Land development and land transfer:

Land development - a concept that may sound technical at first glance, but can have very concrete implications for landowners. One of the most significant is the restriction on the ability to transfer (sell or donate) land affected by land improvements. If you are a farmland owner or an investor considering buying such land, you should beware. Imagine a situation where you have a buyer for your land, you sign a contract, but the Land Registry refuses to register the ownership right. Why? The reason may be the ongoing land improvements that have temporarily blocked the transfer of ownership. In this article, I will clearly explain what land regulations are, why they affect land transfers and how to deal with such a situation.

Author of the article: ARROWS (Mgr. Michal Stafinski, office@arws.cz, +420 245 007 740)

What are land regulations and why are they done?

Land regulation is a process whereby the state (specifically the land authority) spatially and functionally arranges land - especially agricultural land - in the public interest. In practical terms, this means that land is consolidated or subdivided to create more logical units and to provide a more efficient way of farming for landowners.

Land improvements usually involve straightening boundaries, creating access routes and improving infrastructure in the landscape. This is often due to the historical situation - many landowners have land fragmented into small parcels spread across the land registry. The redevelopment of the land "realigns" their ownership into larger, more compact pieces.

Example: Mr Novák owns several small plots in different parts of the village. A land adjustment may mean that instead of five scattered plots totalling 5 ha, Mr Novák gets one or two larger plots totalling the same area, better located and with access from the road. This sounds positive - the development may increase the value and usability of the land. However, during the process, there will be a temporary restriction on property rights. And this is where surprises often occur.

After all, land development is an encroachment on property rights - over a period of time, parcel boundaries change and old land disappears and new land is created. In order to ensure that this process runs smoothly, Act No. 139/2002 Coll., on Land Adjustments and Land Authorities (as amended), lays down certain rules and restrictions. One of them concerns the alienation of land, i.e. transfers of ownership in the course of land consolidation.

Restrictions on transfer of ownership during land consolidation

"Beware of land transfers during land development!" These words are often heard, and not by chance - it is a very important point that both lawyers and real estate agents point out. The law is mindful that if owners freely sell and change land during land improvements, chaos could ensue. Therefore, there are stages in the process that affect whether you can sell your land or not.

Stages of land reform from the perspective of the Land Registry:

1. Initiation of the land improvement procedure

After the official start of the land improvement, the land registry office will make an entry of the note "land improvement started" on the land concerned. This note primarily serves a registration and informative role - it informs about the ongoing proceedings in the cadastral area. It does not have a direct restrictive effect on the disposal of the land: at this stage, no consent of the land office is required for the transfer of ownership and the normal deposit procedure is not affected by the note.

However, the cadastral office cooperates with the land office on an ongoing basis during the procedure and informs it of any changes concerning the land concerned. The opening remark is cancelled (deleted) in the cadastre when it is replaced by a subsequent remark on the approved land development proposal.

2. Approval of the land development proposal

Approval of the land development proposal (the first decision of the land authority within the meaning of Section 11(5) of Act No 139/2002 Coll.) is a separate stage with significant legal consequences. Once the decision has become legally binding, the land office forwards it to the cadastral office to be entered in the cadastre. The cadastre will then enter the note 'approved land development' (note of the decision approving the land development) on the land in question. This makes the effects of the approved proposal publicly known and binding. Pursuant to Section 11(13) of the Land Development Act, the legal status of the approved proposal is also binding on any successors in title of the owners of the land concerned.

From the moment of approval of the proposal, any deed that serves as a basis for registration in the Land Register and includes the land affected by the modification must indicate both the original (existing) land and the corresponding new land according to the approved proposal. This information (designation of the new land) is provided by the competent land authority.

Furthermore, the law stipulates that the individual affected plots or parts thereof cannot be encumbered or alienated by their owner after the approval of the proposal without the consent of the land authority, i.e. they cannot be sold, donated, mortgaged, etc. without the consent of the land authority.

In practice, this means that transfers or other dispositions of land at this stage require the prior consent of the Land Office. The Cadastral Office verifies that the deed meets the above requirements - i.e. the double designation of the land (original and new) and the documented consent of the Land Office - for any application for entry concerning land with the remark "approved land development". If these conditions are not met, the Land Registry will reject the application for registration.

It is therefore clear that the approval phase of the proposal has separate legal effects: the entry of a special note in the Land Register, the temporary restriction of the disposition of the properties concerned and the establishment of a binding basis for further action (for the final decision). It is therefore not just part of the final phase, but a significant intermediate phase in the land development process.

From the point of view of the law, it is a two-step administrative decision (the decision on approval of the proposal and the subsequent decision pursuant to Section 11(8)), but from the point of view of the Land Registry and the restriction of property rights, the approval of the proposal represents a separate key stage between the initiation and the conclusion of the procedure.

