6 November 2023

Real Estate Comparative Guide



Real Estate Comparative Guide for the jurisdiction of Poland, check out our comparative guides section to compare across multiple countries
Poland Real Estate and Construction
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1 Legal framework

1.1 What legislation governs real estate in your jurisdiction?

The most important sources of real estate law are as follows:

  • the Civil Code;
  • the Land and Mortgage Registers and Mortgage Act;
  • the Real Estate Management Act;
  • the Construction Law Act;
  • the Spatial Planning and Development Act; and
  • the Agricultural System Formation Act.

These are supplemented by secondary legislation, with local laws – such as local development plans – also playing a role.

1.2 What special regimes apply to different types of real estate?

Most notably, special regimes apply to:

  • agricultural real estate (the Agricultural System Formation Act);
  • forests (the Forest Act);
  • real estate owned by the state Treasury or local government units (the Real Estate Management Act); and
  • Warsaw real estate (the Act on Special Rules for Removing the Legal Effects of Unlawful Reprivatisation Decisions pertaining to Warsaw Real Estate).

The distinction between agricultural and non-agricultural real estate is particularly important. The former has several definitions, each specific to the scope and purpose of a particular piece of legislation; but it is notable as it triggers various restrictions on purchase and use. For the most part, only farmers can purchase agricultural land.

Finally, special rules have also been adopted with respect to undeveloped land, land under water and listed buildings, among other things.

2 Ownership

2.1 What types of ownership rights exist in your jurisdiction?

The following types of property rights are worth mentioning in the context of ownership:

  • ownership;
  • perpetual usufruct; and
  • limited property rights.

The first of these rights is ownership in a strict sense. The owner's rights are limited only by the provisions of law and the principles of social coexistence.

The right of perpetual usufruct is unique to Poland. It may only be established on land owned by the state Treasury or local government units for a specified term ranging from 40 to 99 years (usually the latter). In addition to being governed by statutory law, the rights and obligations of a perpetual usufructuary are subject to an administrative decision or agreement under which the right of perpetual usufruct is created.

A major difference between ownership and perpetual usufruct is that the latter encumbers land owned by a third party (public entity), which means that in some cases, the landowner's consent is required and the perpetual usufructuary's rights may be subordinated to those of the landowner. The right of perpetual usufruct is freely transferable and effective vis-à-vis third parties. It is also disclosed in land and mortgage registers.

Please see question 2.4 for information about the separate ownership of buildings situated on land in perpetual usufruct.

As of 1 January 2019, the right of perpetual usufruct of land developed for residential purposes was abolished and transformed into ownership. Consequently, if any new residential development is completed on land covered by the right of perpetual usufruct, that right will be transformed into ownership upon completion of the development. Legislative works are underway to establish ownership in place of perpetual usufruct in the case of commercial real estate.

In addition, Polish law provides for several types of limited property rights. As a rule, such rights are effective vis-à-vis third parties. They may be disclosed in appropriate registers, such as land and mortgage registers in the case of mortgages; and their scope is narrower than that of ownership or perpetual usufruct. One such right is the cooperative ownership right to residential premises, which is limited to buildings constructed by housing associations. Since 2007, it can no longer be created; even so, rights established before that time continue to exist and can be the subject of a real estate transaction.

2.2 What ownership structures are commonly used in your jurisdiction?

Residential real estate is predominantly owned or co-owned by individuals; however, with the private rented sector slowly growing, the share of institutional investors is likely to increase in the future (currently, it is below 1%).

Commercial real estate is typically owned by companies. For the most part, larger players create special purpose vehicles, each dedicated to operating a single property. These usually take the form of private limited companies or, less frequently, registered partnerships and partnerships limited by shares.

The choice of vehicle depends mostly on risk, liability and tax management strategies.

Fiduciary ownership is currently not recognised by Polish law. Legislative works aimed at introducing real estate investment trusts have been underway for many years, with no end in sight; at this point, their scope is mostly limited to residential real estate.

For more details, please see question 7.

2.3 Are there any restrictions on real estate ownership in your jurisdiction?

As a rule, ownership is freely transferable. However, certain limitations apply, depending on factors such as:

  • the type of real estate (eg, agricultural land, forest, land under water);
  • the location (eg, special areas); and
  • the status of the buyer (eg, a foreign entity from outside the European Economic Area (EEA)).

