Czech Republic: EU accession - Real estate & construction

What changes to real estate and construction in the Czech Republic come into effect on accession?

Acquisition of real estate

In December 2002 the Czech Republic finished negotiations with the EU on the conditions of accession and reached an agreement on accession of the Czech Republic to the EU although there were some interim provisions relating to real estate. From the date of accession the following will apply:

• interim period for the acquisition of secondary houses by EU nationals shall be five years after the accession of the Czech Republic to the EU
• interim period for the acquisition of agricultural land and forests by persons who do not have permanent residence in the Czech Republic shall be 7 years after the accession of the Czech Republic to the EU

Construction law

• the EU is encouraging the mutual recognition of qualifications. An Amendment to the Act on Professional Self-government of Architects, Construction Engineers and Urban Planners became effective on 1 May 2004. This Act allows for the recognition of the professional qualifications of Architects, Construction Engineers and Urban Planners qualified outside Czech Republic
• an interim period for lower value added tax for construction works for the purposes of housing has been negotiated.

Dispute resolution

• the Czech Republic is in the process of ratifying the Rome Convention on Law Applicable to Contractual Obligations (1980). Under this Convention the parties to a contract can freely choose the governing law of their contract. Therefore, the choice of non-Czech law as the governing law of, for example, construction contracts will be effective without it being necessary to indicate any links between the chosen law and the obligations of the parties.

What can you do to ensure you comply with the new law and prepare for accession?

• to ensure that consideration is given to the governing law and jurisdiction of contracts for the carrying out of major construction works in order to take account of the specific requirements of the parties.

For further information please contact Hilary McDowell.