In recent times, the Supreme Court had to decide several disputes in which one party invoked the so-called principle of material publicity of the cadastral record. The present article takes a closer look at the conclusions reached by the Supreme Court in two of those cases – in both, the validity (or nullity) of the transfer played a role.
One of the statutory requirements for applying the so-called principle of material publicity of the cadastral record (implicitly enshrined in Sec. 984 of the Czech Civil Code) is the validity of the transaction by which the relevant right in rem was supposedly acquired. When one puts it this way, it sounds almost trivially self-evident, but the Supreme Court decided at least two cases in recent times in which the (in)validity of the act of transfer played a decisive role.
In 22 Cdo 1980/2020, the Supreme Court saw itself confronted with the case of a transferor whom the cadastral record recognized as the rightful owner and who transferred an apartment unit to the transferee in spite of being restricted by a general ban on disposal and divestment under debt enforcement laws.
In this matter, the Supreme Court (and, before it, the court of appeals) arrived at the conclusion that there was no room for the application of Sec. 984 of the Civil Code (which had been invoked by the transferee, with specific reference to their good faith in the entry in the public record).
Rather, the Supreme Court confirmed that the transfer of an apartment in violation of a general ban on divestment is null and void from the very beginning by operation of the law, so that even good faith on the part of the transferee within the meaning of Sec. 984 of the Civil Code could not make the successful acquisition happen. Moreover, the Supreme Court pointed out that a general ban on disposal and divestment is not subject to entry in the cadastral register. Therefore, at least one other prerequisite of the material publicity principle was absent: that of the factual erroneousness of the entry in the cadastral register.
Consequently, the transferee’s claim for exclusion of the transferred apartment from the foreclosure conducted against the transferor was unsuccessful.
In an earlier case (21 Cdo 3017/2019), the Supreme Court looked into the validity of a pledge title that had been established by a married man who was entered as the exclusive owner of the mortgaged house – however, the house in actual fact was part of the joint marital property of both spouses, whose joint household was moreover installed in the house.
After the wife who was not entered in the cadastral register learned from the creation of the pledge, she invoked the relative invalidity of the pledge agreement within the meaning of Sec. 747 of the Civil Code against the pledgee, who defended their title by referring to their good faith in the entry in the cadastral register (according to which the husband was perfectly entitled to pledge the house).
In this case, the Supreme Court came down in favor of the wife, stating (with reference to its case law) that the successful invocation of relative invalidity of a legal transaction has the same effects, in temporal terms, among the participants and other affected persons as an absolute invalidity, i.e., its consequences are felt from the very beginning (ex tunc). Because of this, the basic prerequisite for applying material publicity was again absent also in this case – namely, a valid transfer transaction.
In addition, the Supreme Court pointed out that the pledgee’s defense was also meritless because the relevant criterion for assessing the facts of the case was not so much the missing entry in the cadastral register for the wife in her capacity as co-owner of the house (forming the joint marital property of her and her husband), but the fact that the family home was installed in the pledged house. This fact is not subject to entry in the cadastral register which is why, according to the Supreme Court, the pledgee could not rely on the principle of material publicity.
The lower-instance courts had arrived at the opposite conclusion, which is why the Supreme Court quashed their decisions and returned the case for a new trial. It is fair to assume that on the second attempt, the wife was successful with her action for nullification of the pledge agreement.
Source:
Supreme Court resolution 22 Cdo 1980/2020 of 9 December 2020,
Supreme Court judgment Cdo 21 Cdo 3017/2019 of 2 June 2020
relevant provisions of the Civil