A new stage of attorney escrow services as of 1 January 2026: the Czech Bar Association Guarantee Fund and what it means for clients

30. 01. 2026

As of 1 January 2026, a significant change in the area of attorney escrow services is being finalized, strengthening client protection. An amendment to the Act on Advocacy introduced a new Section 29a, establishing the Guarantee Fund of the Czech Bar Association, while professional regulations governing its operation have also been adopted. This part of the amendment entered into force on 1 January 2026.

The practical significance of this change is substantial, particularly for clients who use attorney escrow services for holding funds, typically in real estate transactions. The law now provides that, in the event of damage caused by criminal conduct of an attorney in connection with an escrow, the injured party may, subject to statutory and professional conditions, obtain compensation from the Guarantee Fund. This is therefore not a “standard insurance” covering every issue related to escrow, but a specific protective mechanism designed for serious situations involving criminal activity.

The statutory framework sets basic limits for compensation. Compensation is provided up to CZK 2,500,000 per escrow; in the case of a purchase price from the sale of real estate used for residential purposes according to the land register, up to CZK 5,000,000 per escrow. The law also provides that compensation is paid once per year and that, in the event of insufficient funds in the fund, claims are satisfied proportionally, with the remaining amount paid at a later date.

It is also important that this mechanism does not affect the liability of the attorney for the damage caused. The purpose of the fund is to mitigate the consequences of damage for the injured party, not to replace the personal liability of the wrongdoer. The law further explicitly addresses the subsequent transfer of the claim to the Bar Association to the extent of the compensation paid.

More detailed rules governing the operation of the fund are set out in a resolution of the Assembly of the Czech Bar Association on the Guarantee Fund. This resolution regulates both the formation of the fund and the conditions for compensation. The fund is financed primarily through contributions from attorneys and law firms providing escrow services, as well as from recovered amounts. The contribution amounts to CZK 500 for each escrow registered in the electronic escrow register. The resolution also includes a mechanism for suspending contributions once the fund reaches a certain level and for their reinstatement if the fund subsequently decreases.

From the client’s perspective, it is also important that the professional regulation fairly precisely defines the conditions for submitting a compensation claim. Typically, the injured party is expected to provide a final court decision imposing on the attorney an obligation to compensate for pecuniary damage caused by criminal activity in connection with the escrow, as well as documentation regarding recovered amounts where the damage has not been covered by insurance. However, the resolution also contemplates certain exceptional situations in which the Bar Association may grant compensation even without this standard procedural path, if the findings of law enforcement authorities sufficiently confirm that the damage resulted from a criminal offence, or where there are circumstances worthy of special consideration.

Another practical aspect is the method of allocating compensation where multiple injured parties are involved within a single escrow. In such cases, compensation is provided proportionally; a similar principle applies if the fund’s resources in a given year are insufficient to fully satisfy all claims. The resolution also regulates the decision-making process such that applications are submitted throughout the calendar year, and the decision on granting compensation and its amount is made by the Board of the Bar Association by the end of January of the following year.

From a temporal perspective, it should be emphasized that compensation from the Guarantee Fund is, according to the professional regulation, provided only to persons harmed by criminal conduct of an attorney in connection with funds accepted into escrow after 31 December 2025. In other words, it does not constitute universal “retroactive” coverage of all previous cases.

At the same time, the current legal framework does not rely solely on the Guarantee Fund. It builds on broader tightening of the rules governing attorney escrow services, including the electronic escrow register and enhanced record-keeping and information obligations toward the parties to the escrow. The Czech Bar Association publicly states that attorneys must submit data to the electronic escrow register before receiving funds and must subsequently supplement the date of receipt without undue delay; the Bar Association also provides on its website a summary of the basic parameters and limits of the Guarantee Fund.

For clients, the practical conclusion is straightforward: attorney escrow remains a standard and legitimate instrument, now strengthened by an additional layer of protection for exceptional cases. This does not mean that caution in selecting an attorney and reviewing the structure of the escrow can be neglected. It does mean, however, that as of 1 January 2026, the legal environment provides clients with a more robust framework of protection in this area than before.

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