On July 1, 2022, the Act of May 20, 2021 on the protection of the rights of the buyer of a flat or single-family house and the Development Guarantee Fund entered into force. Compared to the current developer law of 2011, it introduces additional mechanisms aimed at even stronger protection of buyers' interests and limiting the scope for abuse by dishonest developers.
Objective scope of the act
First of all, it should be noted that the material scope of the Act has been extended to include contracts concluded with the developer, on the basis of which the developer undertakes to establish separate ownership of the apartment and transfer the ownership of the apartment and the rights necessary to use the apartment to the buyer, transfer the property to the buyer. a residential premises and the rights necessary to use this premises, development of a land property constituting the subject of ownership or perpetual usufruct with a single-family house and transfer to the buyer of the ownership of this property or perpetual usufruct of land and ownership of a single-family house erected on it constituting a separate real estate or transfer of a fractional part of the property real estate with the right to the exclusive use of part of the real estate serving housing needs and transfer to the buyer the ownership of real estate developed with a single house perpetual usufruct or perpetual usufruct of land and ownership of a single-family house erected thereon constituting a separate real estate or transfer of a fractional part of the ownership of this real estate with the right to exclusive use of a part of the real estate serving housing needs. What's more, unlike the regulations in force so far, the provisions of the new developer act will also apply after obtaining a permit to use the property.
Reservation agreement - a solution to a pressing problem or a dead provision?
Article 29 et seq. The New Property Development Act introduces regulations concerning reservation agreements, commonly concluded in the real estate market on the primary market. In recent months of systematic increase in apartment prices, the public has repeatedly heard information about dishonest developers who, after concluding reservation agreements with potential clients, re-publishing offers for the sale of reserved premises for a higher price, and then concluded further agreements with new clients. Pursuant to Art. 29 sec. 2 of the new act, the reservation agreement is an agreement between the developer and the person interested in the sale offer, the subject of which is the obligation to temporarily exclude from the sale offer a flat or a single-family house selected by the booking party. It should be concluded in writing, otherwise null and void, for a specified period of time, and the parties may stipulate that the potential buyer must pay a reservation fee in the amount not exceeding 1% of the value of the offered real estate. These funds, in the event of concluding a contract for the transfer of ownership of the premises, shall be added to the price. Moreover, if the buyer does not receive a loan to finance the purchase and the developer changes the information prospectus and its appendices without consulting the buyer, the reservation fee will be refunded. In the event of a serious breach by the developer of his obligations in the form of his failure to comply with the provisions of the reservation agreement or failure to remove the defects reported in the acceptance protocol, as a result of which the buyer did not proceed to sign the agreement that transfers the ownership of the property, the reservation fee is refunded in double amount.
It is debatable whether the above changes will effectively affect the problem of developers terminating reservation contracts due to finding a customer who is able to pay more for the same premises. Despite the fluctuating demand, prices per square meter of real estate are rising month by month, which means that twice the reimbursable reservation fee may be an amount lower than the price obtained from the new buyer.
Travel educates the legislator as well
The newly established Development Guarantee Fund is an institution that is able to realistically secure the interests of buyers and the funds deposited by them in fiduciary accounts. So far, in the event of a deterioration in the financial situation or even the declaration of bankruptcy, as was the case in the case of the Leopard group companies, which was famous several years ago in Krakow, the buyers of the premises had little chance of recovering the invested funds. The above-mentioned fund is to perform similar functions as the Tourist Guarantee Fund, known from the travel industry. The developer will be obliged to pay contributions to the developer, calculated in relation to the buyer's payments to the escrow account associated with the development project. Moreover, the funds from the fund will be released not only in the event of the developer's bankruptcy or the opening of restructuring proceedings, but also when the developer will refrain from transferring the ownership of the premises within the agreed period or fails to remedy the defects of the property.
The Act of May 20, 2021 on the protection of the rights of buyers of a flat or single-family house and the Development Guarantee Fund significantly improves the situation of buyers of premises offered as part of development projects, at least in theory. It remains to be hoped that in this case the introduced regulations, knowing the inherent passion of Polish entities to look for non-standard solutions, will not remain just dead regulations.
This entry contains general information about the legal issue discussed. It does not constitute legal advice or a solution to a specific case or legal problem. Due to the unique nature of each factual situation and the variability of the legal status, we recommend seeking legal advice from our law firm.