Good faith buyers of real estate are protected from invalid
transfers between previous owners and as such will retain their
ownership rights, according to a recent decision by the
Constitutional Court.
The case concerned an attempt by previous owners to regain title
to a property which they had transferred under an invalid purchase
agreement, and which had subsequently been transferred to another
buyer in good faith.
Under Czech law, registering ownership of a property in the
Cadastral Register is not conclusive evidence of title. The fact
that the law does not protect good faith purchasers of real estate
has attracted much criticism from the legal and real estate
communities.
This decision will help bring a little more stability to property
ownership, but it does not provide blanket protection for a good
faith buyer from a seller who is the registered owner but not the
true owner of the property.
In particular, it does not lessen the need for careful and thorough
title research when buying property in the Czech Republic, as the
decision may well have been different if the new owners had failed
to notice obvious defects in the previous transfer documents.
In fact, the Supreme Court has already declined to follow this
'radical' decision in another case.
Cases: Constitutional Court file no. II. ÚS
165/11; Supreme Court file no. 30 Cdo 4280/2009
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 27/09/2011.