real estate | In Principle

In the newest episode of News from Poland – Business & Law, dr Jakub Baranowski from Wardyński & Partners’ Real Estate practice discusses the major changes in Polish real estate law in 2022 with entry into force of the New Developers Act. It is designed to provide consumers with greater security in acquiring residential properties by greatly expanding the applicability of the statute, adding new security instruments, and modifying the procedure for removing defects.
 

Poles are eagerly engaged in providing assistance to refugees from Ukraine, including allowing them to stay in their homes. But this raises the concern that providing free access to their home, as a courtesy, might carry some negative consequences for the owner, particularly to carry out a lengthy eviction process if the refugee eventually refused to leave. We believe that in this extraordinary situation the notion of “precarium” could be used.

According to the Conversion Act, existing perpetual usufructuaries acquire ownership of real property if conditions set forth in the act are met. What are these conditions, and is perpetual usufruct of land converted into ownership of the land if the building on the land is subsequently designated for residential purposes?

In housing communities, the individual parts of common areas (e.g. parking spots, terraces or gardens) are intended for common use by all owners of premises. Often, to avoid problems with use of such areas, division and use of common areas is established at the stage of acquisition of housing units from the developer. This is known as quoad usum division. Can it be changed if circumstances change?

The private rented sector in Poland is on the radar of foreign institutional investors.  Investments in residential rental properties are in vogue in Western Europe. Despite the global crisis caused by COVID-19, investors actively seek opportunities in friendly foreign markets, including Poland. The Polish market is considered promising, even though historically in Poland there has been a tradition of owning rather than renting.

The pandemic has affected the way we shop. More and more frequently, buyers order products (including Christmas gifts) online with delivery to a designated customer service location or a parcel locker, so they don’t have to wait at home in the time slots indicated by the courier. More parcel lockers are appearing in housing estates and on the street. While it is clear that constructing parcel lockers does not require a building permit, are parcel lockers subject to real estate tax?

During the decade after the current Developers Act entered into force in Poland, it was repeatedly argued that its provisions were vague or diverged from the market reality, so that the act did not live up to the hopes placed in it. As a result, in the last few years, work was undertaken to introduce a new law to fill the existing gaps and, above all, provide greater protection for buyers of residential units and single-family houses.

One of the new features of the new Developers Act is comprehensive regulation of the reservation agreement, so far not governed by separate provisions. It is worth thoroughly analysing the shape the drafters decided to give to this type of agreement when introducing it officially into the Polish legal system.

On 1 July 2022, most of the provisions of the new Developers Act will come into force. One of the changes is to make the handover procedure for a residential unit or single-family house more detailed, and to introduce new rights for buyers. The new rules are particularly controversial among developers.

A developer commencing sales of residential units or single-family houses in Poland must prepare a prospectus for the property. The prospectus should include information on other projects planned in the vicinity of the development. In this regard, the current provisions are imprecise and raise concerns. Does the new Developers Act eliminate them?

The new Developers Act substantially modifies the rights and obligations of banks in connection with real estate developments. The new regulations significantly increase the scope of rights and obligations of banks, which will entail a greater expenditure of time and effort on their side. Thus the new rules may increase the cost of banks’ participation in the execution of residential developments.

Analysis of the transitional provisions of the new Developers Act is complicated and unfortunately does not lead to unequivocal conclusions. Indeed, we believe these provisions should be amended immediately to remove doubts, so that developers can prepare for application of the new law and avoid litigation in the future.