EU citizens on Polish soil
This event affected nearly all branches of the law, especially the civil law. It was also followed by a number of social concerns including apprehension as to the buy-out of Polish real-estate by foreigners
By Jarosław Chałas
The anti-EU political parties strongly opposed any harmonisation in the field of real-estate-related legal issues (art. 44 point 2e of the Treaty establishing European Communities) submitting that the raison d'etat required the Parliament to restrict the accessibility of real-estate to foreigners as much as it was allowed by the EU. Due to the political and social pressure, the government was not able to act freely and applied only partially transitional periods related to foreign vendees. However, it is worth analysing the accessibility of real-estate to EU citizens before the accession and now.
From 1989 up to 1999, the number of properties in Poland acquired by foreigners gradually increased to 2,304 and then dramatically decreased to 1,580 in 2003. Therefore, the statistics prove the before-mentioned argument immediately wrong as the foreigners acquired properties even more willingly when the provisions were stricter than now. The relevant provisions that came into force on May 1 2004 were incorporated in the legal act titled The Real Estate Acquisition by Foreigners Act (Dz.U. 04. 167. 1758). The provisions of REAFA include a rule concerning the EU citizens, envisaged in article 8 s.2, which negates the general rule that foreigners may acquire real estate (save the succession) no sooner than permission is obtained. Granting the permission is exclusively in discretion of the Minister of the Internal Affairs and the Administration. Nevertheless, two exceptions were constituted. An EU citizen is still obliged to obtain a permission if, firstly, one seeks to purchase real-estate defined as either agricultural or woodland (the transitional period is 12 years from the accession), and, secondly, if the foreigner wishes to purchase a household but already is in possession of another one (the transitional period is five years from the accession). Even so, the permission will not be mandatory should the agricultural or woodland real-estate be situated in specified districts (Dolnośląskie, Kujawsko-Pomorskie, Lubuskie, Opolskie, Pomorskie, Warmińsko-Mazurskie, Wielkopolskie, Zachodniopomorskie) and seven years have passed from the moment of concluding a tenancy agreement signed by the parties, including the EU citizen, under a fixed date. Moreover, the REAFA requires the EU citizen to carry on agricultural activities personally throughout the period mentioned above and to legally reside in Poland. In some districts (lubelskie, łódzkie, małopolskie, mazowieckie, podkarpackie, podlaskie, śląskie, świętokrzyskie) the period is even shorter-three years. When it comes to a second household the permission will not be mandatory, even during the transitional period, should the EU citizen have legally and continually resided in Poland for at least four years or the household is to be used as a means to conduct tourist business. The Ministry has defined a second household as real estate on which either a household is to be built or the purchaser designated it for a recreational place and will not reside there continually (part time only). A second household would not, in any case, be an apartment no matter its features.
It is submitted that before the accession the exceptions to the general rule of mandatory permission were scarce and very narrow. That, however, did not discourage potential buyers from applying for the permission up until the beginning of 2001 when the Parliament adopted amendments introducing articles 5a and 7a (currently not binding). The first provision gave the relevant Minister the power to control the foreign purchaser, including EU citizens, for a period of 10 years after the permission was granted and render it invalid should the permission be used contrary to the provisions of the REAFA. What was even more controversial, the provisions of article 7a drastically reduced the number of permissions granted to EU citizens, including legal persons, planning to conduct business in Poland by introducing a general requirement that the relevant Minister granted the permission in question only if it was essential for the business' conduct for which the enterprise had been set. Moreover, despite the fact that the foreigner satisfied all the requirements, the Minister could still deny the permission should it endanger the national security, the national interest, or the well being of the society. The premises were so wide and unspecific that the business dealings were far too unreliable to invest freely. Fortunately, the above-mentioned provisions are no more in force.
To sum up, it must be stressed that media reports of a low demand for Polish real estate after accession clearly negates the earlier concerns. However, whether the official statistics confirm the above-mentioned trend is yet to be seen.
By Jarosław Chałas
The anti-EU political parties strongly opposed any harmonisation in the field of real-estate-related legal issues (art. 44 point 2e of the Treaty establishing European Communities) submitting that the raison d'etat required the Parliament to restrict the accessibility of real-estate to foreigners as much as it was allowed by the EU. Due to the political and social pressure, the government was not able to act freely and applied only partially transitional periods related to foreign vendees. However, it is worth analysing the accessibility of real-estate to EU citizens before the accession and now.
From 1989 up to 1999, the number of properties in Poland acquired by foreigners gradually increased to 2,304 and then dramatically decreased to 1,580 in 2003. Therefore, the statistics prove the before-mentioned argument immediately wrong as the foreigners acquired properties even more willingly when the provisions were stricter than now. The relevant provisions that came into force on May 1 2004 were incorporated in the legal act titled The Real Estate Acquisition by Foreigners Act (Dz.U. 04. 167. 1758). The provisions of REAFA include a rule concerning the EU citizens, envisaged in article 8 s.2, which negates the general rule that foreigners may acquire real estate (save the succession) no sooner than permission is obtained. Granting the permission is exclusively in discretion of the Minister of the Internal Affairs and the Administration. Nevertheless, two exceptions were constituted. An EU citizen is still obliged to obtain a permission if, firstly, one seeks to purchase real-estate defined as either agricultural or woodland (the transitional period is 12 years from the accession), and, secondly, if the foreigner wishes to purchase a household but already is in possession of another one (the transitional period is five years from the accession). Even so, the permission will not be mandatory should the agricultural or woodland real-estate be situated in specified districts (Dolnośląskie, Kujawsko-Pomorskie, Lubuskie, Opolskie, Pomorskie, Warmińsko-Mazurskie, Wielkopolskie, Zachodniopomorskie) and seven years have passed from the moment of concluding a tenancy agreement signed by the parties, including the EU citizen, under a fixed date. Moreover, the REAFA requires the EU citizen to carry on agricultural activities personally throughout the period mentioned above and to legally reside in Poland. In some districts (lubelskie, łódzkie, małopolskie, mazowieckie, podkarpackie, podlaskie, śląskie, świętokrzyskie) the period is even shorter-three years. When it comes to a second household the permission will not be mandatory, even during the transitional period, should the EU citizen have legally and continually resided in Poland for at least four years or the household is to be used as a means to conduct tourist business. The Ministry has defined a second household as real estate on which either a household is to be built or the purchaser designated it for a recreational place and will not reside there continually (part time only). A second household would not, in any case, be an apartment no matter its features.
It is submitted that before the accession the exceptions to the general rule of mandatory permission were scarce and very narrow. That, however, did not discourage potential buyers from applying for the permission up until the beginning of 2001 when the Parliament adopted amendments introducing articles 5a and 7a (currently not binding). The first provision gave the relevant Minister the power to control the foreign purchaser, including EU citizens, for a period of 10 years after the permission was granted and render it invalid should the permission be used contrary to the provisions of the REAFA. What was even more controversial, the provisions of article 7a drastically reduced the number of permissions granted to EU citizens, including legal persons, planning to conduct business in Poland by introducing a general requirement that the relevant Minister granted the permission in question only if it was essential for the business' conduct for which the enterprise had been set. Moreover, despite the fact that the foreigner satisfied all the requirements, the Minister could still deny the permission should it endanger the national security, the national interest, or the well being of the society. The premises were so wide and unspecific that the business dealings were far too unreliable to invest freely. Fortunately, the above-mentioned provisions are no more in force.
To sum up, it must be stressed that media reports of a low demand for Polish real estate after accession clearly negates the earlier concerns. However, whether the official statistics confirm the above-mentioned trend is yet to be seen.
