Czechia: You, too, may end up forfeiting your real property, come the end of 2023

The end of this year marks ten years since the (not-so-)new Civil Code has come into force. Will this milestone have impact on those owners of real property who, as at that date, are purely identified as such in the land register?

Real property whose owners are not sufficiently identified does not only mean real property for which no owner has been entered in the land records at all – the term includes also property with respect to which not all identifying particulars of the owner have been entered in the land records as required under the applicable legal provisions. Both cases have in common that the owners of such real property cannot be unambiguously identified.

The authority whom the Cadastral Act has given the power to remedy such situations is the Office for Government Representation in Property Affairs (Úřad pro zastupování státu ve věcech majetkových, or ÚZSVM for short), which in collaboration with other state authorities and local governments must carry out active enquiries toward the proper identification of such owners. In spite of its efforts, as at 1 February 2023, the ÚZSVM still accounted for more than 150 000 pieces of real estate with insufficiently identified owners or, as it were, more than 120 000 such persons. The ÚZSVM keeps a public list of these properties and persons on its website. In those cases in which ÚZSVM finds itself unable to identify the owner, the property in question will after ten years be deemed abandoned, by operation of the law, and forfeited in favor of the state.

We consider this legal concept problematic to begin with, under a number of aspects, and in particular from the vantage point of constitutionally guaranteed rights. For instance, the concept is not dissimilar to that of “eminent domain”, or expropriation, which however is conditional upon (among other things) the existence of overriding public interest and the payment of compensation to the expropriated party – two important elements which are missing here. For that matter, the lawmaker itself conceded, in the explanatory memorandum for the bill of the Cadastral Act, that the whole rationale of this arrangement was to circumvent earlier case law of the Supreme Court and the Constitutional Court which prohibited the “forfeiture” of private property in favor of the state based upon similar simplistic assumptions by the authority of the state. Finally, we should also note that ÚZSVM as the representative of the state is on the one hand supposed to “help remedy the defective state of affairs”, but on the other hand has to gain a rather substantial pecuniary advantage from not doing so.

Notwithstanding the seriousness of the aspects outlined above, we shall leave them aside for the moment. After all, the legal fiction of abandonment of real property discussed herein, in the way in which it is laid out in the Cadastral Act, is marred by yet another uncertainty: that of its application in practice. More specifically, questions arise as to the moment in which the aforementioned ten-year period begins – a matter on which the Cadastral Act takes a very unclear stance (or, rather, is altogether silent).

Within the context of the task to identify property owners, the Cadastral Act imposes a number of individual obligations on the ÚZSVM (and on the municipalities within which the real property in question is located). Chiefly among them are (i) the obligation to call upon owners to remove the shortcomings in their identifying particulars, along with an advisory of the possible consequences if they fail to do so (i.e., the forfeiture of their real property to the state), and (ii) the obligation to engage in active investigations toward owner identification. The question therefore arises whether the protective character of the ten-year period (upon whose lapse the real property of an insufficiently identified owner passes to the state) is not best preserved by making its commencement conditional upon the prior fulfillment of the above-mentioned obligations by the ÚZSVM – in other words, whether this time period should start even if, hypothetically, the ÚZSVM undertook no steps whatsoever toward identifying the owner of the real property.

We feel that it would be absurd to entertain this alternative interpretation – prior notice by the ÚZSVM and by the municipality in question, along with proper legal instruction, appears absolutely fundamental to us, considering the stakes (i.e., the potential infringement of the constitutionally protected right to own property). While we understand that an individual review of the time periods involved for each and every real property would entail an enormous administrative burden, we believe that it simply must be undertaken, given the importance of, and the principles of protection for, private property within a democratic state in which the rule of law is upheld.

However, the ÚZSVM’s view of the ten-year period discussed above could not be more simplistic. According to the information which it posted online, the ÚZSVM apparently believes that this time period automatically lapses on 31 December 2023 (i.e., after ten years from the coming into force of the Civil Code and the Cadastral Act) for all insufficiently identified owners who have not asserted their ownership by then. According to the ÚSZVM, this legal consequence apparently is supposed to occur irrespective of the fact that it only published the mandatory notice to insufficiently identified owners on 6 March 2014, and irrespective of the possibility that it may not have fulfilled other obligations imposed on the ÚSZVM and the individual municipalities in this respect by the Cadastral Act. Quite clearly, the ÚSZVM also intends to entirely disregard whether or not the insufficient identification of the person in the land records has itself lasted the requisite ten years.

We are well aware that only future court rulings on individual cases will deliver a binding interpretation of these matters. At the same time, it is all but impossible to tell at this point how they will decide, given the complexity of this issue, and how it still represents unchartered territory. Again, the general recommendation that it is usually more efficient and less costly to avoid any disputes in the first place holds true also here. While we don’t expect the ÚZSVM to go ahead right after 1 January 2024 and file vast numbers of motions for entry of the state’s ownership right to real property whose owners are insufficiently identified, one must keep in mind that the interpretation favored by the ÚSZVM would not even require such activity (for, according to the ÚSZVM, the forfeiture of real property in favor of the state occurs automatically, by force of law, and the subsequent entry into the cadastral register is thus mere record-keeping). This is yet another reason why we recommend spending some time over the list of the contentious properties (see the link earlier above in this article) before the year is out: you may find your own name, or that of a relative, in there. In some cases, it will take little to then protect your ownership – as little as informing the cadastral office of your current address of residence. There may also be more complicated cases, such as an unresolved inheritance, and our law firm will gladly assist you with them, if need be.

Civil Code (Act No. 89/2012 Coll., as amended)
Cadastral Act (Act No. 256/2013 Coll., as amended)

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