The conditions of real estate agents' activity will tighten

Prague - The requirements for real estate agents and the conditions of their activities will become stricter. The Senate today allowed the adoption of a draft new law under which agents will have to be honest, qualified, and insured. They will have to inform clients about the amount of their commission for mediating the sale or rental of the property.

The upper chamber did not adopt any resolution on the proposal. There were not enough votes for its acceptance as proposed by the committees, nor for its rejection, which was advocated by Zdeněk Hraba (STAN) and Miloš Vystrčil (ODS). The Senate did not support any of the submitted amendments. Therefore, the government’s draft law will be sent for the president's signature after the deadline expires.

According to the government, the law aims to protect clients of real estate agencies more and improve the functioning of the real estate market. "The law leads to significant consumer protection", said the Minister for Regional Development Klára Dostálová (ANO). Critics among the senators, on the other hand, labeled the proposal as unnecessary. According to Hraba, it will not protect clients of real estate agents and only restricts the market.

The norm aims to prevent agents from claiming commissions from both sellers and buyers. The proposal also regulates the particulars of the brokerage agreement, which must be exclusively in writing and will not obligate the client to purchase or sell a property. Agents will have to inform interested parties about the defects of the property.

According to the amendment, agents must have either a university degree in a relevant field or at least a secondary education with a high school diploma and three years of experience. The law provides for insurance of real estate transaction intermediaries for at least 1.75 million crowns. Agents working under a contract under the brand of a real estate company would only need half the insurance. If an agent is not insured, they risk a fine of up to one million crowns.

The Chamber of Deputies adjusted the provision of money escrow. Real estate agencies will be able to provide it, but exclusively upon 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 an executor.

Senatorial amendments aimed at the insurance of intermediaries, money escrow, the obligation to disclose property defects, and the effectiveness of the law, which is proposed to start from January. The upper chamber did not support any of them.

According to data from the Czech Statistical Office, there were 14,602 business entities engaged in mediating activities in the Czech Republic at the end of last year. This means approximately 720 residents per agent, which is the lowest in Europe. In Germany, which ranks last in this European table, the number of residents per agent is ten times higher.