Экзамен зачет учебный год 2023 / 24 Poland

Editor’s Preface

I wish to express my deep and sincere thanks to all my distinguished colleagues who have contributed to this first edition of The Real Estate Law Review. I would also like to thank Gideon Roberton and his publishing team for their tireless work in coordinating the contributions from the various countries around the world.

David Waterfield

Slaughter and May

London

February 2012

viii

Chapter 24

Poland

Paweł Halwa and Michał Gruca 1

I INTRODUCTION TO THE LEGAL FRAMEWORK

The two most common forms of holding a real estate as owner are ownership and perpetual usufruct. Both rights are regulated by the Polish Civil Code.

A right of ownership is a wider entitlement than perpetual usufruct. According to currently prevailing views, a perpetual usufruct is a right in property between right of ownership and limited property rights (such as easement and usufruct). First, a perpetual usufruct may be used and disposed of on the basis of the statute, principles of common coexistence and agreement. In contrast, the use and disposal of the right of ownership is only limited by the statute and principles of common co existence. A right of perpetual usufruct is limited in time, which means that it is valid for 99 years. In exceptional cases, when the economic aim of perpetual usufruct does not require handing over the land for a period of 99 years, such period may be shorter, but must be at least 40 years. Within the last five years prior to the lapse of the period reserved in the agreement, a perpetual usufructuary may request that such period be prolonged for another 40 up to 99 years. As opposed to the perpetual usufruct, the right of ownership is acquired for an unlimited period of time. A perpetual usufructuary must pay an annual fee, whereas in the case of ownership, no such fee is required. Some provisions relating to the right of ownership also apply to perpetual usufruct, for example provisions on the transfer of ownership of the real estate applies when the land owned by the State Treasury or land belonging to territorial self-government units or their associations is given for perpetual usufruct.

Generally, every piece of real estate is registered in the land and mortgage registers held by the district court competent for its location. Land and mortgage registers are accessible by the general public.

Entries in the land and mortgage registers are made upon application, unless a specific provision provides for making an entry ex officio. The provisions of law impose

1 Paweł Halwa is a partner and Michał Gruca is a senior associate at Schoenherr Attorneys at Law.

248

Poland

upon the owner of the real estate an obligation to file an application for revealing its rights in a land and mortgage register. Failure to fulfil this obligation results in the imposition of a sanction on an anonymous owner, which consists in being liable towards a third party for damage incurred by that third party caused by the non-fulfilment of this obligation or indolence in the fulfilment.

As a general rule, the entry into the land and mortgage register does not create a right (i.e., it is not constitutive); in most cases, it is declaratory and confirms a right that already exists. There are a few exceptions to this general rule: entry of a separate ownership of domestic premises, specified in the Act on Ownership of Premises, into the land and mortgage register creates that right (constitutive entries), and entry of the perpetual usufruct right into the land the mortgage register is obligatory for creation or transfer thereof.

In the event of a discrepancy between the legal situation of real estate described in the land and mortgage register and the actual legal situation, the law favours the person who by a legal act with an authorised person in accordance with the land and mortgage register has acquired the ownership or other property right (principle of good faith). The principle of good faith of the land and mortgage registers does not protect transactions that take place free of charge or that are made in favour of a purchaser that acts in bad faith. A person acting in bad faith is one who knows that there is a discrepancy between the land and mortgage register and the legal situation, or a person who would have easily learned about such discrepancy.

The Civil Code needs to be taken into account regarding a transaction involving real estate. If the transaction concerns non-Polish individuals also the Laws on the Acquisition of Land by Foreigners apply. If the transaction concerns agricultural land, the Law on the Shaping of Agricultural System needs to be taken into account as it imposes pre-emption rights in certain cases concerning such transactions.

