Legal Challenges and Compliance for Real Estate Brokers in 2026

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
30.4.2026 | ARROWS law firm

Real estate brokers face increased legal and operational demands in 2026. Beyond the statutory obligations of insurance and professional training, they must navigate complex transactional risks, liability for errors, and inspections by public authorities. ARROWS, a Prague-based law firm with a specialist in real estate law and comprehensive legal services, helps real estate agencies address legal uncertainties and build secure business processes. Read why hundreds of real estate professionals choose attorneys from ARROWS.

In the image, we see a specialist discussing the topic of legal services for real estate agencies.

The real estate market in the Czech Republic and the legal environment in 2026

The real estate sector in the Czech Republic is experiencing an exceptional boom. Based on trends from previous years and current forecasts, a high volume of transactions was expected in 2025 as well, exceeding tens of billions of Czech crowns. However, this momentum and transaction volume are putting increasing pressure on real estate agencies to minimise legal risks and comply with a stricter legal framework.

The legal environment has become significantly stricter for real estate agents. A fundamental change was brought by Act No. 39/2020 Coll., on Real Estate Brokerage, effective from 1 July 2020, which introduced a number of obligations that real estate agencies must not underestimate. These changes affected not only small one-person businesses, but also large real estate networks.

From 1 January 2026, the existing strict Rules of the Czech Bar Association governing the practice of law, which relate to attorney escrow accounts, continue to apply and are being tightened. These rules, which are constantly evolving, set strict criteria for the segregation of funds held in escrow and ensure maximum transparency and auditability of transactions.

For real estate agencies, this means they can no longer work with just any lawyer – they must verify that their partner has proper processes in place and insurance at an appropriate level.

Key legal obligations of real estate agents in 2026

For a real estate agency to operate legally, it must meet a number of conditions that cannot be circumvented. Failure in any of them leads to fines or a ban on activity.

Professional liability insurance – an obligation that is not optional

Every real estate agent must be insured for the duration of their activity in case they are required to compensate for damage caused by the provision of real estate brokerage services. The statutory minimum insurance limit is at least CZK 1,750,000 per insured event and CZK 3,500,000 in the event of multiple insured events in one year (pursuant to Section 16(1) of Act No. 39/2020 Coll.).

It may seem like a simple administrative obligation. Practice shows that it is, on the one hand, a relatively high amount, and on the other hand it is crucial to have the insurance active and to use an insurer authorised to provide this insurance in the territory of the Czech Republic. In the past, many real estate agencies faced situations where, when damage occurred, they found out that their insurance had either expired or had not been properly arranged.

Criminal integrity and education

A real estate agent must have a clean criminal record. This means they must not have been finally convicted of an intentional criminal offence, or of a negligent criminal offence in connection with the provision of real estate brokerage (pursuant to Section 6(1)(c) of Act No. 39/2020 Coll.). At the same time, they must meet the conditions set out in the Trade Licensing Act – specifically, this concerns the regulated trade “real estate brokerage”, which may be carried out only with specific education or after passing a state examination.

In practice, this means that a real estate broker cannot be just “anyone”. The attorneys at ARROWS advokátní kancelář encounter these requirements routinely and know which specific educational certificates and credentials are necessary and how to keep proper records of them.

Written real estate brokerage agreement

A real estate brokerage agreement must always be in writing (pursuant to Section 17(1) of Act No. 39/2020 Coll.). It is not possible to agree orally or via messages. The law prescribes what the agreement must contain – identification of the subject matter of the brokerage, the purchase price, rent or other consideration, and the amount of the commission or the method of determining it.

If the agreement lacks these requirements, it is relatively invalid – and such an objection may be raised by the interested party (the client), not by the real estate agent. In practical terms, this means the client may complain only “later”, which creates legal uncertainty and may even lead to claims for damages being pursued through the courts.

Most common legal issues faced by real estate agencies

Transaction risks and handling of the purchase price

One of the most common issues real estate agencies face is how to safely handle the transfer of money between the buyer and the seller. These are transaction risks – i.e., potential problems related to the transfer of ownership of the property and the transfer of funds.

A typical scenario: the buyer wants to protect their money, the seller wants to protect the registration of title. What if the seller refuses to sign after the money is transferred? What if the Land Registry blocks the registration due to a legal dispute? What if it turns out that the property is encumbered by easements that were not stated in the listing?

The solution is to properly set up escrow of the purchase price with a trustworthy third party – most commonly an attorney, a notary, or a bank.

Over twelve years of experience with real estate transactions, the lawyers at ARROWS advokátní kancelář have developed processes that guarantee the money will remain in a segregated escrow account and will be released only after it has been verified that all conditions have been met – i.e., that title has been registered in the Land Registry, all encumbrances have been settled, and the property has been handed over in the agreed condition.