Depending on the exact circumstances, the consent of competent authorities or a pre-emption right holder may be required. For example, a foreigner from outside the EEA and Switzerland will usually be required to obtain the consent of the minister for internal affairs in order to purchase real estate in Poland (minor exceptions apply).

2.4 Is ownership of land and buildings constructed thereon legally separable?

In general, buildings and structures constructed on land form an integral part thereof, and their ownership cannot be separated.

There are a few exceptions to this rule. Most notably, in the case of perpetual usufruct, buildings and structures belong to the perpetual usufructuary, while the land itself belongs to a public entity (either the state Treasury or a local government unit).

Another exception is infrastructure constructed or operated by utility companies on land that belongs to third parties. In such cases, the company owns the installations and uses third-party land based on a limited property right (specifically, a utility easement).

2.5 What security interests can attach to real estate? How are they prioritised?

A mortgage is by far the most common security interest that can attach to real estate. Once established, it allows the lender to pursue enforcement against real estate, irrespective of its current owner, with priority over the borrower's personal creditors. Mortgages can be established under a contract or based on a court or administrative decision. They must be disclosed in a land and mortgage register to be valid.

To some extent, third-party interests are also secured by various other types of information disclosed in land and mortgage registers, such as:

  • warnings about pending enforcement proceedings;
  • prohibitions on the sale of real estate for the duration of court proceedings; and
  • claims resulting from preliminary contracts.

Such entries provide a certain level of security by preventing third parties from pleading ignorance.

In general, the priority of security interests is determined by the order of applications received by the competent court. However, when establishing a security interest that is to be disclosed in a land and mortgage register, the real estate owner may prioritise one right over another (subject to specific regulations on third-party consents).

3 Registration

3.1 What body administers the land register in your jurisdiction?

Depending on its nature, information on real estate is disclosed in one of two types of registers, each maintained by a different body. Technical information – such as the cadastral designation, area, boundaries or permissible use of real estate – can be found in a register of land, buildings, and premises (cadastre), which is kept either by the chair of a district executive board or by the mayor of a city that is the seat of district administration. On the other hand, real estate rights and encumbrances are disclosed in land and mortgage registers kept by district courts.

3.2 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?

Registration requirements and the consequences of failure to register differ depending on the type of right, transaction or encumbrance. Some arise only upon being disclosed in land and mortgage registers – for example, disclosure is necessary to transfer a right of perpetual usufruct or establish a mortgage or separate title to premises. On the other hand, while there is a legal obligation to register a transfer of freehold title to real estate, failure to do so carries a risk of a fine but does not affect the validity of the right. The general rule is that entries in land and mortgage registers confirm pre-existing rights. This has the double advantage of making them easier to enforce vis-à-vis third parties. Here, examples include lease, tenancy and timesharing. There is a legal presumption that information disclosed in land and mortgage registers is true and constitutes public knowledge. This ties in with the principle of reliance on public records, which protects a buyer that purchased real estate or other rights from a person disclosed in a land and mortgage register only to realise that the information contained therein was inaccurate. No such protection is afforded to buyers that acted in bad faith or provided no consideration.

3.3 What are the formal and documentary requirements for registration?

Where a transaction is executed at a notary's office, the notary will file the necessary applications for land and mortgage register entries using a dedicated electronic system. Otherwise, the applicant must fill out an official form published by the Ministry of Justice and file it with the competent court. The application should be accompanied by documents forming the basis for the requested entry and proof of stamp duty payment (if applicable). The law may additionally require the accompanying documents to be signed before a notary or drawn up in a specific form, such as the form of a notarial deed necessary for real estate contracts. As for the creation and amendment of cadastral records, an appropriate application may be based on a court ruling, an administrative decision or survey data, among other things. While it must be made using an official form, such an application can usually be filed free of charge.

3.4 What is the process for registration?

As a rule, information is entered in land and mortgage registers upon application. Once an application has been filed, its general description appears in the appropriate land and mortgage register section. The court then examines the form and content of the application and the content of the land and mortgage registers, as well as verifying the application's compliance with the cadastral records. Unless something is amiss with the application, the requested entry will be made in the land and mortgage registers. Cadastral entries can be made either upon application or ex officio; however, in principle, the obligation to report any changes that should be reflected in such records rests with real estate owners. Please see questions 3.1 and 3.3 for information about competent authorities and documents that may form the basis for an entry.

