The Supreme Court held that a real estate agency is liable for damages caused by invalidity of a purchase contract to the preparation of which the real estate agency obliged itself

(Judgement of the Supreme Court of the Czech Republic file No. 25 Cdo 5007/2016, from 28 June 2018)

The plaintiff (an applicant for purchase of a flat) entered into a real estate booking agreement with defendant (a real estate agency) and he paid the deposit. After that, the real estate agency prepared a draft of a purchase contract, which the parties of the purchase concluded. However, the Land Registry Office dismissed the entry proposal to the Real Estate Register because of the vagueness of the purchase contract. Meanwhile a writ of execution against the seller was issued and the auction of the flat in question was announced. Because of that, the plaintiff did not file the entry proposal again.

The Municipal Court held that the damages were caused to the plaintiff by the defendant because the defendant did not secure that the purchase contract had been perfect and had been successfully registered with the Land Registry Office. By its conduct, the real estate agency violated its preventive duty under the Civil Code.

However, the Court of Appeal did not agree with the Court of First Instance. The Court of Appeal concluded that the deficiencies of the purchase contract were not the reason for unsuccessful filing of the entry proposal to the Real Estate Register. The reason was the fact that no other proposal was filed. According to the court, even if the contract had been perfect, the entry proposal would have been dismissed by the Land Registry Office because a writ of execution against the seller had been issued before the conclusion of this purchase contract.

The Supreme Court held that the real estate agency is liable for damages.

The Supreme Court decided on the ground of the fact that the defendant was committed to provide the seller and the buyer with legal services (to prepare contractual documents and the entry proposal). It is the defendant who is liable for the damages even if the defendant entrusted the drafting of these legal acts to an attorney. Precisely, the formal deficiencies of the purchase contract were the reason why the entry proposal was dismissed. The writ of execution mentioned in the reasoning of the Court of Appeal became effective later. Therefore, the Supreme Court annulled the judgement of the Court of Appeal and referred the case back for a new decision.