This article is the last article in a series of articles in which we discuss the draft law on the protection of the rights of purchasers of a dwelling or a single family house and on the Developer Guarantee Fund (hereinafter referred to as the "Developer Act"). We will discuss here the issue of the reception of a residential or single-family home and the planned extension of the conditions for withdrawal from the development contract or one from other contracts concluded with the purchaser, the subject of which is the transfer of property ownership.
The development bill introduces some changes in the reception of a residential or a single-family house. At present, the transfer to the purchaser of the right arising from the development contract or contract concluded after the establishment of a separate property is preceded by its receipt.
Draft development bill introduces 14-the day-old deadline from the date of signature of the receipt protocol, at which the developer informs the buyer of the recognition or non-recognition of defects. Overshooting of this term will be unequivocally recognized by the developer for the drawbacks submitted to the protocol.
Responsibilities of the developer to repair the defects reported in the protocol
A developer who has recognised the defects reported by the purchaser in the minutes shall be required to remove them within the time limit 30 days from the date of signature of the collection protocol.
Where a developer within the time limit 30 the days from the date of signature of the receiving protocol, despite due diligence, will not remove the defects recognised by it, may indicate an appropriate, different deadline for the removal of the defects, together with a justification for the delay.
The time limit set by the developer shall not cause undue inconvenience to the buyer. However, if the defect is not removed after the deadline specified by the developer, the buyer will set an additional deadline for the developer to remove the defect after which the buyer will be able to remove the defect at the developer's expense.
The responsibilities of the developer will include in the information prospectus relevant information on these conditions of withdrawal from the contract in the information prospectus
Currently, the rules do not provide for the right of the purchaser to refuse to receive a dwelling or a single-family home, where it has significant defects, even if the disadvantages are so significant that they prevent the use of such a accommodation or home.
Project of the Development Act under Article 40(9) provides for the right of the purchaser to refuse receipt of a dwelling or a single-family house in the event of a material defect. The refusal to accept shall be recorded in the receipt protocol.
In the event of refusal of receipt due to a defect, the relevant parties shall set a new time limit for receipt allowing the developer to remove this defect before re-imposing. After this deadline has expired, the buyer will be entitled to withdraw from the contract.
Regulating defect reporting
At present, the rules do not provide for a procedure for reporting defects between collection and transfer of property ownership. In this situation, the purchaser cannot exercise the rights of the guarantor.
The draft development bill provides for the issue of reporting to the developer the defects found in the post-received period and before transferring property ownership to the buyer. The purchasers who submit the defect during this period will be entitled to the same rights.
what he was entitled to when he received a place or a single-family house.
Expanding the grounds for withdrawal
The current law on the protection of the rights of the purchaser of a dwelling or a single-family house provides for a number of conditions authorising the parties to withdraw from the development contract in the event that the parties do not fulfil the obligations arising from the law. The draft development bill provides for additional conditions for the buyer to withdraw from the development contract in the following cases:
- failure of the developer to enter into a residential trust account agreement despite such a statutory obligation (if the bank terminates the existing MRP contract) – in this case the buyer has the right to withdraw from the contract after the bank has reimbursed the funds in accordance with Article 10(3) draft development bill, failing to inform the buyer of the conclusion of the residential trust account agreement with the new bank within the time limit 10 the dates from the date of conclusion of such an agreement;
- failure to inform the buyer of the conclusion of a residential trust account with the new bank within the time limit 7 days from the date of conclusion of such a contract (this obligation is a consequence of the bankruptcy of the bank holding the residential trust account and the obligation of the developer to enter into a new MRP contract), in this case the buyer has the right to withdraw from the contract after the expiry of 60 the days from the date on which KNF’s decision on the bankruptcy of the bank or the decision of the insolvency court was made public;
- lack of consent of the secured mortgage creditor, despite the obligation to obtain such consent;
- failure of the developer to remove significant defects in the residential or single-family premises within the additional time limit set by the buyer in the event of re-receivement of the residential or single-family premises.
It will be the responsibility of the developer to include in the information prospectus relevant information on these conditions of withdrawal from the contract in the information prospectus.
In the event of withdrawal of the buyer from the development contract for the reasons indicated in the draft development act, such a contract shall be attentive for it and the buyer shall not bear any costs associated with withdrawal from the contract. In addition, the provision contained in the development contract, which reserves the possibility of withdrawing from the contract for payment of the amount of money marked in connection with the existence of any of the statutory conditions, will be invalid.
Developer within time 30 the days from the buyer's notice of withdrawal from the contract will be required to reimburse the funds paid to the developer by the bank from an open residential trust account. The developer, who will not return the funds to the buyer within the time limit, will not be able to enter into a contract concerning this housing unit or a single-family house with another person. A contract concluded in breach of that prohibition shall be null and void by law.
In summary of the entire series of articles on the draft law on the protection of the rights of the purchaser of a dwelling or a single-family house and on the Developer Guarantee Fund, it should be noted that the proposed solutions should serve to better protect purchasers.
The introduction of the Developer Guarantee Fund, the extension of the scope of the Development Act to new types of contracts concluded with purchasers, the subject of which is the transfer of ownership of the residential premises, the single family house or the commercial premises purchased with it, the regulation of the booking agreement or the introduction of the right of the buyer to refuse reception to provide accommodation, should have a significant impact on the development industry, equalising the positions of the purchasers in relation to the developers.
Those wishing to carry out development activities will be subject to greater verification in terms of financial capacity or creditworthiness, eliminating entities that do not guarantee successful development.
Author: Ernest Bucior, Legal adviser Russell Bedford Polan d
Draft law on the protection of the rights of the buyer of a residential or single-family house and the Developer Guarantee Fund CZ.1
Draft law on the protection of the rights of the purchaser of a residential or single-family house and the Developer Guarantee Fund.2
Draft law on the protection of the rights of the buyer of a residential or single-family house and the Developer Guarantee Fund. CZ.3.