3.5 Is registered information publicly accessible?

In theory, the information contained in land and mortgage registers is publicly accessible. Anyone who knows the number of a particular land and mortgage registry entry can view its content online, free of charge, on the website of the Ministry of Justice. However, these numbers are considered personal data, meaning that they are legally protected and disclosed only to persons with a legitimate interest. Likewise, documents accompanying applications for registration are not made public and only authorised persons may access them in court (in particular, a notary or a person with a legitimate interest). Cadastral records are public insofar as they do not contain rights holders' particulars or land and mortgage register numbers. In order to obtain a complete copy of registration records along with a map extract, one must show a legitimate interest and, typically, pay a fee.

4 Commercial leases

4.1 What types of commercial leases exist in your jurisdiction?

The most common types of commercial leases – retail, office and warehouse – can be classified as net leases. In addition to rent, the tenant pays a proportionate share of operating costs, calculated by comparing the area occupied by the tenant with the total area of the property. These include maintenance costs, real estate tax and insurance (payable as monthly advances and reviewed annually). On the retail market, percentage leases are common: apart from base rent and operating costs, the tenant pays a percentage of revenues earned on the leased premises if certain conditions are met.

4.2 Are the terms of a commercial lease regulated or freely negotiable? What do they typically cover (eg, duration; security deposit; rent; sub-letting; termination)?

Commercial leases are subject to the general rules of civil law. In practice, this means that although the parties may freely negotiate most lease terms, some terms are regulated by law and cannot be modified through a contract. Any attempt to introduce such modifications would be futile, as the mandatory provisions of law would apply instead. Likewise, general provisions of law apply to any matters that are not otherwise regulated in a contract.

A lease contract typically covers the following:

  • collateral;
  • delivery and surrender of premises;
  • dispute resolution;
  • maintenance, repairs and alterations;
  • rent and other lease payments;
  • sub-letting;
  • term and termination.

4.3 What are the formal and documentary requirements for conclusion of a commercial lease?

Usually, commercial leases are concluded in simple written form. Alternatively, the parties may execute a contract before a notary. It is also possible to request that the contract date be certified, usually by a notary, which protects the tenant from the possibility of the lease being terminated by the new owner if the leased premises are sold during the lease term.

4.4 What is the process for concluding a commercial lease?

The process usually begins with the signing of a letter of intent. This ensures that the negotiating parties share some basic assumptions about the planned lease (eg, the lease term and rent rate). Professional agents are often engaged to find prospective tenants or premises and hammer out a deal. Once all lease terms have been agreed upon, a contract is entered into.

4.5 What are the respective obligations and liabilities of landlord and tenant under a commercial lease, and what are the consequences of any breach?

The obligations and liabilities of the parties to a commercial lease vary depending on the terms of the lease itself and the type of premises (eg, office, retail, warehouse).

The basic obligations of the landlord are as follows:

  • to deliver the premises to the tenant;
  • to make the premises available for the agreed purpose throughout the lease term; and
  • to retake possession of the premises upon the expiry of the lease term.

On the other hand, the tenant's obligations are as follows:

  • to take possession of the premises;
  • to use the premises only for the agreed purpose;
  • to pay the agreed rent and make other payments (as applicable);
  • to provide collateral; and
  • to vacate and surrender the premises upon the expiry of the lease term.

Furthermore, the parties are usually expected to obtain property and liability insurance.

Most of the tenant's obligations are secured by liquidated damages and the landlord's right to terminate the lease in the event of a material breach on the part of the tenant. Similar regulations are typically included in relation to a breach by the landlord.

4.6 How are rent variations typically effected throughout the term of the lease?

In commercial leases, rent is usually denominated in euros and adjusted annually in line with Eurostat's harmonised index of consumer prices for the euro area. Where rent is denominated in Polish złoty, rent variations are typically based on a consumer price index published by Statistics Poland. As long as an appropriate provision has been included in the contract, all that the landlord need do to effect a rent variation is give written notice to the tenant (no contractual amendment is necessary). Sometimes, rent variations are effected by means of a step-up rent, which is usually subject to further adjustments. On the retail market, it is common for the tenant to pay base rent and an additional turnover rent (usually a positive difference between a specified percentage of gross sales and the sum total of the base rent payments made over the same year).

4.7 What taxes are levied on rental income?

Landlords pay income tax on rental income. Other than that, value added tax is added on top of rent and most other payments due under a lease contract.

4.8 Can a commercial lease be triple net?

Yes – in fact, most commercial leases in Poland could be said to fall into this category. It is typical for the tenant to pay rent and a proportionate share of operating costs to the landlord (this normally includes maintenance costs, building insurance premiums and taxes associated with real estate ownership).

