A few hints for foreigners wanting to buy real estate
Eighteen years, seven years, five years? The length of the proposed transition period during which Poland could maintain restrictions on citizens of European Union (EU) member countries buying land in Poland has become the latest hot spot in the country's EU accession talks.
In the midst of this debate, new amendments to the Law on Acquisition of Land by Foreigners have just taken effect. At the risk of giving away the punch line, I will go ahead and tell you that the amendments do not introduce any great breakthroughs in easing these restrictions, but a clever investor could use them (in conjunction with a little detective work) to make life a little easier.
While Poland is generally making efforts to harmonize its law with that of the EU, the government has found it particularly difficult, for a multitude of historical, psychological and other reasons, to ease legal restrictions on the acquisition of Polish land by foreigners. These most recent amendments will continue to disappoint foreign investors waiting for real change. The basic rule remains the same. With certain, limited exceptions, foreigners in other words, non-Polish citizens or legal entities with their registered offices abroad and also Polish legal entities under foreign control must obtain a permit from the Interior Ministry prior to acquiring real estate in Poland.
What the amendments do is to make it easier to get this permit in certain circumstances. As of March 24, 2001, if an EU citizen or business has established a company or a branch office in Poland and applies for a permit to acquire real estate necessary for its operations, the minister may only refuse to grant the permit if it is contrary to social policy, public security or public health.
Caveat emptor. This rule does not apply to land that is classified as agricultural, forestry or containing natural resources. A foreign investor wanting to purchase this type of land would have to go through the regular procedures, in which the Interior Minister has discretion over whether to grant a permit. Moreover, for this type of land, the minister must also seek the opinion of the Agriculture Minister.
What all of this comes down to is that EU citizens and businesses should pay special attention to the classification of land that they would like to acquire to conduct their business activities in Poland. This is where the detective work comes into play. In Poland there are three official sources of information on real estate, each of which has some significance in assessing the legal status of a parcel of real estate.
The most important register, at least for us lawyers, is the title and mortgage register (ksiegi wieczyste or "perpetual books", as they are sometimes called). Unfortunately, less than 30% of real estate in Poland has been recorded in this register. Nevertheless, the register provides the most significant and valid information on the legal history of the real estate that is recorded in it. It contains information on ownership and on encumbrances and mortgages that burden the real estate. Unfortunately, this register has no value (at least legally) in establishing the address of the real estate, its surface area or its classification.
While a title and mortgage register may serve as a good source of information, it is not always possible to get the information you need from it. The register is kept only in handwritten books (so 20th century). While anyone may review the register, the information that served as the basis for the entries in it is not publicly available. Only the owner of the real estate, a notary or a geodesic engineer may access these underlying documents. Also, only the owner or notary may apply to the court for the issuance of a certificate confirming the entries in this register with respect to a particular parcel of land. As with other government documents, it usually takes a couple of weeks to get this certificate. Finally, a warning to the wise. Except for mortgages, the entries in this register are in most cases outdated. As a rule, the entries in this register are only made if an authorized person takes the trouble to apply, and goes to the expense to pay, for the entry.
The land registers kept by local administrative authorities (urzedy starostwa) are in better shape. Over 95% of real estate in Poland is included in these land registers. Typically, every local authority has an electronic version of its land register, but, so far, there is no single, uniform database for all of Poland. The most important attribute of a land register is the inclusion of a specific land description, stating its classification and providing the only accurate information on the location and surface area of real estate. Also, a land register specifies whether a particular parcel of land has been recorded in a title and mortgage register. Surprisingly, a court maintaining a title and mortgage register, in most cases, will not respond to an inquiry as to whether a parcel is recorded in it and will direct you to the land register.
The information included in the land register is available to everyone who goes to the appropriate local authority, asks for the information and pays a small fee. It is not available by telephone or on the Internet.
The land register provides us with information on the classification of land, but not its zoning. To find out this information, we do not need to go far. Another local government office, the urzad gminy, manages zoning plans (plany zagospodarowania przestrzennego), which will specify what parts of a given gmina have been designated for what purpose (e.g., industrial, commercial, residential, agricultural, forestry and recreational). Anyone may ask for an excerpt from the plan.
Now, returning to our EU investor, the key for evoking the friendlier procedures is the classification of the land as stated in the land register. If that register indicates an agricultural or forestry classification, do not lose hope: Get the zoning plans. You may be pleasantly surprised to learn that the zoning has already been changed. If so, you can seek to change the classification in the land register to bring it up to date with the zoning plan.
In considering an application for a permit, the Interior Ministry requires that an investor provide excerpts from all three sources of information, the title and mortgage register, land register and zoning plan, if they exist. In deciding what procedure should be used, however, the minister will look at the designation of the land as set forth in the land register.
This article was prepared by Lejb Fogelman, the managing partner of Hunton & Williams Poland, with the assistance of Joanna Bartosiewicz, an associate attorney.
