Acquiring Title from a Person Who Is Not the Owner

Take the typical case. Party A transfers title under a purchase contract to Party B, and the contract is later avoided — for instance by rescission — so that it is treated as invalid ex tunc, from the beginning. In the meantime, however, Party B has transferred title in the subject matter to Party C. If that acquirer is in good faith as to the transferor's title, we have the classic case of acquisition from a person who is not the owner: a valid legal title and the acquirer's good faith are the mandatory elements of the institution. Party C becomes owner ex lege, and their title is not derived from their predecessor, who loses the right to recover the thing. Party A is left with a single option — to sue Party B for damages.

It may look objectionable that Czech law prefers the good-faith acquirer to the true owner. Support for the approach is found in Hurdík, for whom the principle of good faith is “one of the key expressions of legal certainty, which is itself a fundamental principle of a substantive rule-of-law state (…). From that standpoint the protection of legal certainty would be incomplete if the good faith of participants in private-law relations were not protected at the same time.”

Where the thing was obtained through a criminal offence, or was lost, it can be acquired only by proper usucaption and not under this institution. The burden of proof rests in principle on the acquirer, save in the privileged case — a departure from the general rule in Section 7 of Act No. 89/2012 Coll., the Civil Code, under which good faith is presumed as a rebuttable presumption.

Acquisition from a person who is not the owner differs from ordinary acquisition in the absence of title on the transferor's side. The institution does not apply where the contract itself was affected by a defect causing absolute invalidity from the outset; in that case title would not pass even from an entitled transferor. Lack of legal capacity or mental disorder are examples.

Things recorded in public registers

A thing entered in a public register may also be acquired from a person who is not the owner. Besides the acquirer's good faith and a valid legal title, Section 984 of the Civil Code adds further conditions connected with the principle of material publicity:

(a) there is a discrepancy between the true state of affairs and the entry in the public register. As described above, such a discrepancy may arise, for instance, where a contract is rescinded after the application for registration in the Land Register has been lodged; and

(b) the right in rem must have been acquired for consideration, in good faith, from the person entitled according to the register.

Tégl describes material publicity as follows: “Material publicity of a public register in its classic form protects those acting in good faith and relying on the truthfulness (correctness) and completeness of the entry (those acting secundum tabulas). (…) It has two aspects: positive and negative. The positive is expressed as ‘what is written is given’, the negative as ‘what is not written is not given’. Both correspond to the rebuttable presumptions in Section 980(2) of the Civil Code: where a right to a thing is entered in a public register, it is presumed to have been entered in accordance with the true legal position, and where a right has been deleted, it is presumed not to exist. Both presumptions are tied to the rule that, where a right has been entered in a public register, ignorance of the entry excuses no one (Section 980(1)).”

Remember that for things recorded in the Land Register, title passes to the acquirer only upon registration, with retroactive effect ex tunc to the time the application was lodged. Good faith is assessed by reference to that moment — the moment the application reaches the register. If the acquirer subsequently learns of a fact inconsistent with their good faith, that has no legal effect on their title once the application has been lodged. Under Section 1107 of the Civil Code the acquirer is also protected against encumbrances on the thing (a real burden or a servitude, for example) where these are entered in the public register; encumbrances that do not pass are extinguished.

How can the true owner defend themselves?

In these circumstances title can be acquired from a non-owner. The legislature offers the true owner the entry of a note of dispute (poznámka spornosti). It is used where the state recorded in the public register does not correspond to the true legal position, and the owner shows, on their own application, that they have asserted their right and thereby rendered the contract invalid from the outset. The fact is entered in the register, and that declaratory act “breaks” the good faith of all future successors until title returns to the original owner. From then on every new acquirer is outside good faith, because no one who acquired the thing knowing that the right had been acquired from a person not entitled can rely on title.

Sources: HURDÍK, J., LAVICKÝ, P., Systém zásad soukromého práva, 1st ed., Brno: Masaryk University, 2010, p. 173; TÉGL, P., Úplatnost nabýtí věcného práva jako podmínka fungování materiální publicity veřejných seznamů v novém občanském zákoníku, Právní rozhledy, 2013, No. 1.