The new year has brought a number of amendments and among them is the completely new Act on Public Auctions No. 250/2023 Coll., which is effective from 1 January 2025 (hereinafter referred to as the „APA“) and has thus completely abolished Act No. 26/2000 Coll. (hereinafter referred to as the „original APA“). As the electronic form of auctioning has recently prevailed, it was necessary to change the rules for public auctions. The original APA was adopted at a time when electronic auctions did not exist and all administration and correspondence concerning public auctions was carried out on paper. The original APA was then completely inadequate as it did not reflect the now common electronic forms of dealing via data boxes, electronic signatures, internet and mobile banking, etc. In this article, we bring you the most important changes concerning public auctions:

The most significant change is that in a public auction, instead of the passage of ownership, there is now a transfer of ownership. Although it may seem that this is an unnecessary specification of legal terminology, this brings alignment with civil law and better characterises the manner of contracting in a public auction between the auctioneer and the participants. Thus, the transfer of ownership of the property will now take place on the basis of a purchase contract. The content of such a purchase contract will already be contained in the auction notice and the contract will be concluded by affixing a seal. However, a written purchase contract will not be concluded; the auctioneer will only issue a confirmation of the conclusion of the purchase contract after the auction.

The APA also introduces a new definition of an auctioneer – any person who, as an entrepreneur, conducts a public auction. An auctioneer is now also an organisational unit of the state or a state organisation and a territorial self-government unit if it conducts a public auction of state property or other property which it is authorised to dispose of. At the same time, auctioneers may be fined for offences defined in the APA, up to CZK 1,000,000. This change provides a necessary tool for the Ministry of Regional Development to proceed with violations of the APA, the purpose of which is primarily prevention. The aim of the control activity should continue to be the cultivation of the auction environment and the promotion of auctioneers who conduct auctions properly and fairly.

Thanks to the unification of the rules for auctioning, information will now be published in the Central Register of Public Auctions maintained by the Ministry for Regional Development, a register that is linked to other registers, not only the register of legal entities, natural persons engaged in business and public authorities, but also the register of population or territorial identification, addresses and real estate. According to the Ministry of Regional Development, this register replaces the original central address, which did not meet the technological and security requirements for electronic public auctions and contains, in particular, auction decrees with their amendments, records of the price, information on waiving the auction, etc.

The APA also brought about the unification of the terms „auction“ and „public sale“. Public sales, unlike auctions which could only be conducted by authorised persons (auctioneers), could be conducted by practically anyone, even on the internet. Now, however, both concepts are covered by the new definition of public auction. It reads as follows: „A public auction is an auction in which an auctioneer addresses an undetermined number of persons at a predetermined place with an invitation to bid in order to conclude a contract of sale or a contract for future sale with the person who submits the best bid under specified conditions.“

In the simplified regime of public auctions of certain movable property, the starting price was also increased to CZK 300,000, due to the increase in the price of the assets.

Along with the APA, the following amendments were approved. One of them is an amendment to the Trade Licensing Act, according to which public auctions at the proposal of the owner will be moved to a lighter regime of a bound trade under the name „Conducting public auctions except forced auctions (Provádění veřejných dražeb s výjimkou dražeb nucených).“ Until now, even for the conduct of such public auctions, the auctioneer had to have a stricter trade licence in the form of a concession to conduct auctions. For the conduct of compulsory auctions, the auctioneer will still have to hold a trade licence under the most restrictive “Conduct of compulsory auctions (Provádění nucených dražeb)“ regime.