Unreported construction and the transfer of private real estate to the state

You can read below that an unreported construction is not only a building that has not been permitted by the building authority, but also a building that is placed on third-party land without the owner's consent. We will discuss unreported construction in more detail below. In conclusion, we will point out that at the end of this year, buildings that are considered abandoned will be transferred to the state.

The term "unreported construction" is usually used for buildings that are built without the necessary paperwork from the building authority (e.g. zoning decision, building permit, etc.) or that are built in violation of what the building authority has authorised. Surely everyone has encountered some kind of unreported construction at some point.

Within these unreported constructions, however, we can distinguish between two basic groups. First, there are illegal constructions, and second, unauthorised constructions. Although it may not seem so at first glance, these are not identical concepts.

The term illegal construction refers to such structures that are built without any involvement by the building authority (e.g. building permit), or where the building authority has authorised the construction, but the construction has been carried out with substantial deviations from the authorised project. Typical examples are where the builder first builds the building and only then "completes the paperwork" or extends the floorplan of the building or adds another floor as part of a new construction.

The term unauthorised construction is used to describe those buildings which the builder has constructed on land which they do not own or which they do not have the right to build on, or where they had such a right but subsequently lost it. An example of this would be the running of utility lines across land that is not owned by the builder and the builder does not have consent from the owners of that land to lay the utility lines.

We recommend that the above-mentioned consent of third parties to the placement of the building is always obtained in the strictest possible, rigid form – for example, by establishing an easement. The third party may withdraw its original consent to the placement of the building, thus turning the originally perfect building into an (unauthorised) unreported construction.

In short, while the term illegal construction refers to the permission of the construction by the building authority, the term unauthorised construction refers to the ownership rights and the right to build on the land in question.

In assessing whether a building is unreported or not, the building authority must examine both categories, and both must be answered in the affirmative. Hypothetically, it is possible to imagine a situation where a building that has been permitted by the building authority, but part of which is on someone else's land without the owner's consent, will also be classified as unreported. Thus, there would be a building which, although permitted by the building authority, is not authorised. It must therefore be concluded that such a structure is an unreported construction and the building authority must order its removal.

If the building authority concludes that the construction is illegal or unauthorised (or both), it is obliged to initiate proceedings for the removal of the construction. As part of this procedure, it must inform the owner of the building that the building in question may be retroactively permitted on request. It is inferred that the building authority is obliged to permit such a building if the owner proves that the building:

a. is not placed contrary to the planning documentation;

b. is not built on land where it is prohibited or restricted by special legislation;

c. does not conflict with the general requirements for construction or with the public interest protected by a special legal regulation.

Additional permitting of unreported buildings under similar conditions will be allowed under the new Building Act, which will come into force on 1 July 2023.

A common problem with unreported buildings is that their owner is unknown. In this respect, please note that on 31 December 2023, the deadline for the owners of buildings that are not properly identified to make a proper identification and thus retain their ownership will expire. Simply put, the Civil Code provides that after 31 December 2023, the deadline for abandoned properties to become the property of the state expires.

That this is not an isolated problem is evidenced by statistics from the Office for State Representation in Property Matters, according to which as of 1 February 2020, 174,040 plots and 5,353 buildings with insufficiently identified owners were registered in the Czech Republic. These properties are at risk of being transferred to the state.

We therefore recommend that you make a detailed inventory of both company and family real estate assets and address any shortcomings soon. A list of under-identified owners can be found here: https://www.uzsvm.cz/seznam-nedostatecne-identifikovanych-vlastniku.

Of course, we are always happy to be of service in dealing with both unreported buildings and poorly identified ownership.