MMR has pushed the estimate of the effectiveness of the real estate law to February to March

Prague - The law on real estate brokerage will come into effect in February or early March. The Ministry of Regional Development (MMR), which prepared the law, informed CTK today. Thus, it has extended its estimate by about a month since early January. The preparation of the law, whose main aim is to improve the functioning of the real estate market and protect the clients of real estate agencies, took eight years.

"The new law has already been signed by the president and will come into effect in the coming days. It will take effect on the fifteenth day after being published in the Collection of Laws. The issuance is at the discretion of the Chamber of Deputies. It is done at their request within the publication options of the Collection of Laws," stated the ministry.

The law will change the current free trade into a regulated trade with requirements for professional qualifications. The law provides for five options for practicing the profession. The first is a university education in legal, economic, construction, or other relevant fields. The second is another university, higher vocational, or secondary education. In this category, three years of practical experience in the field are required. Furthermore, there are international recognition or a bachelor's degree together with an MBA degree in real estate and one year of practice. Regardless of education, passing a professional exam will suffice.

According to the MMR, a current real estate broker has six months to submit a request to change from a free to a regulated trade, i.e., to provide proof of education, experience, or passing an exam. Those entering the field newly must present these documents immediately when submitting their application.

The law aims to prevent brokers from claiming a commission from both sellers and buyers. The proposal also regulates the details of the brokerage contract, which must be exclusively in writing and will not bind the client to acquire or sell real estate. Brokers will also have to inform interested parties about the defects of the property.

The law requires professional liability insurance for real estate brokers in the amount of at least 1.75 million crowns. Brokers operating under a contract with a real estate company's brand would only need half that insurance. If a broker fails to obtain insurance, they risk a fine of up to one million crowns.

The Chamber of Deputies amended the proposal regarding the provision of money escrow. Real estate agencies will be able to provide it, but exclusively upon a written request from the client and on special accounts. They will also have the right to offer money escrow to clients through banks, foreign banks, notaries, lawyers, or in connection with enforcement and other court proceedings also by the bailiff.

According to statistics, there were 14,602 business entities engaged in brokerage activities in the Czech Republic at the end of 2018. This means there is about one broker for every 720 people, which is the least in Europe.