II OVERVIEW OF REAL ESTATE ACTIVITY

According to the report drawn up by Jones Lang LaSalle with regard to the Warsaw real estate market in the third quarter of 2011, the value of transactions entered into within the commercial real estate sector was €1.8 billion for the first three quarters of the year. The highest amount – €885 million – was achieved in the trade sector, €818 million in the office sector, almost €79 million in the storage sector and only €21 million in the hotel sector. In comparison, the value of transactions entered into within the commercial real estate sector in the whole of 2010 reached only €1.97 billion, out of which the trade sector amounted to €1.072 billion, and the office sector amounted to €579 million.

The improvement observed in the investment market in 2011 has had an influence on the capitalisation rates, which, based on the Jones Lang LaSalle estimates, reach 6.25 per cent for the best office buildings, 6 per cent for commercial centres and around 8 per cent for storehouses.

The increased activity of investors in the real estate market results first from the positive long and short-term prospects of the Polish market and – to be more specific – the Warsaw market as the centre of the Polish market. The short-term prospects mainly result from migration trends within which the younger population migrate to cities and from systematic inflow of industrial and service investment. These positive factors are

249

Poland

currently, however, being tested by the effects of the limitation of the lending due to the global economic crisis, and the tightening of the criteria for credit by the Polish banking supervision authority.

III DEVELOPMENTS IN REAL ESTATE PRACTICE

On 26 September 2009 an important change to the law on mortgages was enacted, which came into force after a 18-month vacatio legis, on 20 February 2011. Prior to this, the following types of mortgages existed: ordinary contractual mortgages, contractual capped-rate mortgages, compulsory mortgages, combined mortgages and second mortgages (mortgages on a receivable already secured by a mortgage).

As a result, there will no longer be a difference between ordinary contractual mortgages and the contractual capped-rate mortgages. Currently, contractual real estate mortgages serve to secure both existing and future claims, in definite, indefinite or changing amounts; they secure all claims to a certain maximum amount. Furthermore, the mortgage securing an existing or future claim secures interest and the costs of proceedings, which fall within the amount referred to in the registration of the mortgage. The new contractual mortgage may secure several receivables from different legal relationships to which one creditor is entitled, and to secure several receivables to which various entities are entitled, but which serve to finance the same undertaking.

In the latter case, an entirely new function of a mortgage administrator has been introduced. The mortgage administrator concludes the mortgage contract and executes rights and obligations of creditors secured by mortgage on his or her own behalf but in favour of creditors previously mentioned. The mortgage administrator may be appointed by creditors based on an agreement, which specifies the extent to which each creditor has been secured and the undertaking that is to be financed by secured receivables. The mortgage administrator is entered into the land and mortgage register as creditor. The entry may be changed by the court, subject to a motion of creditors whose receivables have been secured by the mortgage.

Should the contract on appointment of mortgage administrator expire with no new administrator being appointed or there being no mutual consent between the creditors, each creditor may demand that the court divides the mortgage.

In the event that a real estate is divided, the contractual mortgage encumbering the real estate changes by virtue of law to a combined mortgage and encumbers all real estate created due to such division; a combined mortgage comes into being ex lege. In this event, the court that keeps land and mortgage registers will enter ex officio combined mortgages for real estate in all registers established that have been borne out of the division.

It is also possible to create a combined mortgage by means of an agreement. This form of combined mortgage is often the only way of contracting a greater obligation, since a possibility of combining several objects of collateral makes it easier to contract ‘large loans’. The combined mortgage may only secure the same receivable.

The receivables secured by the mortgage and the mortgage may only be transferred together; however, since 20 February 2011, new exceptions to that rule were established. According thereto, if a mortgage secures several receivables of the same creditor, in the case of transfer of one of them, the mortgage will ex lege transfer in the proportion

250

Poland

reflecting an amount of transferred receivable in relation to the overall sum secured by this mortgage, unless the parties agreed otherwise.