4.9 How are landlord and tenant disputes typically resolved?

Where no amicable resolution can be reached, disputes are typically decided by a common court. However, the parties may agree in advance that an arbitration court will be competent to decide any disputes pertaining to the lease contract.

4.10 What types of guarantees are market practice and required by landlords to secure the tenant's obligations

The tenant's obligations are usually secured by a bank guarantee or security deposit. On the retail market, parent company guarantees are sometimes used. Regardless of the type of security, the tenant will usually be expected to provide collateral for an equivalent of three months' gross rent and a proportionate share of operating costs. Additionally, commercial leases often provide for the tenant's obligation to make a statement on voluntary submission to enforcement with respect to the obligation to pay any amounts due under the lease contract and to surrender the leased premises to the landlord upon the expiry of the lease term. Such statements must be made in the form of a notarial deed.

5 Real estate transactions

5.1 What form do real estate transactions typically take in your jurisdiction?

Real estate transactions tend to take the form of an asset or share deal, with the latter option gaining popularity. Rather than purchasing title to real estate, investors increasingly prefer to acquire shares in the company that owns it.

5.2 Which players are typically involved in a real estate transaction in your jurisdiction?

Commercial real estate transactions generally involve the seller (real estate owner) and the buyer, both typically represented by their lawyers, as well as a notary. Depending on the type and scope of the transaction, other players – such as tax and technical advisers, banks, agents, insurers or guarantors – may also be involved.

5.3 Is the seller bound by a duty to disclose? What representations and warranties will it typically make?

As a rule, the seller should disclose any information that could affect the buyer's decision on whether to proceed with the transaction. However, the exact scope of such disclosure and the consequences of failure to disclose are usually regulated in the real estate contract itself, and the seller's liability for any defects disclosed prior to the transaction is typically excluded.

Representations and warranties tend to address issues related to the seller's title and capacity to contract, as well as matters specific to a particular piece of real estate, such as:

  • land use designation;
  • access to a public road;
  • lease and service contracts;
  • real estate tax arrears;
  • environmental issues; and
  • other issues, including completeness of disclosure.

All of the above is quite often limited by a 'best knowledge' clause.

The seller's liability may be based on a statutory warranty for legal and physical defects of the object of sale, as regulated by the Civil Code. Alternatively, the statutory warranty may be replaced by a broader, strict liability warranty, which is often the case in commercial real estate transactions. Under a contractual warranty, the seller then undertakes to indemnify the buyer against any damage caused by a breach of the seller's representations and warranties over a pre-agreed period (usually a few years).

5.4 What due diligence is typically conducted in a real estate transaction?

The scope of due diligence depends on:

  • the type of real estate;
  • the scale of the project; and
  • the structure of the transaction.

Typically, legal due diligence of real estate and/or its owner (particularly in the case of share deals) is conducted; but technical, tax, commercial and environmental due diligence audits are also quite common.

Legal due diligence normally covers matters related to:

  • title;
  • lease (if applicable);
  • land use designation;
  • construction and IP rights;
  • environmental issues; and
  • other applicable contractual or statutory limitations.

5.5 What are the formal and documentary requirements for conclusion of a real estate transaction?

A notarial deed is required for a real estate transaction structured as an asset deal. On the other hand, it is generally possible to acquire shares in a company that owns real estate without observing any particular form. However, there is a notable exception to this rule, as a contract with notarised signatures is necessary to acquire shares in a private limited company.

In addition, the consent of third parties, corporate bodies or competent authorities may be required, depending on:

  • the contracting parties;
  • the object of sale; and
  • in the case of commercial companies, the articles of association.

This is especially the case if:

  • the transaction concerns agricultural real estate; or
  • the buyer is a foreigner.

5.6 What is the process for concluding a real estate transaction? How long does this take? What costs are incurred?

The process of concluding a real estate transaction usually begins with negotiating and signing a letter of intent, which sets out the heads of terms, including the price and deadlines. The next step is to negotiate the exact wording of the contract. It is common practice to execute a preliminary contract that specifies what conditions must be met for the parties to close the deal, with the final contract being executed upon satisfaction or waiver of such conditions. Where real estate is subject to a statutory pre-emption right, the contract must be made contingent on the pre-emption right holder deciding not to exercise that right. In such a case, two contracts are made:

  • a conditional contract between the negotiating parties; and
  • a final deed transferring title either to the intended buyer or to the pre-emption right holder.

