?- ?General remarks ?-?
Under Polish law, ownership is the broadest title to real property, under which the owner of real estate is entitled to use an area of real estate for an unlimited period of time, exclusively, and may freely dispose of his right to the real estate. The ownership right may only be limited by (i) statutory law, (ii) principles of community life and (iii) the socioeconomic purpose of right.
According to the Act dated 24 March 1920 on the acquisition of real property by foreigners, the acquisition of real estate by a foreigner generally requires a permit issued by a minister competent for internal affairs in the form of an administrative decision.
In Poland, the courts maintain land and mortgage registers (ksi?gi wieczyste) for real properties. The registers describe, in particular, the legal title to, and encumbrances on, real properties. If there is a discrepancy between the legal status of a real property entered in a land and mortgage register and the actual legal status of that real property, the legal status entered in the register protects a bona fide purchaser who purchased the real property for consideration ? so-called ?public trustworthiness of land and mortgage registers? (r?kojmia wiary publicznej ksi?g wieczystych).
A practical consequence of the ?public trustworthiness of land and mortgage registers? is that if, on the date of the execution of a sale agreement transferring the ownership or the Right of Perpetual Usufruct (?RPU?) of a real property the seller is entered as, respectively, the owner or the perpetual usufructuary in the land and mortgage register, the purchaser will effectively purchase the title even if the seller does not hold that title.
The ?public trustworthiness of land and mortgage registers? does not apply in some cases, in particular if the purchaser, when purchasing the real property, knew or could have easily become aware that the legal status disclosed in the relevant register differed from its actual legal status, e.g. that the seller was not the owner/perpetual usufructuary of that real property.
Access to Land and Mortgage Registers is granted publicly so that everyone can check the content of the register (access to the content of the whole file of documents concerning a given real estate is however limited to entities holding a proven legal interest). Land and mortgage registers are available on-line and can be accessed at http://ekw.ms.gov.pl/pdcbdkw/pdcbdkw.html
RPU ? general remarks
In many aspects, the Right of Perpetual Usufruct (u?ytkowanie wieczyste) is similar to freehold. Perpetual usufruct resembles a leasehold established for a period of 40 to 99 years (with the possibility of an extension), but the legal nature of this right should be considered more as a freehold. Only lands owned by State Treasury and situated within the administrative limits of towns and settlements, lands owned by State Treasury situated beyond those limits but covered by a real estate local zoning plan of a town or settlement and designated to serve its economic needs, and lands owned by municipalities or their unions, may be held under perpetual usufruct.
The perpetual usufructee is entitled to: (i) use the land exclusively, (ii) dispose of his right to the land, (iii) erect buildings and facilities on the land, as specified in the perpetual usufruct agreement, (iv) own buildings and other facilities erected on the land let for perpetual usufruct (this right constitutes an exception to the suprficies solo cedit rule), (v) to exercise the right of purchase the land when an owner of the land wants to sell it, (vi) to request an extension of the right of perpetual usufruct for a further 40 to 99 years, within the last 5 years before the expiry of the original time of the perpetual usufruct, (vii) to obtain remuneration for the buildings and other facilities erected on the land upon the expiry of the perpetual usufruct, (viii) to enjoy the right to transform the perpetual usufruct into the ownership when specific requirements are met.
Perpetual usufruct is established by an agreement between the owner of the land and the perpetual usufructee. The agreement should specify the manner of the use of the land (?purpose of the land?) and the period of time for which the perpetual usufruct is established. If the land is let for the purpose of erecting buildings or other facilities, the agreement should specify: (i) the dates on which the work is to begin and to end, (ii) the kind of buildings or facilities, and the obligation to maintain them in the proper condition, (iii) the condition and the dates of rebuilding the buildings and facilities if these were destroyed or dismantled during the period of perpetual usufruct, (iv) the consideration due to the perpetual usufructee for the buildings or facilities existing on the land on the day when the perpetual usufruct expires.