According to another exception, the parties to the legal relationship from which the receivable secured by a mortgage results may agree that an assignment of a receivable secured by mortgage will not result in the transfer of the mortgage to the purchaser. Such agreement may be concluded on condition that there exists a possibility that a new receivable that may arise from the initial legal relationship. The aim of this regulation is to enable the assignment of the secured receivable resulting, inter alia, from the framework sale agreement without resigning from the security in the form of a mortgage securing the receivables of the seller, which may arise under that agreement in the future. In this case the mortgage secures the future receivable that is to arise from the initial legal relationship.

Another exception refers to the assignment of receivables resulting from securities secured by a mortgage. In this case, upon the transfer of the receivable from the document transferable by endorsement or from the bearer document to the purchaser of the receivable, the mortgage will also pass. The difference lies in that for the assignment of such receivable, an entry in the land and mortgage register is not necessary, as is the case with the assignment of another receivable secured by the mortgage.

Another innovation introduced by the amendment refers to the entitlement to dispose of an empty mortgage entry. This is an exception to the rule under which the expiry of one mortgage resulted in lower-priority mortgages moving forward. According to the new regulation, should a mortgage expire, the owner of the real estate is entitled to dispose of the empty mortgage entry. The owner may create a new mortgage or transfer to it, upon the consent of the entitled entity, any mortgage encumbering the real estate. The mortgage sum of a mortgage newly created or transferred to the empty entry may not exceed the value of the mortgage previously registered on the entry.

The entitlement to dispose of the empty mortgage entry is vested with each owner of the real estate. An entitlement to dispose of the empty mortgage entry is not subject to seizure. The owner may dispose of the empty mortgage entry before it clears or thereafter; however, in such case its entitlement thereto should be registered before the entry clears.

A compulsory mortgage is not permitted to be created in the empty entry. If the subject of a joint mortgage is released from encumbrance, the owner of such real estate may dispose of the emptied mortgage entry up to the mortgaged sum. The owner of the real estate is not allowed to undertake not to dispose of the empty mortgage entry.

IV REAL ESTATE AND FOREIGN INVESTMENT

The acquisition of real estate by foreigners is restricted by the Laws on the Acquisition of Land by Foreigners. Under this Act, a foreigner must obtain consent for the acquisition of land in Poland, which is issued as an administrative decision by the Minister for Internal Affairs (providing the Minister for National Defence has not raised objections) and for agricultural land, if, in addition, the Minister competent for issues of village development has not objected. For the purposes of the aforementioned Laws, a foreigner is (1) a natural person who is not a Polish citizen, (2) a legal entity that has its seat abroad, (3) a partnership without legal personality of the aforementioned natural persons or legal persons that has its seat abroad and was established under law of foreign states, or (4) a legal entity

251

Poland

and commercial company without legal personality that has its seat in Polish territory, controlled directly or indirectly by the foreign persons or partnerships mentioned above.

Since 1 May 2004, the general rule that foreigners must obtain consent to purchase real estate or shares in companies that own or have real estate in perpetual usufruct does not apply to citizens or entrepreneurs whose place of residence or registered office is in the European Economic Area (‘EEA’) or Switzerland. There are, however, exceptions; entrepreneurs and citizens of the EEA and Switzerland must still obtain consent if they purchase real estate that is agricultural or forest land, for a period of 12 years from Poland’s accession to the EU (until 2 May 2016). The Minister for Internal Affairs issues permits for the purchase of real estate.

V STRUCTURING THE REAL ESTATE INVESTMENT

Commercial real estate projects are usually structured in separate special purpose companies. Depending on the holding or ownership structure of such special purpose vehicles, the most common structures visible in the Polish market are:

aa limited liability company; and

ba partnership limited by shares.