Negotiating a real estate deal may take anything between a few weeks and a few months, depending on the level of complexity of the transaction.

The parties incur the costs of any advisers that they decide to involve in the process, as well as notarial and court fees.

5.7 What are the respective obligations and liabilities of buyer and seller, and what are the consequences of any breach?

The seller's main obligation is to transfer title and deliver the object of the transaction in the agreed condition to the buyer. On the other hand, the buyer must pay the purchase price and take possession of the relevant piece of real estate. The parties may – and usually do – include additional obligations in the contract. For example, the parties typically modify general liability for a breach; however, even in the absence of such modifications, the breaching party may be held liable for non-performance or improper performance of the contract on general terms. For more information about the seller's liability, please see question 5.3.

5.8 What taxes are payable on a real estate transaction?

The tax treatment of a real estate transaction depends on its structure and the parties involved.

A real estate transaction structured as an asset deal is generally subject to value added tax (VAT) at a rate of 23% or – if the asset consists of residential premises or buildings – 8%. Alternatively, such transactions may be subject to a 2% tax on civil law transactions, which applies to:

  • transactions between individuals; and
  • the sale of:
    • vacant plots not intended for development;
    • business undertakings; and
    • organised parts of business undertakings, among other things.

Where a given property has been operating for more than two years, the parties may opt for the tax on civil law transactions instead of VAT. When it comes to transactions which are subject to VAT, the tax is paid by the seller, but the amount is included in the purchase price and can be recovered, which is not the case with the tax on civil law transactions paid by the buyer. On the other hand, a share deal is subject to a 1% tax on civil law transactions (again, paid by the buyer) – in this case, VAT does not apply.

An individual who sells real estate within five years of its acquisition or construction by the seller, donor or testator (counting from the end of the calendar year) may be obliged to pay income tax at a rate of 19%.

In the case of commercial transactions, it is customary to apply for a tax ruling regarding the correct tax treatment of the transaction so as to mitigate the risks involved.

6 Real estate finance

6.1 Who are the most common providers of real estate finance in your jurisdiction? Do any restrictions apply in this regard?

In theory, anyone can grant a loan, including individuals and non-bank lenders; however, banks are the most common real estate finance providers. Their operations are regulated by the Banking Law Act, as well as numerous national and EU regulations; and they are supervised by the Financial Supervision Authority. Alternative finance providers are not as strictly regulated or monitored, but their role is marginal.

6.2 What forms of real estate finance are available in your jurisdiction?

The following forms of real estate finance are among the most popular in Poland:

  • mortgage loans;
  • commercial bank loans granted for a specific purpose (eg, development loans or investment loans used to finance or refinance the acquisition of real estate);
  • mezzanine loans used to supplement an existing mortgage loan or commercial bank loan granted for a specific purpose;
  • loans provided by a parent company or affiliate;
  • debt finance; and
  • bonds.

6.3 What formal, documentary and other requirements do lenders typically require of borrowers?

The exact requirements vary depending on the nature of the project, but they typically include:

  • the delivery of corporate documents and consents for executing loan and security documentation; and
  • the provision of financial information for a credit check.

Additionally, any prospective borrower must pass a know-your-customer verification to be considered for a loan.

6.4 What type of security interests are typically required by lenders?

Lenders typically require the following types of security interests:

  • mortgage;
  • pledge;
  • power of attorney authorising the lender to access the borrower's bank accounts in the event of default;
  • assignment of the borrower's receivables;
  • statement on voluntary submission to enforcement; and
  • subordination agreement.

Banks are especially keen on mortgages as the most reliable security interest available under Polish law. They are also versatile, in that one mortgage may be used to secure multiple claims of a single creditor or those of various creditors financing the same project.

6.5 What is the process for obtaining real estate finance? What costs are payable?

The process of obtaining real estate finance from a bank usually begins with a prospective borrower filing a loan application and signing a term sheet, at which point the lender commences a due diligence audit. Then, the parties may negotiate the exact terms of the loan and, once the conditions precedent set by the bank have been met, execute a loan agreement.

Various fees may apply, including a fee for preliminary work related to assessing the borrower's creditability, as well as commitment, pre-payment and cancellation fees. Additional fees will apply whenever the bank takes on further responsibilities (eg, those of a security agent or lead arranger).

