This article explains in detail how the statutory pre-emption right operates on the transfer of a co-ownership share in land in Slovakia. It highlights important differences between Slovak and Czech case law (particularly regarding gifts) and describes, step by step, the process of making an official written offer. It also defines the three legal claims that arise for co-owners where their rights are breached.
The sale of land held in fractional co-ownership is governed by strict rules. If you decide to sell your co-ownership share to a third party, you cannot do so entirely without restriction. The law protects the other co-owners and grants them a statutory pre-emption right.
If you transfer your co-ownership share, the other co-owners have a right to purchase it in priority. The only exception is where you transfer the share to a close person (e.g. relatives in the direct line, siblings or a spouse). An interesting point from the case law is that, under certain conditions, even a legal entity may be regarded as a close person (Supreme Court of the Czech Republic, file no. 22 Cdo 1836/2003).
If not all the co-owners agree on the purchase, they are entitled to buy your share proportionately – according to the size of their own shares.
But how do you manage this process without mistakes and avoid disputes? Let us look at the key questions through the eyes of the statute and judicial practice.
Judicial practice has provided clear answers as to when you must respect the pre-emption right.
The pre-emption right applies only to a transfer of ownership (e.g. by sale or gift). It does not apply to the passage of ownership by inheritance (R 54/1973) or in enforcement proceedings (the sale of a share in the execution of a judgment), where the co-owners' rights are protected in other ways. Note, however, that the right does not lapse on a co-owner's death. It passes to the heirs, who become the new holders of the pre-emption right (R 26/2011).
A contract by which you contribute your co-ownership share to a company as a member (e.g. to an s.r.o., a Slovak limited liability company) also counts as a transfer. In that case, too, you must respect the co-owners' pre-emption right.
In the case of gifts, there is a marked conflict between the Slovak and Czech legal views:
Since you are transferring property in Slovakia, you must follow the stricter Slovak interpretation — otherwise you risk the relative invalidity of the transfer contract.
If you want to transfer the share to a person who is not a close person, your basic obligation is to make the other co-owners an official buy-out offer. Since our statute lacks detailed rules for the statutory pre-emption right, legal practice applies the rules on the contractual pre-emption right (§§ 602 to 606 of the Slovak Civil Code) by analogy. The offer is a unilateral legal act which must meet the following requirements:
The offer is effectively accepted only upon actual payment of the purchase price by the co-owner (R 49/2010). For immovable property, the statutory period for paying the purchase price is two months from delivery of the offer. This period is preclusive, meaning that missing it definitively extinguishes the right. If the co-owner does not pay the price within two months, the pre-emption right lapses "for this specific case" and you may sell the share to a third party.
According to the Constitutional Court of the Czech Republic, you cannot set your own, shorter period for the co-owner in the offer. If you sold the share before the statutory 2-month period expires, you would be breaking the law.
The pre-emption right is breached if you make no offer to the co-owners at all, if you offer them the share at a price higher than the price at which you ultimately sell it to the new acquirer, or if you sell it on more favourable terms (e.g. allowing the purchase price to be paid in instalments). If such a breach occurs, the overlooked co-owner has, under the case law of the Supreme Court of the Slovak Republic, three options. The choice depends on the outcome they want to achieve. These claims are mutually exclusive, so only one of them may be chosen:
Claim no. 1: The right to demand that the new acquirer offer the property for purchase
The co-owner may call on the new owner of the share (the acquirer) to sell them the share on the same terms on which the acquirer obtained it. If the new owner does not comply voluntarily, the co-owner may bring an action in court to have the owner's expression of will replaced by a court decision (§ 229 of the Slovak Code of Civil Contentious Procedure). The right to bring the action is subject to the general 3-year limitation period, which starts to run from the registration of the ownership right in the Land Registry (kataster).
Claim no. 2: Invoking the relative invalidity of the contract
The co-owner may object that the transfer contract between the transferor and the acquirer (e.g. a purchase, gift or exchange contract) is relatively invalid (§ 40a of the Slovak Civil Code). The invalidity takes effect when the expression of will reaches both of them, i.e. the transferor and the acquirer. The right to invoke the relative invalidity of a legal act becomes time-barred 3 years from the day the legal act was performed. Invoking relative invalidity may not be advantageous for the client. Relative invalidity does not compel anyone to transfer the share. The original owner is under no obligation to sell the property, even where they breached the pre-emption right. The situation merely returns to square one. Moreover, if the new acquirer has in the meantime managed to transfer the share to a third party who acquired it in good faith, invoking the invalidity no longer affects that party's legal position (R 31/2013).
Claim no. 3: Retaining the pre-emption right for the future
Since the statutory pre-emption right is a right in rem, it continues to burden the land and is effective against the buyer's legal successors as well. The co-owner may therefore let the breach pass in silence, with their pre-emption right remaining fully preserved against the new owner.
A closing word
Whether you are planning to sell or gift a share, or you are on the other side and your pre-emption right has been breached, we recommend consulting an expert on every step. Legal missteps in the offer procedure can cost you years of litigation in the courts.
If you need a share buy-out offer prepared, or representation in protecting your co-ownership rights, we are fully at your disposal.