The suitability of particular structures for real estate investments will largely depend on their tax attractiveness for the intended investors, as well as on the costs and ease of operating the holding structure. As an additional factor, the regulatory limits on the types and origin of investments that bind some types of domestic institutional investors, in particular pension funds, may play a role in structuring the investment.

i Limited liability companies

Limited liability companies are attractive and easy-to-operate investment structures, especially common among foreign funds and other investors who are not bound by special regulatory restrictions determining the desired form of investment. A Polish limited liability company will be taxed with corporate income tax; however, the overall tax burden will largely depend on the holding structure. Moreover, limited liability companies may not be the most attractive and effective structures for some types of investor.

In its basic form, a limited liability company needs to have a management board consisting of at least one management board member. It is possible for one investor to hold all the shares in a limited liability company.

ii Partnerships limited by shares held by closed-end funds

For domestic investors, including institutional investors, a structure involving a closedend investment fund dedicated to non-public assets, established under Polish law and supervised by the Polish market regulator, may appear as quite attractive. Non public asset closed-end investment funds may invest in real estate both directly and indirectly, but due to certain specific restrictions concerning direct investment in real estate, it may be beneficial to structure real estate investments through such special purpose entities as partnerships limited by shares, established in accordance with the Polish law.

252

Poland

A partnership limited by shares is not a legal entity in the full sense, but it may acquire property, including real estate, in its own name. A partnership limited by shares needs to have at least one general partner who is liable for the debts of the partnership without any limitation, and at least one shareholder. It is common for a limited liability company to become a general partner in a partnership limited by shares.

The partnership limited by shares is a hybrid entity, which combines many features typical of a partnership (e.g., the liability of the general partner) with those typical for joint-stock companies (e.g., the function of general meetings, shareholders’ rights).

From a corporate income tax perspective, the partnership limited by shares is transparent (i.e., there is no taxation at the partnership level) and the tax is paid only at the shareholder or general partner level.

If combined with a closed-end investment fund as a holding entity (which is also exempt from corporate income tax) the partnership limited by shares offers an effective structure for real estate projects, particularly effective in the case of reinvestment of proceeds.

Despite the relatively complicated structure and high costs, the above investment scheme is very attractive for domestic investors. The costs of the structure are outweighed by the tax benefits – especially in case of larger investments – and the availability of the scheme to institutions makes it an interesting option for structuring real estate investments.

VI REAL ESTATE OWNERSHIP

i Planning

The basic information for investors on the construction process in Poland is set out in the Zoning Plan Act and the Construction Law.

Before an investor takes any steps to plan the investment, it should check the designation of the real estate in the local zoning plan with the local authority. Once this has been done, the investor may commission the preparation of the building plans and then apply for a building permit. If there is no zoning plan, the investor first needs to obtain a ‘decision on building and site development conditions’. After this decision has been issued, the investor can apply for the building permit. The building permit is in the form of an administrative decision that authorises the investor to commence building work, and, in approving the building work, accepts the building plan, including its function and construction and the proposed principles for management of the plot to be developed on the building site. A building, for which a building permit is necessary, in most cases may be opened for use once the Buildings Supervisory Authority has been informed of its completion, and within 21 days from the notification if the Buildings Supervisory Authority has no objection. In selected situations (e.g., industrial buildings) its opening for use requires a user permit issued by the Buildings Supervisory Authority.

In most cases, changes to the manner of using the building or premises2 need to be reported to a relevant authority. A change may be made if the body has not raised an objection within 30 days of the report.

2Taking or ceasing an activity changing the conditions of: fire, flood, labour, health, hygienicsanitary or environmental protection safety, or to intensity or kind of burdens.

253

Poland

ii Environment

Liability related to the pollution of land is settled in a specific manner. According to the provisions of the Act of 31 January 1980 on protection and shaping of the environment, liability for damage to natural environment and an obligation to restore the environment to its proper condition was imposed on entities whose acts or omissions were detrimental to the environment. Pursuant to current solutions, an obligation of land reclamation was imposed on the holders of areas the ground of which was polluted or the natural land formation of which had been unfavourably changed. An exception to the foregoing rule refers to cases when the holder of an area proves that ground contamination or unfavourable change of the natural land formation, made after the holder took possession of that area, was caused by another entity: the perpetrator of the damage must then reclaim the land. If ground contamination or unfavourable change of land formation occurred upon the consent or with the knowledge of the holder of that area, the holder must jointly and severally reclaim the land with the perpetrator.