The process of obtaining finance from alternative lenders is usually less formalised; even so, similar fees and requirements can be expected.

6.6 How is security enforced in case of any breach?

The method of enforcement depends on the type of security. For example, a mortgage may only be enforced by a court enforcement officer, which involves issuing court proceedings. The encumbered real estate is then put up for public auction and, following two failed auctions, may be taken over by the lender. With registered pledges, the parties may forgo court proceedings in favour of out-of-court enforcement methods, such as sale at private auction or seizure of the pledged asset. At the other end of the spectrum, no enforcement proceedings are required in the case of assignment of the borrower's receivables.

7 Real estate investment

7.1 Who are the most common investors in real estate in your jurisdiction? Do any restrictions apply in this regard?

In general, we see two types of real estate investors: individuals and institutions, with the latter being responsible for the majority of large developments, such as office buildings, shopping centres, hotels and leisure facilities. Investors come from various EU countries, the United States and the United Kingdom; while South African, Australian and Korean funds also play an active role on the Polish market.

For the restrictions applicable to real estate investors, please see question 2.3.

7.2 What investment vehicles are typically used in your jurisdiction? What are the benefits and drawbacks of each?

Private limited companies are by far the most common investment vehicle. Their advantages include shielding the investment from the investor's other business and thus mitigating the risks involved. They are also relatively easy to manage and provide a natural platform for joint ownership where several investors wish to invest in the same piece of real estate or in the case of international investors. However, taxation may be a drawback because dividends and income at the company level are subject to two separate taxes in the absence of specific government or EU regulations that exempt dividends from taxation at source.

7.3 How are these vehicles established and administered in your jurisdiction?

Private limited companies are relatively easy to establish, whether electronically or before a notary. Upon being entered in a business register, such companies gain legal personality separate from that of their owners. Each company is managed by a management board, composed of one or more individuals, with plenty of entities offering professional services in this regard.

8 Planning and zoning

8.1 How is land use regulated in your jurisdiction?

The most important piece of legislation in this regard is the Spatial Planning and Development Act. It sets out general rules for local government units, which are responsible for adopting master and local development plans, as well as issuing outline planning permission. The most general of these documents is the master plan, which sets out spatial development rules for the entire municipality, defining key parameters and assigning land use designations. The master plan is binding only on the local authority that must prepare more detailed plans on its basis. Once the master plan is in place, a local development plan may be adopted by resolution of a local council. Local development plans deal with matters such as:

  • area-specific land use and development conditions;
  • archaeological and environmental protection; and
  • road and utility management.

As it has the status of a local law, a local development plan must be respected by everyone in the area. In the absence of a local development plan, the local authority may issue outline planning permission. Such permission is issued upon application and its scope is typically limited to a particular piece of real estate.

8.2 What is the process for obtaining planning permission? How long does this take? What costs are incurred?

To obtain planning permission, a real estate rights holder (which may or may not be the owner) should file an application accompanied by the following documents:

  • a statement confirming its right to dispose of the real estate for construction purposes;
  • outline planning permission (in the absence of a local development plan);
  • a copy of the land registration records and a map extract;
  • a set of building plans;
  • documents confirming the design engineers' qualifications; and
  • any additional documents that may be required under the Construction Law Act in particular circumstances.

The resulting proceedings may involve the developers, owners, perpetual usufructuaries or managers of any real estate located within the area affected by the project. A planning decision may be issued by the chair of a district executive board, provincial governor or chief building control inspector. The competent authority will verify whether the application and plans should be corrected or supplemented. If so, the applicant must make the requested amendments within a specified deadline, failing which the application will be denied.

As a rule, a planning decision should be issued within 65 days, with the law providing for the imposition of penalties on the competent authority in the event of any delay.

The costs incurred in the process will depend on the area and type of a particular project; but – as of 1 December 2022 – the basic fee for the approval of building plans is PLN 47.

Not all developments require a planning decision. The Construction Law Act provides for a number of exceptions related to smaller structures – most notably houses with a maximum area of 70 square metres and small utility networks. In such cases, notifying the competent authorities will suffice. Finally, there are also structures for which neither permission nor notification is required.

8.3 Can a planning decision be appealed?

A planning decision may be appealed by anyone involved in the planning approval proceedings described in question 8.2. The deadline for filing an appeal is 14 days from receipt of the decision. The appeal will be examined by a provincial governor or chief building control inspector, depending on whether the original decision was issued by the chair of a district executive board or provincial governor, respectively.

