Czechia: Tenants’ preemptive right to their apartment unit – observations on a baffling Supreme Court opinion

In resolving an issue concerning the tenant’s statutory right of first refusal to ‘their’ apartment unit, the Supreme Court arrived at surprising conclusions regarding the moment in which the owner becomes obliged to offer the unit for purchase to the tenant.

In its judgment 26 Cdo 2923/2022 of 13 December 2022, the Supreme Court engaged in a detailed analysis of how the statutory preemptive right to the apartment unit (enshrined in Sec. 1187 of the Czech Civil Code – Act No. 89/2012 Coll.) is to be applied.

The aforementioned provision of the Civil Code recognizes a preemptive right of tenants (private individuals) to the apartment which they occupy and which came into existence as a separate unit by way of a subdivision of the right to the house or land plot; this right may be exercised upon the first transfer of the said unit.

In the case that ended up before the court, the tenant had used the apartment in question since 1991; in 2016, the owner of the building divided the house into apartment units. In 2017, the owner proceeded to send a letter to the tenant, offering her the apartment for purchase. More than six months later, the tenant confirmed her interest in the apartment (though not for the landlord’s asking price). Subsequently, the landlord sold the apartment to a third party. In July 2020, the tenant announced to the new owners of the unit that she wished to exercise her preemptive right under the law and demanded that they enter into a purchase agreement with her.

According to the statutory provisions on the right of first refusal, the owner (here: the landlord) becomes obliged to offer the item in question to the preferential buyer (here: the tenant) for purchase at the moment in which the owner enters into an agreement with the person (third party) who expressed interest in the purchase. In the light of this, any offer made by the landlord long ahead of the conclusion of the purchase agreement ought to be considered premature in accordance with the law.

However, the Supreme Court found that upon the lapse of the 6-month period from the delivery of the offer (i.e., the statutory time period for accepting the offer once it has been made) without any response, the unit becomes legally unencumbered and may be transferred to any third party, and the conclusion of a contract with such third party ought not to be affected in any way by the preemptive right. The Supreme Court in fact went on to expressly state that it was unrealistic to assume that the obligation to offer the apartment for purchase should arise only of the moment in which the purchase agreement is being made with the prospective buyer, as the Civil Code presupposes.

In other words, the Supreme Court, in spite of the laws in force, has interpreted the principles governing the preemptive right in the same manner as the “Old” Civil Code (whose rules are different from those in today’s Civil Code. Even so, our recommendation to the owners of apartment units is to proceed in accordance with the latter when transferring a unit for the first time – whereas according to the Civil Code, the obligation to offer the unit to the tenant for sale indeed does arise only as of the moment in which a contract is made with the third party.

Supreme Court judgment 26 Cdo 2923/2022 of 13 December 2022

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