Newsletter (not only) for real estate brokers - Whistleblowing in real estate agencies, How to ensure access to the property via a special purpose road?, Beware of speculation with land without access!

News in law: whistleblowing in real estate agencies

Whistleblower Protection Act No. 171/2023 has been in effect for almost a year and still many real estate agents are unaware that it applies to them. This law makes it mandatory to have an internal whistleblower system that allows employees and others to report violations while protecting them from retaliation by the brokerage.

Real estate agencies are obliged to have an internal reporting system as they fall under the obliged persons under Act No. 253/2008 Coll. on Measures against the Legalization of the Proceeds of Crime and the Financing of Terrorism (AML Act). Similarly, this obligation also applies to persons who, as entrepreneurs, "sell and buy immovable property". This may include, for example, real estate investors or developers.

Failure to comply with the obligations set out in the Whistleblower Protection Act may result in the obliged person being held liable for an offence and fined. If you are unsure about implementing a whistleblower protection scheme, please contact us. We will be happy to help you.

Helpful hints: how do I ensure access to my property via a dedicated road?

One important issue that should not be underestimated by an estate agent when recruiting for a property and by a buyer when vetting a property is access verification. The existence of an access route and how it is secured significantly affects the use value of a property and its market price. It is difficult for an owner to do without access to a property and an otherwise lucrative piece of land may be undevelopable for this reason.

In some cases, access to the property may be via a dedicated road owned by a private party. To be recognized as a dedicated road, it must meet several statutory characteristics: it must be visible as a thoroughfare, it must be used to connect or cultivate the property, there must be no other comparable alternative means of access, and the landowner must consent to its public use. Such consent may be implied if the owner of the road has long tolerated its public use without express consent.

If you are in any doubt about the public status of the road, we recommend that you contact the road administration authority (the municipal authority of the municipality with extended jurisdiction). The latter may issue a decision confirming the public nature of the road. If the owner subsequently closes the road or restricts access across it, the authority may ask the owner to remove the obstruction and impose an offence fine.

Decision: Beware of speculation on land without access!

The purchase of land without secured access is regularly dealt with in court practice. An example is the Supreme Court's decision of 16 July 2020, Case No. 22 Cdo 1132/2020.

According to this decision, the purchase of a property at a significantly reduced price, knowing that it is not connected to a public road, may constitute grossly negligent conduct. This is particularly true in cases where the purchaser did not even attempt to reach an agreement with the owners of the neighbouring land before the purchase. In such a case, the court may refuse to establish the necessary road.

The above approach of the Supreme Court has recently been tempered by the Constitutional Court, according to which "the acquisition of immovable property without a connection to a public road cannot be regarded as an act of gross negligence in the Czech Republic, given the historical development of the legal regulation of land ownership". However, we doubt whether this decision can be applied to all cases of purchase of real estate without access.

Therefore, it can still be recommended that the purchasing party sufficiently verify the existence of access before the purchase and, if necessary, take the necessary action to obtain access. Failure to do so exposes the buyer to the risk of neighbour disputes and legal proceedings with an uncertain outcome.