In our two articles on latent defects, i.e. Liability for latent defects of real properties and claiming them and Limitation of (exemption from) the seller’s liability for latent defects of a real property being sold, we have informed you about what a latent defect of a real property is, what the time limits for claiming it are, what the buyer’s claims against the seller on account of defective performance are, how the amount of the discount from the purchase price is determined and whether liability for latent defects of a real property can be limited or exempted by a purchase agreement.

This article deals with the issue of latent defects of real properties in connection with real estate agencies. It is quite common these days for sellers to employ the services of real estate agencies.

Act No. 39/2020 Coll., the Act on Real Estate Brokerage and on Amendments to Related Acts, which imposed new and increased requirements and standards on the activities of real estate agents, has intervened quite dramatically in the world of real estate agencies.

The profession of a real estate agent has newly become a professional trade requiring professional qualifications. The provisions of Section 5 of Act No. 89/2012 Coll., the Civil Code, also apply to real estate agents since they are professionals: “Whoever, in public or in dealings with another person, declares themself to be a member of a particular profession or station, indicates that they are capable of acting with the knowledge and care associated with their profession or station. If the person acts without such professional care, this shall be to their detriment.“

You should always consider who it is that enters into the real estate brokerage contract with the real estate agency, as that person enters into a contractual relationship and will be making any potential claims against the real estate agency. Most often, it is the seller who wants to sell the real property. In practice, however, it might also be the case that the contract is entered into by a buyer who wants to find a suitable property. Tripartite agreements for real properties, whether reservation or purchase agreements, are no exception. In this case, however, it is necessary to review their content in detail to ascertain whether they fulfil the characteristics of a real estate brokerage contract or not, and whether the buyer will be able to enforce any claims against the real estate agency. Alternatively, a seller who has entered into a real estate brokerage contract and against whom the buyer has asserted a claim for defective performance may bring a claim for damages against the real estate agency.

Another important consideration is the specific content of the advertisement on the basis of which the property in question was being offered. You should focus on terms such as fully renovated, newly built, and in the case of apartments, terms such as living space, floor area or usable area. You should also check whether the age of the property is mentioned in the advertisement. The expectation for a 100-year-old property would be different from that of a new building or a building that has been completed less than 10 years ago. All of this may affect any claims against the real estate agency, since it is the real estate agency who advertises the property and who, as an expert in the field, has a duty to verify the information provided in the advertisement.

In conclusion, claims for damages against real estate agencies are still not that common in practice and so, the first case law has yet to emerge to shape the judicial view on this issue. Only time will tell how the courts will deal with claims against estate agencies and how far the liability of real estate agencies goes. Often, however, it is only the real estate agent who does all the communication with a potential purchaser and answers their questions about the condition of the property and it is therefore only appropriate that they should not do so without any liability, just to make the deal happen. Finally, a recommendation: When buying or selling a property, it is desirable to gather as much evidence as possible, i.e. documents relating to the transaction, in order to support any potential claims, and it is therefore advisable to keep the advertisement and communication with the agent and, ideally, to have the essential information captured in written communication, and to be careful in choosing the real estate agency whose services you want to employ.

Please feel free to contact our law firm at any time in matters of real estate transfers and latent defects – we will be happy to assist you.

Mgr. Jana Sedláčková, Partner

Mgr. Jana Melezínková, Attorney at law

Pajerová Sedláčková ADVOKÁTKY s.r.o.

29.03.2024