Not sure about a particular topic?

3. Approval of the results of the land development (decision under Section 11(8))

The final step is the issuance of a decision by the land office on the exchange or transfer of ownership rights pursuant to Section 11(8) of Act No 139/2002 Coll. (or also a decision on the establishment or cancellation of easements, if this is part of the land improvement).

This "second decision" effectively implements the new status - on the basis of it, the rights to the new land will be transferred according to the approved proposal. Once the final decision has been delivered to the cadastral office, the cadastral office will update the cadastral register: it will enter new parcel data, new owners and other changes according to the decision, thus bringing the cadastral register into line with the results of the land adjustment.

In this step, the cadastre will delete the existing remarks related to the land improvements - in particular the remark 'land improvements approved' for all the resolved plots and any remaining remarks 'land improvements started' (for plots that were in the perimeter but perhaps not resolved by the proposal). Similarly, the 'cadastral renewal' notice that was entered when the proposal was approved will be removed.

Once these changes have been made to the cadastre, the land improvements are formally over and the affected owners have the newly arranged land registered on their title deeds. Restrictions on the disposal of land that were in place after the approval of the proposal generally cease to apply - the new status is fully effective and transfers of new land are already governed by the standard regime (no more need for double parcel marking or land office approval for ordinary transfers except in specific cases, see below). The only exception is the additional remarks concerning land earmarked for public utility measures, so-called common facilities:

• Note "Land designated for the implementation of common facilities according to Act No 139/2002 Coll." - The cadastre will mark it for those new plots on which a common facility (e.g. dirt road, green space, polder, etc.) is to be implemented, according to the approved plan. This remark indicates a special regime: if such land is to be transferred to another owner, the Land Registry will check whether the consent of the Land Office has been granted in accordance with Article 9(13) of the Act. Without the consent of the Land Office, the entry cannot be authorised. (The Act provides for an exception that the consent of the Land Office is not required in the case of a gratuitous transfer of such land into the ownership of the municipality.) This notation is subsequently deleted on the Land Authority's proposal after the purpose is fulfilled - typically after the land has been transferred to the municipality or the facility has been implemented.
• Note "Prohibition of change in the type or use of land without the consent of the land authority" - According to Section 12(6) of the Act, land on which a common facility in the public interest is located shall be marked with a prohibition of change in the type or use of land without the consent of the land authority. The cadastre shall enter this note on the basis of the decision on land improvements to the respective new land. This is a measure to ensure that land designated for e.g. public roads or green areas is not converted to another purpose without the knowledge of the land authority. This note can also be removed later, once the reasons for the restriction have passed (typically after the completion of the implementation of the common facility and its transfer to the municipality, at the proposal of the land authority).

Contact our experts:

What to watch out for and how to proceed as an owner or buyer

As an owner of land in an area where land improvements are taking place or are to take place, you should be careful and informed. Here are some practical tips to avoid any unpleasantness:

• Check the land registry: the first step is always to check whether your land falls within the land improvement perimeter and what stage it is in. This is relatively easy to find out - in the Land Registry (e.g. via the online application "Access to the Land Registry"), a note such as "Land development started" or "Land development approved" etc. will appear in the "Other entries" section for the land in question. This note will tell you what stage the process is at and what restrictions apply.
• Are you planning a sale during the modification? If you find that the development is underway and you urgently need to sell the land, find out if the proposal has already been approved. If it has, expect to need approval from the Land Registry to transfer. This consent is a formal act - I recommend contacting the local land office, submitting an application and expect it to take some time. Without the consent, there is no point in submitting the purchase contract to the Land Registry, as they will suspend or reject the registration procedure anyway. At the same time, it is advisable to inform the potential buyer about the situation - a serious buyer will understand that this is not your mistake, but a legal procedure. A possible solution is, for example, to negotiate a condition precedent in the purchase contract that the transfer of ownership will only take place after the consent has been granted or after the completion of the land improvements.

Not sure about a particular topic?

Buying land? Similar advice applies to buyers. Check whether the land you are looking at is subject to land development. If so, find out the stage and be aware that you may become the owner later than you would like, or even that the resulting land may have different boundaries or location than the original (if you are buying during the process and subsequently the land is being regrouped/divided as planned). Caution pays off; an uninformed buyer could be unpleasantly surprised by the outcome if they ignore these specifics.

If you are unsure where your land stands, or need to transfer property during the land development process, do not hesitate to consult an attorney. An experienced attorney can help you verify the status of the property, communicate with the authorities, and design a safe contractual treatment for the entire transaction.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.