An agreement establishing perpetual usufruct must be concluded in the form of a notarial deed. Moreover, in order to create a valid right, a perpetual usufruct has to be entered into land and mortgage register. Other issues connected with establishing and transferring perpetual usufruct are correspondingly governed by the provisions concerning the transfer of the ownership of real estate. Perpetual usufruct is formed for a ?purpose? and it should be remembered that if the property is being used contrary to its purpose, the owner may terminate the perpetual usufruct.
Both ownership and perpetual usufruct rights are entered into the Land and Mortgage Register maintained by local district courts. With respect to perpetual usufruct, entry in the Land and Mortgage Register is required for the perpetual usufruct right to be effective (with entry the perpetual usufruct rights become effective from the date on which the relevant agreement for its establishment was entered into).
Alternative titles to land for construction purposes
InPolandany investor, prior to obtaining the construction permit, needs to have a legal title to land on which the investment will be localized. Apart from ownership or RPU sucj legal title could be secured in the following way:
Transmission easement
The transmission easement is an institution of Polish law allowing business entities to use a landlord?s land in a determined way for the purpose of constructing and/or operating public utility facilities, either for remuneration, or gratuitously.A transmission easement is a limited right in rem. It is strictly connected with the term ?transmission facilities?. As a general rule, under Polish law buildings and other facilities permanently connected with the land are considered component parts of the land, and therefore they, in principle, constitute the property of the landowner. However, they are not treated as a component part of the land if they constitute a component of an enterprise (in such circumstances the ownership of the facilities is separated from the ownership of the land on which the facilities are set up, and the transmission facilities are owned by the relevant enterprises? owner). A transmission easement consists in the right of its holder, who intends to construct facilities for the transmission or distribution of gas or other similar facilities, to construct such facilities, operate them, and subsequently to access them for maintenance.In order to establish a transmission easement, the provisions of the Polish Civil Code require an agreement to be concluded between the landowner and the investor. A transmission easement agreement should include provisions regarding the description and scope of the easement, as well as the remuneration for the land?s use. If a landlord refuses to conclude a transmission easement agreement and the easement is necessary for the proper use of the transmission facilities, the energy company may submit an application to the civil court and require the establishment of the easement for the relevant remuneration. In order to obtain a satisfactory court decision, the applicant should prove that the establishment of a transmission easement is necessary for the proper use of the transmission facilities. However establishment of the transmission easement using court proceedings is a long-lasting process. A transmission easement may be entered into land and mortgage register (which is recommended from the legal point of view to fully secure investor?s rights).
Tenancy agreement
Another way to secure the title to the land for the purpose of the construction of is execution of tenancy agreements with the landowners. A tenancy agreement may be entered into land and mortgage register (which is recommended from the legal point of view to fully secure investor?s rights).
Administrative decision limiting the right of the landowner
The county governor (starosta), executing tasks in the scope of government administration may, by decision, impose restrictions on the manner of real estate use, by granting permits for installing and laying real estate drainage systems, lines and facilities for the transport of liquids, steam, gas or electricity (including flowlines / pipelines) and public communication facilities and signalling facilities, as well as other underground, land or overhead facilities necessary for using the above mentioned lines and facilities, if the owner (or the perpetual usufructee) of the real estate does not grant permission. The restrictions shall conform to the local zoning plan (if one exists) or to decision determining the location of public purpose projects.
The permit may be granted ex officio or upon a motion of the interested entity. Granting of a permit shall be preceded by negotiations conducted with the owner (or perpetual usufructee of the real estate for obtaining the consent for the execution of the works. The negotiations shall be conducted by the person or entity intending to file a motion for the permit. The motion should be accompanied by documents evidencing these negotiations. The person or entity seeking the permit shall restore the real estate to the former condition immediately after the completion of works. When the laying or installation of the systems, lines and facilities mentioned above renders the owner or perpetual usufructee incapable of properly using and enjoying the real estate in a previous manner or in accordance with the previous purpose of the real estate, the owner or perpetual usufructee may demand that the county governor (starosta) or the person or entity applying for the permit buy from them for the State Treasury, the ownership or the perpetual usufruct rights to the real estate. The final decision shall constitute the basis for the entry in the land and mortgage register.
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