Good faith buyers of real estate are protected from invalid transfers between previous owners and as such will retain their ownership rights, according to a recent decision by the Constitutional Court.

The case concerned an attempt by previous owners to regain title to a property which they had transferred under an invalid purchase agreement, and which had subsequently been transferred to another buyer in good faith.

Under Czech law, registering ownership of a property in the Cadastral Register is not conclusive evidence of title. The fact that the law does not protect good faith purchasers of real estate has attracted much criticism from the legal and real estate communities.

This decision will help bring a little more stability to property ownership, but it does not provide blanket protection for a good faith buyer from a seller who is the registered owner but not the true owner of the property.

In particular, it does not lessen the need for careful and thorough title research when buying property in the Czech Republic, as the decision may well have been different if the new owners had failed to notice obvious defects in the previous transfer documents.

In fact, the Supreme Court has already declined to follow this ‘radical’ decision in another case.

Cases:  Constitutional Court file no. II. ÚS 165/11; Supreme Court file no. 30 Cdo 4280/2009