With one exception, the pre-emption right of the co-owners is completely cancelled in the Czech Republic

It´s finally here. Starting with July 1, 2020, when the amendment to the Civil Code comes into effect, the pre-emption right of co-owners to the share in real estate being sold will be abolished completely, with one minor exception which I´ll write about later. The legislators finally amended and expanded the original draft which focused only on cancelling the pre-emption right for the sale of co-ownership shares in real estate that are functionally related to the main property (typically garage parking which was defined as a share in a non-residential unit, I wrote about it in the article here).

That means that if you are the owner of a share in a weekend house, house, apartment or any other real estate, after July 1, 2020 you can freely transfer the property without having to offer your share to the other co-owners. This change will surely untie hands and allow sales to many property owners, on the other hand, it will also make it easier for speculators to enter into co-ownership.

Beware of the exception

If you´ve acquired a co-ownership share by inheritance, you must pay attention to the fact whether a protective period of 6 months from the acquisition of the share is applicable on the transfer. It´s because the other co-owners may have a pre-emptive right in this case, unless we transfer our share to another co-owner or to our spouse, sibling or relative in the direct line, with these people the 6 months protective period won´t apply and it´s possible to make the transfer immediately.

In conclusion, I´d like to add another option for settling co-ownership if we can´t sell the share for any reason:

Another way to settle co-ownership: the court

One of the basic principles of co-ownership is that nobody can be forced to remain in it. The co-ownership relations can be settled via the little-known institute called settlement of co-ownership in the event of its cancellation by a court decision. We have the option to ask the court to cancel and settle the co-ownership. The court must then decide and choose one of the following manners:

  1. division of real estate
  2. assign the thing to one or more co-owners for compensation,
  3. sale at public auction.

These options must be considered by the court in the given sequence. It can´t therefore decide to sell the property at public auction without examining, for example, the possibility of dividing the property.

The division of real estate is typically possible for land, apartment buildings and in all cases where the division doesn´t significantly reduce the value of the property and where it´s also technically possible. In case the division is not possible but one or more co-owners have enough money and would like to acquire a share of another co-owner, the court may order the property to be sold to the co-owner for compensation based on an opinion prepared by a sworn expert. If even this isn´t possible, the court decides on the sale of the entire property at public auction or, possibly, the co-owners can agree on exercising the power of sale.