Inconsistencies in purchase agreements and defects

A real estate broker often works with a purchase agreement prepared by a lawyer. However, it may happen that the lawyer prepared a standard template for the real estate agency, but the specific broker modified it in a hurry or applied it incorrectly to a particular case. The result is blank spaces, unclear contractual provisions, or the absence of important representations.

The buyer then complains that the property has hidden defects that only appeared after the transfer. The real estate agency claims that the seller knew or should have known about the defects. A court dispute arises.

Court practice repeatedly confirms that a real estate agent has a duty to ensure transparent information about the condition of the property, and if hidden defects are discovered, they may ultimately be liable if they failed to inform the client adequately. If the real estate agency does not have sufficient resources, the buyer may never see their money.

ARROWS attorneys know how to prevent such situations. They carry out a qualified review of purchase agreements, pay attention to every detail, and ensure that all legal risks (e.g., easements, liens, unresolved inheritance matters, or disputed co-ownership) are identified before signing.

Liability for errors in communication with clients

A real estate intermediary can also fail through insufficient or poor communication with the client. They promise that the property will be sold by a certain date, but then the deadline is not met. They promise to arrange the transfer of title, but then it turns out that the Land Registry has an older record that prevents registration.

At that point, the problem begins. The client gets angry, calls a lawyer, and the lawyer asks: “What did they promise you in the purchase agreement?”If the agreement was vague or incomplete, there is nothing to enforce. If it was clear but the real estate agency failed to perform, a lawsuit awaits it.

Attorneys from ARROWS, a Prague-based law firm, help real estate agencies ensure that their agreements and client communications are precise and legally sound. This prevents disputes before they arise.

Most common legal questions in real estate brokerage

1. If a real estate agent works with a lawyer who prepared the agreement, is the agent still liable for errors?
    Yes. Supreme Court decision file no. 25 Cdo 5007/2016 clearly states that the real estate intermediary remains liable even if they commissioned an attorney to draft the agreement. The client trusts that the service will be provided at the appropriate professional standard, and a real estate agent cannot “insure” that trust simply by hiring a lawyer.

2. What happens if a real estate agency does not have valid insurance at the moment the damage occurs?
    The real estate agency becomes fully liable for the damage and must compensate it from its own funds. If it does not have the resources, the client may seek enforcement against its assets. In the long term, this means loss of reputation and an inability to continue operating.

3. Must a real estate agency guarantee defects in the property that the buyer does not notice?
    The real estate agency is not the seller, so it is not liable for defects of the property itself. However, it is liable for transparently disclosing and stating in the purchase agreement all known defects and restrictions (easements, liens, debt security). If it fails to do so, it is liable for damages.

Table of typical problems and risks in real estate brokerage

Possible issues

How ARROWS can help (office@arws.cz)

Invalid or incomplete purchase agreements, missing important representations, or unclear contractual terms

ARROWS attorneys draft and review comprehensive purchase agreements with a focus on protecting all parties. They ensure that all legal risks are reflected in the text and that the contractual terms are clear and enforceable.

Incorrectly set up escrow of the purchase price, risk of loss of funds or manipulation of financial resources

ARROWS provides attorney escrow in accordance with the strict and continuously tightening Rules of the Czech Bar Association governing the practice of law. The funds are held in a separate escrow account, fulfilment of conditions is monitored, and the release is governed by a legally compliant process.

Fines of up to CZK 500,000 for breaches of the Real Estate Brokerage Act (missing insurance, unclear information to clients, etc.)

ARROWS attorneys advise real estate agencies on all obligations under Act No. 39/2020 Coll. and help agencies manage documentation and communications so that they avoid fines and inspections by the authorities.

Court disputes with buyers or sellers regarding the performance of real estate brokerage, liability for damages, or failure to meet obligations

ARROWS attorneys represent real estate agencies in court disputes, assert their rights, and defend them against unjustified claims. They have many years of experience with typical disputes in the real estate sector.

Need to verify the legal status of the property, identify restrictions on title or easements

ARROWS conducts an in-depth legal audit of properties, including reviewing the Land Registry and checking insurance and debts. This enables real estate agencies to prevent unpleasant surprises during the transaction.

Why the attorneys at ARROWS, a Prague-based law firm, understand the needs of real estate agencies

The attorneys at ARROWS, a Prague-based law firm, have been focusing on real estate law for more than twelve years. This is not a random number—it reflects a period during which the legal environment for real estate brokerage in the Czech Republic has been continuously changing, and during this time ARROWS has handled dozens of transactions, clients, and legal challenges.

