Agreement on future real estate purchase agreement does not necessarily require written form
Form of a future purchase agreement regarding real estate
The future purchase agreement is a frequently used instrument not only in real estate. The contracting parties use it to create an obligation between them to enter into the main purchase agreement within an agreed period of time if the conditions agreed between the contracting parties are met (for example, a positive conclusion of the legal examination concerning the relevant real estate).
In many cases, the Czech law stipulates a written form in connection with various legal acts. These are mainly legal acts with which the law associates serious legal consequences, legal acts that are to be published within the framework of public records or legal acts reflecting an interest in the protection of the weaker contracting party. In some cases, however, the form of legal act is not entirely clear and there are multiple opinions based on different arguments why the given legal act should be made in one form or another. Until recently, one of these controversial forms of legal acts was the future purchase agreement regarding the real estate.
Until recently, according to the case law of the Czech courts, it was necessary for the future purchase agreement regarding real estate to be in writing. The main reason for the written form of the future purchase agreement regarding real estate was the consideration that it protects the rights of the contracting parties and their legitimate expectations of the future purchase or sale of the real estate, i.e. the will of the contracting parties to buy or sell the real estate. However, according to the decision of the Supreme Court of 27 May 2022, Case No. 33 Cdo 72/2021, it should be emphasised that the subject matter of a future purchase agreement is not an obligation of the contracting parties to a specific performance in the form of the purchase or sale of real estate, but only an obligation to conclude, provided that the relevant agreed conditions are fulfilled within the agreed period, the main contract resulting in the actual purchase or sale of real estate.
According to the current Czech law, the role of the court is not only to replace the expression of the will of the obligor, as was the case under the old Czech law, but the court also determines the content of the agreement using the general criteria set out in the provisions of Section 1787(1)(a) of the Civil Code. According to the Supreme Court, a future purchase agreement regarding real estate does not have to be concluded in writing, as the future contract of sale, as a preparatory contract, does not have to contain the essential elements of the future purchase agreement regarding real estate (which has to made in written form) but its content is to be determined at least in a general manner.
Despite the above-mentioned decision of the Supreme Court, we still recommend concluding a future purchase agreement in written form in order to avoid any future disputes between the parties regarding the content of the agreement.
The full decision of the Supreme Court of 27 May 2022, Case No. 33 Cdo 72/2021 is available here: https://www.nsoud.cz/Judikatura/judikatura_ns.nsf/WebSearch/67B8BC9F16F660F4C12588A60017EA18?openDocument&Highlight=0.