Restrictions on the development of encumbered plots of land

Prague, 20 July 2017

The Supreme Court of the Czech Republic has ruled that any development of an encumbered plot of land by an easement is restricted to only certain business activities.

The ruling concerned a case where an easement contract restricted the encumbered estate from constructing and operating a business related to furniture, home accessories, etc. that would have come into direct contact with end customers. The land book officials did not register said easement and the lower court of justice said that such a restriction can be achieved through a commercial/civil contract and not by an in rem obligation.

Despite such disagreement, the Supreme Court concluded that the easements provided in the Old Civil Code of the Czech Republic are not exhaustive and therefore can be further regulated by contract. The restriction on conducting a business activity is a valid clause because there is no public policy restriction applicable. We note that the same rationale shall apply under the New Civil Code, which does not exclude the negotiation of an easement or servitude provided that the compulsory requirements are observed.