In connection with the aforementioned changes to the legal situation, it is of paramount importance to protect entities holding, on the day when the applicable provisions came into force, the area of land the ground of which had been contaminated or the natural land formation of which had been unfavourably changed prior to the entry into force by another entity. Such protection is guaranteed by a provision of the Act introducing the current remedies. According to its wording, an entity holding on 1 October 2001 the land that had been contaminated prior to the entry into force of that provision by another entity, was obliged to report this fact to the relevant Province Chief Administrator by 30 June 2004.

iii Tax

Sale of real estate is generally subject to value added tax (‘VAT’); however, in certain cases (i.e., supply of land that is not for development, buildings and constructions) the acquisition of real estate will be subject to the tax on civil law activities (PCC) at 2 per cent of the market value of the property instead of VAT.

Sale of a real estate enterprise (i.e., business as a going concern) is outside the scope of VAT and therefore subject to transfer tax, usually at an effective rate of 2 per cent of the market value of the business’s assets.

Due to the obligation to execute a real estate purchase agreement as a notarial deed, it will also be necessary to pay a notarial fee. The maximum rate of this fee is calculated from the value of the real estate and amounts to:

aup to 3,000 zlotys: 100 zlotys;

b3,000 to 10,000 zlotys: 100 zlotys + 3 per cent from the surplus over 3,000 zlotys;

c10,000 to 30,000 zlotys: 310 zlotys + 2 per cent from the surplus over 10,000 zlotys;

d30,000 to 60,000 zlotys: 710 + 1 per cent from the surplus over 30,000 zlotys;

e60,000 to 1 million zlotys: 1,010 zlotys + 0.4 per cent from the surplus over 60,000 zlotys;

f1 million to 2 million zlotys: 4,770 zlotys + 0.2 per cent from the surplus over 1 million zlotys;

gover 2 million: 6,770 zlotys + 0.25 per cent from the surplus over 2 million zlotys, up to a limit of 10,000 zlotys.

254

Poland

iv Finance and security

Mortgage is the most common form of securing monetary receivables over real estate. Since 20 February 2011 there have been following types of mortgage: a contractual mortgage, a compulsory mortgage and a mortgage on a receivable secured with a mortgage.

A contractual real estate mortgage is created by an agreement under civil law and entry into the Land and Mortgage Register (constitutive entry). This agreement creates a mortgage on the real estate to secure specific receivables (i.e., a defined receivable arising from defined legal relations).

A document including the statement of the owner on establishing the mortgage is sufficient to enter a mortgage to the land and mortgage register. Such a statement has to be submitted in the form of a notarial deed; however, pursuant to the decisions of the Supreme Court, it is sufficient to append to the bank documents a written statement of the owner of the real estate on establishing a mortgage in order to enter the mortgage that secures the payment of the credit for the benefit of the bank. A written form is only admissible for statements submitted to the Polish banks.

The essence of a compulsory mortgage lies in the fact that a creditor whose receivable is confirmed with a writ of execution specified in the provisions on execution may obtain a mortgage for all real estates of the debtor known to it.

VII LEASES OF BUSINESS PREMISES

A typical form of occupying of commercial premises by non-owners is the lease. The lease may be concluded for a definite or indefinite term. The lease for real estate or premises for over a year should be concluded in writing; if it is not concluded in writing it is deemed to be concluded for an indefinite period. A lease agreement concluded between entrepreneurs (commercial lease) for over 30 years is deemed – after the elapse of this period – to be concluded for an indefinite period. For a lease not concluded between entrepreneurs, after 10 years the lease is deemed to be concluded for an indefinite period. Commercial premises are usually leased for five years.

