On the possibility of concluding an amendment to a “recorded” real estate transfer contract
Authors: Mgr. Irena Kolárová and Mgr. Martin Murad
According to existing case law, real estate transfer contracts cannot be changed ipso facto (by concluding amendments, etc.) once the title to a property has been entered in the Land Register on the basis of such contract. A new decision of the Supreme Court of the Czech Republic N. 28 Cdo 4168/2019-272 goes on to explain however that as long as a sales contract is still effective, the contracting parties cannot automatically be denied the right to change certain provisions by agreement (e.g. a provision on the amount of the sales price) just because these provisions were concluded only after the contract had served as the basis for the entry of the title to the property in the Land Register becoming effective.
In the case at issue, the appellate court concluded from the judgment of the Supreme Court as of 21.8.200, Ref. N. 22 Cdo 871/2000 that a real estate transfer contract cannot be changed ipso facto after it has served as the basis for entering a title to a property in the Land Register. The appellate court came to such a conclusion as a consequence of the above-mentioned judgment (and also from the judgment as of 15.6.2010, Ref. N. 21 Cdo 3625/2008) due to the resolution of the issue of nonvalidity of a sales contract pursuant to Section 39 Act N. 89/2012 Coll., the Civil Code (hereinafter referred to as “CC”) (and the issue that an amendment to a contract cannot proclaim it valid) and due to the interpretation of Section 46 Art. 2 CC (according to which the validity of the contract must be evaluated from the day of its conclusion, and additional circumstances do not have any effect on the validity of the contract). Still, the lower courts did not have any doubts about the validity of the (original) sales contract in the discussed case, and because of that the appellate court concluded that the parties of a valid contract such as this cannot be ipso facto denied the right to change the provision on the amount of the sales price by agreement just because this provision was concluded after the recording of the title to the property in the Land Register had come into force pursuant to a valid sales contract of this kind. The appellate court then concluded in this case: “After all, within the bounds of contractual freedom of the subjects of civil relations, contractual parties generally cannot be prohibited from changing (even supplementally, after the contract has been concluded and the title to the property has been entered in the Land Register) the obligations of a contract, including a provision on the amount of the sales price.”
In cases where an amendment to a real estate transfer contract is concluded after the title to the property has been entered in the Land Register on the basis of this contract, we still recommend carefully evaluating the prospective effects of concluding an amendment separately in each case, and with regard to the specific factual circumstances, paying particular attention to the possible aspects of taxes on the transfer of real property, etc.