Real Estate & Development

Real Estate & Development

In many areas of the Czech Republic, especially Prague, real estate development accounts for a substantial portion of both domestic and foreign investment. Prague is the center of both commercial and residential development. Commercial real estate (especially shopping centers and mini-malls) is also being developed in all regional centers of many smaller towns. Development of logistics centers, which are very important in the Czech Republic due to its central location in Europe, is concentrated along main road transport arteries.

 

Despite the huge interest of investors in real estate development in the Czech Republic, completing such projects is not easy. At present, there are limited plots of land suitable for development, local government permitting is an extremely lengthy and complicated process, and last but not least, those plots of land that are available often have issues with legal title. Due to today’s tight employment situation in the Czech Republic, developers often experience problems with contractors keeping to construction deadlines and can face penalties from their clients. The help of an experienced Czech real estate lawyer is absolutely essential to success in this area.

 

rutland & partners’ real estate team consists of Czech real estate lawyers with over 25 years of experience on the Czech real estate market. We assure that issues relating to ownership, encumbrances, permits and environmental protection are discovered and addressed early in the process of due diligence. We also offer assistance throughout the construction process, starting with seeking modifications of zoning plans and representing clients in appeals of wrongful administrative decisions by municipalities.

Key contacts

Monika Rutland has over 25 years experience in real estate transactions on the Czech market. She assisted both Czech and foreign clients in more than 200 real estate acquisitions and sales of commercial and industrial estate, including their financing. She has extensive experience in real estate Due Diligence, SPAs and joint ventures. She has also advised clients on demergers and post closing mergers of real estate companies. In addition Monika is an expert in construction law and represented many clients in the are of construction law and construction litigation.

Due Diligence in Real Estate Development Projects

Thorough due diligence in ascertaining ownership of land and possible encumbrances affecting it is essential to the process of acquiring Czech real estate. Mere registration of an owner in the Czech land registry does not exclude questions about the ownership of real estate. Documentation of transfers of title for the last ten years must be reviewed and a continuous chain of ownership verified. It is also very important to determine the existence any easements and other encumbrances on the property, because easements can difficult to deal with in the Czech Republic. Finally, permitting is extremely important to the successful realization of a project, especially in cases where numerous extensions of construction permits are required prior to the actual start of construction.

 

rutland & partners attorneys often provide due diligence:

• to verify ownership of a plots of land to be purchased (including issues relating to restitution of property seized by prior governments)
• to determine the existence of possible easements attached to plots of land, including those for public access
• to determine the existence of any leases on the land
• to lay the groundwork for permits connected to intended construction (e.g., the validity of zoning decisions, construction and use permits and the like)

Czech Construction Permits

Our clients often encounter problems in the course of the construction permitting process. In the Czech Republic, changes in land use master plans can be most difficult if local authorities do not cooperate. This applies to zoning permits as well. In such cases, our real estate team supports clients in negotiation with municipal authorities, and in litigation, if required to reverse incorrect decisions.

 

We assist with:

• changes in the Czech land use master plan, including negotiation of changes with local municipalities
• obtaining zoning permits (including administrative appeals in case a permit is denied)
• obtaining construction permits (including but not limited to, prolongation of construction permits)
• reconstruction of a property and its reclassification for a new use
• obtaining construction financing, drafting documentation on behalf of the client and negotiating with the bank

Construction Contracts, Tenders, and Negotiations

Choosing a good, reliable general contractor is crucial for successful completion of a development project in the Czech Republic. Engaging a rutland & partners lawyer who has profound knowledge of Czech construction law and International Federation of Consulting Engineers (FIDIC) contracts will assure that our developer-client will end up with a strong contract that will ensure a contractor meets deadlines and completes construction. Furthermore, we can assure that bank financing will be compatible with the timeline and structure of a project, so that the client does not experience any complications in drawing down loan proceeds.

 

We assist with:

• drafting construction tender documentation and negotiating with tender participants
• negotiating and drafting construction contracts
• drafting and negotiation of FIDIC-type agreements
• obtaining construction financing, negotiating with the bank and drafting documentation on behalf of the client
• assistance with closing construction financing

Construction Disputes

Construction projects sometimes go wrong. That is something we are dedicated to preventing, but if it happens we are prepared to assist. Serious disputes can arise in the middle of construction, or when a claim for breach of warranty arises. Over the years, the senior partners of rutland & partners (Monika Rutland, Michael Novak and Vojtech Makovec) have represented clients including CSOB, Skanska, Klepierre, Horizon Holding, IBE hotels, Agrofim, and others in numerous disputes with various Czech construction companies.

 

rutland & partners attorneys can:

• advise clients on construction warranties
• litigate breaches of construction contracts in Czech courts
• represent clients in Czech and international arbitration of construction disputes
• draft settlement documentation for construction claims