sometimes try to force the buyer to conclude a purchase contract for the real estate through their contracts and the contractual penalties stipulated therein. However, such an arrangement is illegal even if the contract is not called an agency contract. These iniquities have been confronted by the Supreme Court.

koupě nemovitosti s realitním agentem
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The Real Estate Mediation Act expressly prohibits the obligation to enter into a purchase contract or a future contract in the mediation contract (concluded by the real estate agency). Estate agents may sometimes try to get around this by labelling the contract in a different way and declaring that the law in question does not apply to it. However, this is also impermissible.

The Supreme Court has ruled this in its recent decision. In the situation under consideration, the prospective purchasers showed serious interest in buying the property and therefore paid the so-called reservation fee under a tripartite reservation agreement between the buyer, the seller and the agent. In the end, the purchase did not take place due to the real estate agent’s failure to ensure the registration of the land in the land register, as well as to solve the problem of the missing connections and access road. However, this did not prevent him from retaining the “reservation fee” of CZK 72,600 after the purchase had failed.

Real Estate Purchase or Sale

We provide a complete package of legal services related to real estate sales and purchases, including reservation contracts and escrow services. We will also help you with all tax and land registry issues. Our work is fast and accurate, ensuring a worry-free transaction. You’re also welcome to pay after services are provided.

Thereal estate agent argued that it was not a contract under the Real Estate Mediation Act, but an unnamed contract, which does not fall under the Act. It is therefore not a penalty for not concluding the contract, but a reservation fee, which is not prohibited.

However, a legal act cannot be judged only by its name but above all by its content. Therefore, the Supreme Court included the booking contract under the Real Estate Mediation Act and confirmed the opinion of the lower courts, i.e. that the real estate agent is obliged to return several tens of thousands of crowns.

The judgement in no way implies less legal certainty for property sellers who require a certain guarantee that the sale of their house or apartment will take place. This is still the purpose of a contract of sale between a prospective buyer and a prospective seller, in which a contractual penalty can be negotiated and include, for example, the costs of preparing contracts and other expenses incurred by the seller in connection with the sale.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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