Over twelve years, ARROWS attorneys have learned to identify risks that a generalist lawyer does not see in real estate practice. They know what is done incorrectly in practice, which mistakes recur, and how to resolve them effectively before a problem arises.

ARROWS attorneys work with real estate agencies on several levels. First, they prepare and review the agreements that real estate agencies actually use in their day-to-day practice. These are not theoretical templates, but practical documents used every day.

Second, they provide legal advice to individual real estate agents and office managers when an issue or uncertainty arises. Third, where necessary, they represent real estate agencies in administrative inspections and court disputes.

In addition, the attorneys at ARROWS, a Prague-based law firm, also routinely handle international matters through the ARROWS International network, which makes it possible to manage transactions with a cross-border element—for example, where the buyer or seller is foreign, or where ownership involves foreign companies.

Specific examples from practice

Case 1: Unclear escrow led to a loss of trust

A small real estate agency in Brno brokered the sale of an apartment. The buyer mistakenly sent the money to the real estate agency’s account. The agency “temporarily” kept the funds because it was “arranging” escrow with an attorney. In the meantime, the seller decided they wanted to keep the money in cash and asked the real estate agent to pay it out on the relevant office day.

What was expected happened: someone at the office embezzled the money or it was used for ordinary expenses, and when the escrow was to be set up, the money was already gone. Chaos ensued. The buyer complained, the seller demanded a lawyer. The agency ended up in a court dispute and lost its reputation.

If the real estate agency had worked with the attorneys at ARROWS, a Prague-based law firm, from the outset, the escrow would have been set up correctly and the funds would have remained in a separate account with clear legal status, under the supervision of the Czech Bar Association.

Case 2: An easement delayed the sale for months

A real estate agent was selling a house with land. An easement appeared in the Land Registry (a neighbour’s lifetime right to use part of the land), but the agent did not reflect it in the property price and did not mention it in the listing at all. The buyer was interested and signed the purchase agreement.

Only after signing did the buyer discover the easement and decided to withdraw from the agreement. A dispute arose. The real estate agent could not argue that the easement “is not material”, because the legal reality is clear: every easement must be stated in the purchase agreement, and the client is entitled to complete information.

The attorneys at ARROWS, a Prague-based law firm, deal with such situations routinely and know how to communicate them to both parties before signing. This helps prevent disputes and delays in the transaction.

How real estate agencies can minimise legal risks

High-quality legal documentation from the outset

A real estate agency should have its real estate brokerage agreements, purchase agreement templates and other documents prepared with the help of an experienced attorney. There is no need for every agreement to be completely new—high-quality templates that are then tailored to the specific case are sufficient.

The attorneys at ARROWS, a Prague-based law firm, offer agencies a review of their existing agreements and the preparation of new documents that will be legally sound and practically usable.

Clear processes for holding and transferring funds

A real estate agency should have a clear process in place for who handles the transfer of funds, when and how, how communication with the individual parties is managed, and how fulfilment of conditions is monitored. This is not only a legal issue—it is also a matter of operational management.

The attorneys at ARROWS, a Prague-based law firm, focus on these processes and help real estate agencies set them up so that they are transparent, legally compliant and resilient to errors.

Education and training for the internal team

The attorneys at ARROWS, a Prague-based law firm, provide training for specialists in real estate agencies, where they learn what the current statutory obligations are, what risks may arise, and how to avoid them. A well-trained team makes better decisions and prevents mistakes.

Regular legal consultation and audit

A real estate agency should have “its” attorney whom it can approach with questions. The attorneys at ARROWS, a Prague-based law firm, meet with real estate agencies regularly, understand their operations, and can advise them proactively when a new situation or legal uncertainty arises.

The most common questions real estate agencies face in practice

1. What obligations do we have as a real estate broker if we want to operate at all in 2026?
    You must have at least professional liability insurance with a limit of CZK 1.75 million per claim (and CZK 3.5 million for multiple claims in a year), have a clean criminal record, have the required education, conclude real estate brokerage agreements exclusively in writing, and provide clients with extracts from the Land Registry. If you offer to hold clients’ funds in escrow, you must comply with strict rules set by the Czech Bar Association. The attorneys at ARROWS, a Prague-based law firm, can help you review whether you meet all of these obligations.

2. Who bears liability if a legal error appears in the purchase agreement?
    The real estate broker bears liability for its activities regardless of whether it engages an attorney to prepare the agreement. This means that even if the attorney made a mistake, the agent may still be liable. The only safeguard is to work with an attorney you trust and who has solid insurance—the attorneys at ARROWS, a Prague-based law firm, are insured up to CZK 400 million.