If the term of the lease is not defined, both the lessor and the lessee may give notice of termination of the lease in accordance with the statutory notice periods, the length of which depends on the intervals of rent payment adopted by the parties. If the lease period has been defined, both the lessor and lessee may give notice of termination, only in the circumstances set out in the agreement, which may be defined very broadly.

Generally, the parties are free to agree on the amount of rent payable. The rent may be in the form of money or another benefit that is to be performed. Rents are usually paid monthly in advance. In order to secure the rent and additional benefits with which the lessee is in default for longer than a year, the lessor is entitled, under statute, to establish a pledge on the lessee’s moveables brought to the object of lease, unless these moveables are not subject to seizure. If the lessee has fallen into arrears with rent payments for at least two full payment periods, the lessor may give notice of termination without observing the statutory notice periods.

The situation is different, however, for the lease of premises to which the Act on Protection of Tenants Rights applies. The Act strictly regulates the possibility of increasing the rent. The deadline for terminating the amount of rent or other fees for

255

Poland

using the premises is three months unless the parties agree upon a longer period in the agreement. Pursuant to the Act on Protection of Tenants Rights, an increase that results in the amount of rent or other fees for using the premises on an annual basis exceeding 3 per cent of the replacement value of the premises may only occur in justified cases. An increase in rent or other fees for using the premises, except for fees independent from the owner, may not be made more often than every six months.

For commercial leases there is a common practice to apply a valorisation clause under which the rent amount depends on the change in external indices referred to in the agreement. As under Polish law there is no list of the type of indices as a point of reference for valorisation, the parties may set these using their own discretion. Currently, for commercial lease, the most common valorisation mechanisms for rent encountered are those based on secondary valorisation clauses. These are based on indices for increase in consumer prices in countries whose currency is a measure for calculating rent in zlotys. In defining rents in amounts equivalent in zlotys to amounts defined in euros, the Harmonised Index of Consumer Prices published by the EU Statistical Office is generally used.

Under the Civil Code, the lessor should hand over the premises to the lessee in a state that is fit for use and maintain it in this state during the validity of the agreement. The lessee bears minor outlays connected with ordinary wear and tear. If, during the validity of the agreement, the repairs are required, otherwise it would be unfit for use as referred to in the agreement, the lessee may set the lessor an appropriate period in which to carry out the repairs. If this proves ineffective, the lessee may carry out necessary repairs at the lessor’s cost.

If the object of the lease has defects that restrict its usefulness compared with the contractual designation, the lessee may demand an appropriate reduction of the rent for the period in which the defects existed. If, at the time the object was handed over it had defects that prevented the use designated in the agreement, or if the defects occurred at a later date and the lessor, despite being notified, failed to remove them in the appropriate period or if they prove impossible to remove, the lessee may terminate the lease without a notice period.

In practice, however, in commercial lease agreements usually the lessee has to carry out maintenance and has to bear the majority of repair and maintenance costs.

The Act on Protection of Tenants Rights defines the duties of the lessor in more detail, according to which the lessor must ensure that existing installations and appliances connected with the building function correctly to enable the lessee to make use of water, gas and liquid fuel, heating, electricity, lifts and other installations and appliances making up the fitting-out of the premises and building as defined in separate provisions.

As a rule, a lessee concluding a lease agreement does not have a duty to pay a bond. It is, however, common practice for the lessees to provide security for any potential claims of the lessor, particularly relating to rent. This security may take the form of a cash deposit paid to the lessor before or at the beginning of the lease period. This sum is usually several times the monthly rent amount (often plus the value of charges for use, if this is a separate payment to the lessor). As an alternative to a deposit it is becoming increasingly common (in particular in commercial lease agreements) to provide the lessor with a bank guarantee, the beneficiary being the lessor.

The lessee may not hand over the whole or part of the object to a third party for use free of charge or as a sub-let without the consent of the lessor. If the object is handed

256