8.4 What are the consequences of failure to obtain planning permission or to comply with a planning condition?

Failure to obtain planning permission (if required) or to comply with a planning condition makes it impossible to obtain permission for the development to be used and occupied. Furthermore, the building control authority may decide to suspend the construction works. If that happens, the real estate right holder may appeal the decision and apply for the building plans to be approved in order to be allowed to complete any outstanding works. In the absence of such approval, any building developed without planning permission or contrary to a planning condition must be demolished.

8.5 Is expropriation of land possible in your jurisdiction?

Land expropriation is possible under the Real Estate Management Act, as well as certain other acts and decisions (mostly pertaining to specific types of public utility projects). One such decision is a road construction consent, which allows the competent authority to compel a real estate owner to sell land while simultaneously dividing said land and authorising the construction of a new road.

8.6 Is confiscation of land possible in your jurisdiction?

The confiscation of land is possible only with respect to criminal offenders and is limited to the proceeds of crime. These can mean any economic advantage (including land or a business undertaking) derived from criminal offences committed even five years prior to the crime of which the offender is actually being convicted. The transfer of such proceeds to a third party is ineffective and does not protect against confiscation.

9 Environmental

9.1 What main environmental legal provisions apply to the development, use and occupation of real estate?

Environmental issues related to the development, use and occupation of real estate are predominantly regulated by the following acts:

  • the Environmental Protection Law Act;
  • the Water Law Act;
  • the Nature Conservation Act;
  • the Provision of Information on the Environment and Its Protection, Public Participation in Environmental Protection and Environmental Impact Assessments Act;
  • the Agricultural and Forest Land Protection Act;
  • the Geological and Mining Law Act;
  • the Waste Act; and
  • the Environmental Damage Prevention and Remediation Act.

Other documents that play a part in ensuring sustainable development include:

  • master plans;
  • local development plans; and
  • outline planning permission.

Environmental decisions are also worth mentioning, as they:

  • set out environmental prerequisites for a given project based on the outcome of an environmental impact assessment; and
  • provide guidelines on how to implement the project without damaging the environment.

9.2 Who can be held liable for environmental contamination and how are clean-ups effected?

A person whose actions cause or create the risk of environmental contamination may face civil, criminal and administrative liability.

Under civil law, anyone directly affected by actions that have a negative impact on the environment may request the person responsible to:

  • remedy the damage to the environment and take preventive measures; or
  • where doing so proves impossible or excessively difficult, cease such actions altogether.

As regards criminal liability for environmental contamination, the offender may be subject to:

  • a fine;
  • a non-custodial sentence; or
  • a custodial sentence of up to 12 years.

As regards administrative law, the competent authorities will investigate suspected contamination to determine whether any damage has been done to the environment and, if so, to identify the source of the damage and available remedies. A decision will then be made on the basis of regulations concerning a particular type of contamination, with responsibility for clean-ups varying accordingly. In particular, with respect to soil contamination, the law differentiates between:

  • so-called 'historical contamination', for which the real estate owner is generally liable; and
  • contamination caused after 30 April 2007, where the responsibility will typically rest with the polluter.

The offender may be forced to pay a fine or to cease or limit any activities that have been shown to have a negative impact on the environment.

Finally, real estate owners are obliged to prevent any nuisance that originates on their premises from affecting surrounding properties, even where the owner is not at fault.

9.3 What environmental provisions and considerations should be factored into real estate transactions?

The parties to a real estate transaction should verify whether a particular piece of real estate is not subject to any restrictions on use or development. These may result from the real estate being located within a protected or contaminated area. Consideration should also be given to the possibility of a fine or other penalty being imposed on account of environmental contamination.

9.4 What initiatives are in place to promote green buildings and energy efficiency in your jurisdiction?

Most national green initiatives are led and financed by the National Fund for Environmental Protection and Water Management. The most important initiatives include the following:

  • My Electricity: The programme aims to:
    • popularise photovoltaic micro-installations;
    • maximise the storage and use of self-generated heat and electricity; and
    • increase the efficiency of electricity management in Poland.
  • Power Plus: This programme aims to reduce the negative impact of businesses on the environment (including improving air quality) by supporting investment projects.
  • Clean Air: This programme aims to improve air quality and reduce greenhouse gas emissions by replacing conventional heat sources and improving the energy performance of single-family residential buildings.
  • Energy-Efficient Construction: The main goal of this programme is to improve air quality by reducing energy consumption in buildings through the use of renewable energy sources, as well as reducing or avoiding carbon emissions.

