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Objectives of the Act
- Protect consumer rights: It establishes clear rules and requirements for real estate agents to ensure that clients receive quality services and are protected from dishonest practices.
- Improve the quality of services: It defines the requirements for the professional competence of real estate agents, encouraging them to enhance their knowledge and skills.
- Create equal competition conditions: It regulates uniform rules for all market participants, promoting the development of fair competition.
- Strengthen trust in the real estate market: It aims to increase the transparency and reliability of real estate transactions.
The main objective of the Act is to regulate the activities of real estate agents (realitní zprostředkovatel) to protect the interests of clients and ensure transparency in the real estate market. The Act aims to:
Key Terms and Concepts
- Real estate brokerage (realitní zprostředkování): Activities aimed at mediating real estate transactions, such as purchase and sale, rental, exchange, etc.
- Real estate agent (realitní zprostředkovatel): An entrepreneur (individual or legal entity) providing real estate brokerage services based on a license.
- Real estate brokerage agreement (smlouva o realitním zprostředkování): A legally binding document entered into between the broker and the client, outlining the rights and obligations of the parties, the terms of service, and the broker’s remuneration.
- Real estate transaction (realitní smlouva): An agreement between parties regarding the transfer of rights to real estate (purchase and sale, rental, etc.).
- Interested party (zájemce): A person (buyer, seller, tenant, landlord) seeking to enter into a real estate transaction.
To understand the Act, it is important to become familiar with the key terms:
Key Aspects of the Act
Requirements for Real Estate Brokers
- Impeccable reputation: Absence of a criminal record for intentional crimes or offenses related to economic activities.
- Professional liability insurance: Possession of an insurance policy to cover potential damages to the client during the provision of services. The minimum insurance coverage is 1,750,000 Czech crowns per insurance event and 3,500,000 Czech crowns for all insurance events within a year.
- Professional competence: Possession of higher education in the field of law, economics, or construction, or completion of a specialized training course, documented with certification.
The Act establishes a number of requirements for brokers to ensure their professionalism and reliability:
Commission fees are determined by the agreement between the real estate broker and the client. Typically, commissions are paid after the successful completion of the real estate transaction.
Duties of the Broker
- Provide the client with complete and accurate information about the property, its condition, legal status, and any potential risks.
- Enter into a written brokerage agreement specifying all essential terms, including the amount of commission.
- Act in the client’s best interests, with honesty and integrity, avoiding any conflict of interest.
- Maintain confidentiality and not disclose information obtained from the client.
A real estate broker is obligated to:
The broker is not allowed to offer services for holding funds unless they are a bank, notary, lawyer, or judicial officer.
Client Rights
- Receive complete and accurate information about the property and the terms of the transaction.
- Terminate the brokerage agreement within 14 days of its conclusion under certain circumstances, such as if the broker fails to fulfill their duties or provides false information.
- Claim compensation for damages caused by the broker as a result of improper performance of their duties.
A client of a real estate broker has the right to:
Control and Supervision
Compliance with the Act is monitored by the Ministry of Regional Development and municipal licensing authorities. Violations of the Act can result in fines of up to 1,000,000 Czech crowns.
Conclusion
According to §17, the Act allows for the possibility of entering into an exclusive brokerage agreement, in which the client agrees to use the services of only one broker.