3. What risk arises if funds held in escrow are not properly segregated?
    There is a risk that the client’s money may be “mixed” with the agency’s or the attorney’s funds, and in the event of insolvency or a legal dispute the client may not be able to claim their money.
    The current strict Rules of the Czech Bar Association governing the practice of law, which apply to attorneys’ escrow arrangements, significantly reduce this risk—but only if the client chooses an attorney who strictly complies with the rules and is supervised by the Czech Bar Association.

4. How should a real estate agency act if a legal obstacle arises during the transaction (e.g., the property is encumbered by an unforeseen easement)?
    It should inform both parties without undue delay and contact an attorney. The attorneys at ARROWS, a Prague-based law firm, can analyse such situations, determine whether the matter can be resolved (e.g., by removing the easement from the Land Registry) or whether the transaction must be cancelled. The key is to respond quickly and transparently.

5. Is it worth having our own in-house attorneys, or should we contact external attorneys only on an ad hoc basis?
    All real estate agencies that reach a certain transaction volume should have an external attorney or attorneys on a “retainer”. The attorneys at ARROWS, a Prague-based law firm, focus fully on the real estate sector and understand its specifics better than general-practice attorneys.

6. What trends do ARROWS attorneys see in the real estate sector going forward?
    The key trend is increased regulation and legal oversight. The authorities are starting to monitor compliance by real estate intermediaries more intensively. We expect further tightening of the rules for holding client funds in escrow and liability for defects in real property. Real estate agencies that have solid legal support (such as the attorneys at ARROWS) will feel more secure.

Final summary

Real estate brokerage is, at its core, a business built on trust, documents, and money. Legal mistakes or carelessness can become very costly—not only in the form of fines, but also litigation and loss of clients.

For twelve years, the attorneys at ARROWS, a Prague-based law firm, have been working with real estate agencies and know what they need. They understand statutory obligations under Czech law, can prepare high-quality documentation, handle transactions safely, and represent agencies in difficult situations.

If you run a real estate agency and want to move into 2026 with confidence, contact our attorneys in Prague at ARROWS, a Prague-based law firm. We are insured up to CZK 400 million, we understand real estate law, and we can help agencies grow safely. Contact us at office@arws.cz—we will be happy to listen and recommend how to proceed.

Frequently asked questions about legal support for real estate agencies

1. What are the main reasons why a real estate agency should work with an attorney specializing in real estate law?
    An attorney specializing in real estate law understands the specifics of the sector, identifies risks that a “general” attorney may miss, and can address them effectively. They also know the most common mistakes and how to avoid them. The attorneys at ARROWS have exactly this specialization and twelve years of experience, which enables them to advise even in unusual situations. Contact office@arws.cz.

2. How much should a real estate agency budget for legal support and insurance?
    Professional liability insurance with a limit of CZK 1.75 million typically costs thousands of Czech crowns per year (depending on the insurer and transaction volume). Legal support varies—you can have consultations on a retainer (“tariff”) basis (a monthly fee) or pay for specific services (drafting an agreement, reviewing documentation). The attorneys at ARROWS offer both options and tailor them to the size of your agency. We can arrange this at office@arws.cz.

3. What specific services does ARROWS, a Prague-based law firm, offer to real estate agencies?
    ARROWS prepares purchase agreements and other real estate documentation, conducts legal audits of properties, handles attorney escrow arrangements, provides legal advice, and represents agencies in court disputes or before authorities. If you have a specific need, email office@arws.cz.

4. What happens if a real estate agency does not have professional liability insurance?
    If someone suffers damage caused by the agency’s activities, they cannot claim insurance proceeds—they must claim directly against the agency, which may face an existential crisis or insolvency. Without insurance, you also cannot legally register as a real estate intermediary in the Czech Republic. Our Prague-based attorneys at ARROWS will help you arrange the correct insurance and all required documentation. Email office@arws.cz.

5. How does a legal audit of a property work before a real estate agency lists it for sale?
    A legal audit includes verifying ownership in the Czech Cadastral Register (katastr nemovitostí), checking easements and other restrictions, determining whether there are liens or debts attached to the property, and confirming that the property is not part of a legal dispute. The attorneys at ARROWS carry this out systematically and prepare a list of all relevant legal aspects. Contact office@arws.cz.

6. If a real estate agency retains an ARROWS attorney on an “insurance tariff,” what does that mean?
    It means you pay a monthly or quarterly fee and have the right to contact an attorney at any time with a question, ask them to review an agreement, or request advice.
  It is not an “unlimited” service—it is more like a “consultation hotline” for a real estate agency within an agreed scope of services. The attorneys at ARROWS focus on these retainers and know how to set them up to suit real estate agencies. Email office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended for basic guidance based on the legal framework as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we maintain professional liability insurance with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation. 

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