Czech Real Estate Law: Will it protect you from dishonest brokers?

At the end of last year, a new real estate law was approved to increase the quality of services. Will it bring changes or does it have weak points?

It should be noted that so far pracically anyone has been able to perform the work of a real estate broker. This is one of the reasons why the Czech Republic officially has the highest number of brokers per one citizen and negative experience with and bad reputation of some companies result from this. But let’s not forget to mention that abroad this is a reputable profession with positive connotations.

In practice, we can find three groups of real estate agents in the Czech Republic:

  • They chose this area as an extra income on top of their jobs. Such a person only needs to have a few contracts a year and nothing urges them to sell big. Because they never get enough practice, they can never turn into a respected professional – they don´t even have that ambition and that’s exactly what their work looks like.
  • A broker who is in the industry full time but doesn´t manage to have as many contracts as they would like. There is nothing wrong with that actually, even though they don´t get the necessary experience quickly enough with the small number of contracts but if they start trying, they can get into it over time and have a chance to become a professional.
  • A full-time broker who is able to win new contracts and finish them. They have some knowledge of real estate law, taxes and other related areas, or cooperate with experts in that area.

The goal of the new law is to make the operation of the first category of brokers more difficult or impossible. The novelty is that brokerage practice will be considered a licensed trade which requires qualifications, meaning certain level of education and length of practice, or it will be necessary to pass exams. The idea is definitely right, the problem is its executive. Personally, I can immeditely see two teak points here.

Two years of experience

As per the law, professional competence will be fulfilled by anyone who curretly has at least two years of experience. This means that the existing brokers have nothing to worry about. It´s enough if they´ve been registered in a real estate network for at least two years. The expected clean-up of the current situation will therefore be minimal and part-time brokers can continue their work as happily as before.

Examination of newcomers

The second weak point is in the modification itself of the professional competence exam for newly starting brokers. The legislators have decided that more than one accredited entity will be able to provide education and examinations. There are 26 of them to date. I expect that their number will only increase in the near future. They include larger-scale real estate agencies, educational agencies and a number of physical entitites. It´s impossible for the Ministry of Regional Development to keep an eye on all subjects to check high quality of education and the course of examinations, especially in a field such as real estate, where the limits of improvisation are very wide. Let’s not forget that it´s in the interest of some real estate networks that their beginning brokers pass the exam as soon as possible and, if possible, that all of them pass it, because their business is based on having as many brokers as possible. It would be logical for proficiency exams to be carried out by professional organizations, just as bar exams are carried out by the Bar Association. The effectiveness of the real estate law will be fatally weakened by the decision on a different concept of exam.

References will help

What does this mean for the seller or landlord? Don´t put too much hope in incremental improvement of the real estate market to be brought about by this change of the real estate law. Before you choose who you entrust the property to, think carefully about who you choose. Don’t underestimate the search, look for references and ask how many properties your selected broker has already sold or rented out. Don’t hesitate to contact their former customers and ask about their experience. Alternatively, you can contact me. I´ll be happy to meet you in person and answer any questions you might have.