Agreement on a future contract

In an agreement on a future contract (smlouva o smlouvě budoucí), at least one party undertakes to conclude, when called upon, a future contract whose content is agreed at least in general terms (Section 1785 of the Civil Code). For property it is most often an agreement on a future purchase contract: the parties agree on the purchase now but sign the actual purchase contract later.

When it is used

It is useful where something still prevents the sale, for example: a building is not finished or approved for occupancy, a plot is still being divided by a survey plan, units in an apartment building have not yet been created, or the buyer is waiting for a mortgage. The agreement should describe the property, the price and the main terms of the future purchase contract, and state who may call for it to be concluded and by when.

How it works under the law

• the call to conclude the future contract must come within the agreed period; if none is agreed, within one year
• the party called upon must conclude the contract without undue delay
• if it does not, the entitled party may ask a court (or a person named in the agreement) to determine the contract's content
• if the entitled party does not call in time, the obligation lapses
• it also lapses if circumstances change so much that the obliged party cannot reasonably be required to conclude the contract

Points to watch

A purchase contract for real estate must be in writing. For an agreement on a future contract the law does not expressly require writing and the Supreme Court does not consider it mandatory, but in practice it is made in writing for evidence and certainty. The agreement itself does not transfer ownership; only the purchase contract is entered in the land register by registration.

Advance payments made before the purchase contract are best protected, for example by an escrow. If an estate agent brokers the deal, it must not oblige a consumer to conclude such an agreement, including through a reservation agreement. According to legal commentary, it also must not be in the same document as the brokerage contract.

Frequently asked questions

Can you get out of it?

Only in ways the agreement or the law allow: by mutual agreement, when the period ends without a call, by withdrawal under the agreement, or when the obligation lapses due to a fundamental change of circumstances. Any contractual penalty or right of first refusal is a separate arrangement and needs to be read on its own.