The Czech Bar Association Guarantee Fund and lawyer's escrow: what property buyers should know

When buying a flat or house in Czechia, the purchase price is often placed in lawyer’s escrow and released to the seller only after ownership is registered. The Czech Legal Profession Act tightened the escrow rules in 2025 and established the Czech Bar Association Guarantee Fund from 1 January 2026. Compensation from the fund depends on meeting specified conditions, and the amount is limited. Buyers also have more ways to monitor how the escrow is handled.

How escrow should operate

The following rules have applied to lawyer’s escrow of money since 1 April 2025 (§§ 52g to 52k of Act No. 85/1996 Sb.):

• escrow must be based on a written agreement,
• the money may be held only in a separate account designated “advokátní úschova” (lawyer’s escrow) at a bank, a branch of a foreign bank or a credit union. The account holder is the lawyer. If the lawyer practises in an association of lawyers, another member of that association may also hold the account. If the lawyer practises as a partner in a law firm, the account must be held by that firm,
• one account may hold only one escrow arrangement, and the lawyer may use it for another client only once the previous arrangement has been fully settled,
• the bank must not allow the lawyer to deposit cash into the escrow account or permit cash withdrawals from it,
• a lawyer must not provide escrow in their own matter.

Before accepting money, the lawyer must give the depositor and, if also a party to the agreement, the beneficiary written information about these rules and provide the bank with their contact details (§ 52h of Act No. 85/1996 Sb.). The bank then sends them electronic confirmation that it maintains the escrow account and later confirms transfers from it, stating the recipient’s account number and the amount (§ 52j(2) and (4)).

The lawyer reports the escrow to the electronic escrow register maintained by the Bar Association. The Association sends confirmation of the entry and of the escrow’s closure to the depositor and also to the beneficiary if the beneficiary is a party to the agreement (§ 52k of Act No. 85/1996 Sb.). Under the professional rules effective from 1 January 2026, the lawyer must report it before accepting the money.

What the Guarantee Fund is

Original statutory wording:

Zřizuje se Garanční fond Komory, ze kterého se vyplácejí náhrady osobám poškozeným trestnou činností advokáta v souvislosti s úschovou peněžních prostředků.

§ 29a ods. 1 zákona č. 85/1996 Sb.

Unofficial translation: The Bar Association’s Guarantee Fund is established to pay compensation to persons harmed by a lawyer’s criminal conduct in connection with the escrow of money.

Compensation is limited to CZK 2.5 million per escrow arrangement. Where the funds are the purchase price from the sale of property designated for residential use in the land register, the limit is CZK 5 million. Compensation is paid once a year. If the fund lacks sufficient resources, claims are paid proportionately and the remainder at the next distribution. Upon payment, the Bar Association becomes a creditor of the lawyer who caused the loss (§ 29a(2) and (3)).

The details are set out in Czech Bar Assembly Resolution No. 5/2025 of the Bulletin on the Guarantee Fund, effective from 1 January 2026. For buyers, it means:

• The fund covers only escrow arrangements accepted after 31 December 2025 (Article 9(3)). It does not cover earlier arrangements.
• An application may be made by a person who suffered loss through a lawyer’s criminal conduct connected with escrow and whose identifying details the lawyer reported to the electronic escrow register (Article 4(1)).
• The application must include a final court decision ordering the lawyer to compensate loss caused by criminal conduct, together with an account of sums already recovered. Exceptionally, the Bar Association may pay compensation without a judgment, for example where the investigation leaves no reasonable doubt that an offence occurred but the matter was shelved or prosecution discontinued for one of the reasons listed in the rules (Article 4(2)).
• Compensation is limited to the unpaid portion of the loss. If one escrow arrangement has several injured persons, they share the limit proportionately (Article 5).
• The Bar Association accepts applications throughout the year, and its Board decides on compensation by the end of January of the following year (Article 6).

The fund is financed mainly by levies paid by lawyers for each reported escrow arrangement (Article 3). It does not replace the lawyer’s liability, and the lawyer remains obliged to compensate the loss (Article 2(2)).

Limits of compensation from the fund

An injured person receives compensation only after a lengthy process, generally after a final court decision on damages. The compensation limit may be below the purchase price. According to information from the Bar Association, lawyers’ liability insurance does not cover intentional misconduct or gross negligence in connection with escrow. If you are a consumer, the professional rules require the lawyer to inform you in writing that escrow funds are covered by the deposit insurance fund under § 41a et seq. of the Banking Act, rather than the lawyer’s professional insurance. Deposit insurance covers bank failure.

What to check before sending the purchase price

• The lawyer is registered with the Czech Bar Association and is not among the lawyers whose escrow activities have been suspended. The Association publishes that list on its escrow webpage.
• You have a signed escrow agreement with clear conditions for releasing and returning the funds, and written information from the lawyer.
• You have received confirmation from the bank that it maintains the escrow account, containing your contact details. If it has not arrived, do not send the money until the lawyer has explained the issue.
• The account number in the bank’s confirmation matches the agreement.
• The Bar Association has confirmed the entry in the electronic escrow register. The Guarantee Fund rules also rely on this entry when compensation is sought.

The contact details used by the bank and the Bar Association for confirmations should be yours, not those of an intermediary or estate agent. Otherwise, you will not learn about movements on the account.

How we can help

Before you sign a purchase and escrow agreement in Czechia, we check the property and contractual documentation through our property legal due diligence service or, for commercial premises, our commercial property purchase service (in Slovak). Our guidance on buying property in Czechia and registering title explains the Czech registration process. We provide escrow for transfers in both Czechia and Slovakia through our purchase price escrow service. Our article on lawyer’s escrow when buying property explains how it works.

Legal position verified as at 23 October 2026. This article provides general information and does not replace review of a specific escrow arrangement.