CZECH REPUBLIC Law and Practice Contributed by: Matěj Manderla, Jan Wagner, Ivo Hartmann and Aleš Malach, Tenacta, advokátní kancelář, s.r.o.
2.9 Condemnation, Expropriation or Compulsory Purchase
Liability Caps and Thresholds Caps on the seller’s liability are standard. For general warranties, liability is usually limited to 10–30% of the purchase price, while for fundamental warranties (such as title) it can reach up to 100%. Claims can only be made if they exceed a minimum amount (de mini - mis) and, in total, pass an agreed threshold (basket). 2.6 Important Areas of Law for Investors The most important areas of law for a real estate investor are civil law governing the transaction itself, corporate law (especially in share deal structures), public law including zoning, building and environmen - tal regulations and, in some cases, EIA requirements and foreign direct investment (FDI) screening. 2.7 Soil Pollution or Environmental Contamination The primary rule is “polluter pays”, meaning the par - ty that caused the contamination is responsible for remediation, which is particularly relevant in the con - text of a share deal, where the liability remains with the target company. However, the property owner can still face objective obligations, even without fault, such as tolerating remediation measures or, in some cases, removing waste at their own cost. Because of this risk, buyers typically carry out envi - ronmental due diligence and negotiate contractual protections like warranties and indemnities. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Permitted use is primarily determined by the munici - pal zoning plan, which sets out how the land can be used and developed. For more certainty, buyers can obtain official planning information from the building authority. In practice, developers often enter into planning agreements with municipalities, agreeing to provide infrastructure or contributions in exchange for co- operation, which helps facilitate the project alongside standard permitting procedures.
Expropriation is possible under Czech law, but only as a last resort. Under the Charter of Fundamental Rights and Freedoms and the Expropriation Act (Act No 184/2006 Coll), it is allowed only in the public inter - est, on a legal basis, and with fair compensation. The process can start only if the authority fails to acquire the property by agreement. Compensation is typically based on market value. Special rules under specific legislation in the field of infrastructure and energy law may allow for faster expropriation proce - dures in such cases. 2.10 Taxes Applicable to a Transaction The Czech Republic has no real estate transfer tax, so neither asset deals nor share deals are subject to transfer tax or stamp duty; however, they are generally subject to income tax. Only minor administrative fees payable to public authorities are typically incurred in connection with the transaction; in an asset deal, the cadastral registration fee is around EUR80, while in a share deal, a similar fee applies for updating the Commercial Register. In practice, each party pays its own advisers, while shared costs (eg, escrow or notary fees) are typically split equally. The cadastral registration fee is usually paid by the buyer. 2.11 Legal Restrictions on Foreign Investors Foreigners can generally acquire real estate under the same conditions as local buyers, without specific restrictions. Non-EU investors acquiring strategic real estate may require prior approval under foreign investment screening rules. All transactions are subject to anti- money laundering regulations, including the identi - fication of the ultimate beneficial owner (UBO) and verification of the origin of funds. In addition, compliance with applicable sanctions regimes is essential, as transactions involving sanc - tioned individuals or entities are prohibited.
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