There are also local initiatives which are financed by local government units and focused on rainwater use, carbon and power management, as well as other issues specific to the area.

9.5 What types of environmental certifications apply in your jurisdiction?

The following international environmental certifications apply:

  • DGNB;
  • HQE;
  • LEED; and
  • WELL.

A green home certificate has also been developed by the Polish Green Building Council, which aims to promote sustainable, energy-efficient construction with high indoor air quality. This is the first nationwide, multi-criteria certificate that evaluates residential investments from the perspective of sustainable construction.

10 Trends and predictions

10.1 How would you describe the current real estate market and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Just as the real estate market was starting to recover from the immediate effects of the COVID-19 pandemic, 2022 brought its own share of challenges – some common across Europe, others particular to Poland. High inflation, rising interest rates and surging energy prices, as well as the outbreak of war in Ukraine, had a knock-on effect on the market, making investors adopt a more conservative approach that is likely to persist for months to come. Even so, a weaker Polish złoty could go a long way towards attracting foreign investment.

Residential: Demand for rental apartments is at a record high, with a massive gap between supply and demand causing rent rates to climb. However, the number of apartments available to rent has fallen by 70% compared with 2021, while the influx of Ukrainian refugees caused a spike in demand. This was exacerbated by high interest rates, which reduced consumers' creditability and forced them to rent rather than purchase apartments. In turn, the lower number of prospective buyers, coupled with higher costs and unwelcome regulatory changes, caused developers to pursue fewer new housing projects. On a positive note, the drop in apartment sales makes the residential real estate market fertile ground for institutional investors.

Retail: Since the pandemic, retail parks and convenience stores have emerged as two of the most resilient parts of the retail sector, with the former attracting an increasing number of investors. This trend seems to be continuing, as value shopping and essential goods – both closely associated with retail parks – are still in demand.

Office: Office investment transactions soared in 2022. In the first half of the year, Warsaw faced unprecedented demand for office space, with tenants focusing on quality over footprint and redefining their expectations. On the other hand, high fit-out costs and overheads translated into more lease renewals and extensions, to the point that an average lease term for new buildings now exceeds seven years. Available space is expected to continue to shrink as the number of new office projects has dropped significantly.

Logistics: Over the last two years, the e-commerce frenzy boosted demand for logistics to an extraordinary level: city warehouse vacancies were at a record low and rents were on an upwards trajectory. Now, even though the industrial sector remains strong, new investments and transactions are expected to slow down, reflecting the fact that e-commerce is not growing as fast as during the pandemic.

Green energy solutions: The energy crisis has left its mark on the real estate market, causing construction and operating costs to spike. In response, developers have increasingly been turning to energy-efficient solutions, such as photovoltaic installations, water recuperation systems and vertical or rooftop gardens.

11 Tips and traps

11.1 What are your top tips for the smooth conclusion of a real estate transaction and what potential sticking points would you highlight?

Key factors in successful transactions are:

  • proper planning;
  • good communication; and
  • competent advisers.

The following tips should help to achieve a smooth closing:

  • All necessary advisers should be appointed as soon as possible, particularly tax and legal counsel.
  • All parties and advisers should properly understand:
    • the target and its business (in the case of share deals);
    • the structure of the transaction;
    • any sector-specific requirements; and
    • the economics of the deal.
  • Tax requirements and the regulatory environment in which the target operates may significantly impact on the structure and timing of the transaction, including the need to obtain any certificates or third-party consents that may be required. In particular:
    • the timing of any tax certificates and/or other approvals issued by public authorities should be carefully considered; and
    • appropriate procedures should be initiated well in advance.
  • Proper due diligence of real estate assets is essential, as its outcome will have a major impact on the transaction structure and documentation. Depending on the type and age of the assets, as well as the buyer's strategy, a different emphasis may be placed on issues related to:
    • permitting and/or construction;
    • post-construction matters;
    • rent-roll and lease stability; and
    • operating costs.
  • It is becoming increasingly common to procure various types of insurance for a deal; thus, involving insurers at the earliest possible stage is advisable.
  • Although transactions can increasingly be executed using electronic means of communication, most real estate deals require a notarial deed or a contract with notarised signatures, neither of which can be done electronically. Therefore, it is worth scheduling time to execute the contract in person or ensuring that a duly authorised representative will be available to do so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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