Legal Highlights for Real Estate – July 2023

The end of the state of epidemic emergency

In accordance with the Regulation of the Minister of Health of 14 June 2023 on the cancellation of the state of epidemic emergency in the territory of the Republic of Poland, as of 1 July 2023, the state of epidemic emergency caused by the COVID-19 pandemic was lifted in the territory of Poland. The state of epidemic emergency was introduced in Poland on 16 May 2022. Previously – from 20 March 2020 – an epidemic state was in effect. On 5 May 2023, the World Health Organization (WHO) announced the end of the COVID-19 pandemic.

The abolition of the state of epidemic emergency has many consequences in various areas of law, and this is mainly due to the obsolescence of the so-called anti-crisis shields. Since the beginning of the pandemic, the Parliament has passed four basic laws that significantly organized the life of the state and citizens during the coronavirus epidemic. The first Covid Law – of 2 March 2020 on special solutions related to the prevention, prevention and control of COVID-19, other infectious diseases and emergencies caused by them (the “Anti-Crisis Shield”) – amended 15 laws; the law was later amended as many as 64 times. As of 1 July 2023, major changes (actually, a return to the pre-pandemic state of the law) occurred in taxation, labor law, bankruptcy law, but also in construction law, among others.

This is because the end of the pandemic emergency involves the obsolescence of Article 31zy(1) of the Anti-Crisis Shield, according to which, during the period of an epidemic emergency or an epidemic state declared due to COVID-19, the provisions of Article 55(1)(1) and (3) of the Construction Law (concerning occupancy permits) shall not apply, and applications for occupancy permits submitted before the effective date of the Covid Law shall be treated as a notice of completion of construction. Significant simplifications in the commissioning of buildings, however, have been provided for in the Government’s draft law on amendments to the Construction Law and certain other laws (print no. 3336), which is currently being processed in parliamentary committees.

Amendments to the Development Act – prohibitions on assignment

On 16 July 2023, an amendment (the “Amendment”) to the Act of 20 May 2021 on the protection of the rights of the purchaser of a residential unit or single-family home and the Developer’s Guarantee Fund (the “Developer’s Act”) entered into force.

The Amendment provides, among other things, for the prohibition of transferring receivables under a reservation agreement to a third party under pain of invalidity of the transfer. This prohibition does not apply if the reserving party transfers the receivables under the reservation agreement to a person classified in tax group I or II within the meaning of the inheritance and donation tax act.

The amendment also restricted the possibility of assigning development contracts. A purchaser who is a party to a development agreement referred to in Article 2 points (1), (2), (3) or (5) of the Development Act will be able to assign receivables under that agreement to a third party if: (i) this agreement does not concern more than one residential unit or single-family house together with the land property on which it is or is to be built, and (ii) during the three years preceding the transfer of these receivables, it has not transferred receivables arising from another development agreement or an agreement referred to in Article 2 points (1), (2), (3) and (5) of the Development Act. The above rules will not apply if the purchaser makes the assignment to a person in tax group I or II within the meaning of the inheritance and donation tax act. However, the assignment of receivables under a development agreement to a third party in violation of the above conditions will not render the assignment invalid. The purchaser assigning the contract to another person will have to submit a statement that no such assignment has been made within the last 3 years, under penalty of criminal liability for making a false statement.

Cases of contracts involving the reservation of several or even a dozen units by a single buyer, who then – for a hefty fee – transfers them to the right buyers, are the bane of the Polish housing market. So-called flippers literally charge exorbitant “commissions” for nothing. It’s time to put an end to such practices,” is how Waldemar Buda, Minister of Development and Technology, explains the reasons for the introduction of this legislation. However, as experts point out, the Developer’s Act does not cover business owners, but only individuals who buy apartments to satisfy their own housing needs. Meanwhile, most filippers are engaged in business activities. Therefore, the amendment may not have the effect envisioned by its creators.