The Czech Republic’s new Civil Code (“NCC”), which comes into effect on 1 January 2014, introduces a new notion: the “right to build” on land owned by a third party.
Under the NCC, buildings and the land on which they stand will no longer be legally separate objects, though there are some exceptions – such as temporary structures or buildings already built on land owned by another person. Instead, buildings will be either a legal part of the land on which they stand (if they were built on land owned by the builder) or a “right to build” on such land. Thus, if a building is sold or otherwise transferred, the subject of the transfer will be either the land or the right to build on the land.
The “right to build” is a new proprietary right. It authorises a builder to erect a structure on or beneath land owned by a third party. As with other immovable property rights, it can be transferred, inherited or encumbered. The right to build must be recorded in the land register.
A “right to build” can be established for a maximum period of 99 years. Once the period for which it was established lapses, the structure becomes the property of the landowner, subject to payment to the holder of the right to build of a compensation amounting to half the value of the building, unless otherwise agreed.
For the duration of the right to build, the builder has a right of first refusal to purchase the land and the landowner has a right of first refusal to purchase the right to build, i.e. to purchase the building which is the subject of the right to build.
It is not yet clear whether, under the NCC, it will still be possible to erect buildings on land owned by a third party on the basis of a leasehold or temporary easement, and maintain separate ownership rights to the building. Based on information gathered so far, the response to this question will largely depend on whether the provisions on temporary structures in the Building Act continue to apply to constructions that are permanent by nature (e.g. office buildings, shopping centres) but developed on the basis of a temporary right to the land on which they are erected (i.e. a leasehold or temporary easement).