Property law: Checking the lie of the land

It is necessary to look at the designation of particular planning units for your contemplated development before you decide to purchase the land. Always ensure that the property is not designated for public investments (inwestycja celu publicznego), such as roads, public offices or hospitals, as this may result in the compulsory expropriation of the land.

Developers should be aware that the authorities will not issue a building permit for the development of a shopping mall unless such a development is expressly included in the local master plan. If you are planning a residential development, always double check with your architects that their project design observes the requirements of the local master plan, with regards to the amount of green space on the scheme. Failure to observe this may disqualify your application for the building permit.

Master-plan malaise

Unfortunately, at the end of 2003 the vast majority of local master plans expired and new ones have not yet been prepared for the greater part of Poland. In these circumstances, the terms and conditions of the development will require a development decision (decyzja o warunkach zabudowy).

However, a development decision will only be issued where certain conditions are satisfied (i.e. the land has access to a public road, at least one adjunct plot is developed in a similar manner and has access to a public road, the technical infrastructure is sufficient for the planned development, and the land does not require exclusion from forestry or agricultural production). Therefore, a potential buyer of land for development should conduct a comprehensive search focusing on the possibilities of and restraints to the future development of the land.

Furthermore, the buyer should find out whether a development decision (and in the case of a forward purchase agreement, a building permit) has already been issued for the site. In addition, a buyer should also ascertain whether there have been any previous unsuccessful applications for a development decision and/or building permit, as this would mean it is more likely that any application the buyer made would also be unsuccessful.

Mind your intellectual property

Unlike other jurisdictions in Poland, the benefit of a development decision and/or building permit obtained by the seller will not automatically pass to the buyer upon the sale of the property. The seller and the buyer must to apply to the relevant local authority to get this transferred to the buyer.

Usually the buyer of property which has received a development decision and/or building permit will want to develop it in accordance with the approved plans. Frequently, the copyright for the plans are retained by the architects who drew them up for the seller. Therefore, the buyer should ensure that the purchase deed provides for the transfer of these intellectual-property rights, an assignment clause or an obligation on the seller to procure a valid licence for the buyer to enable the use of the plans.

Besides the zoning and development restraints, in case you acquire the perpetual usufruct right, the use of the given plot may be restricted by the provisions of the agreement establishing the right of perpetual usufruct. In the event that the conditions of the perpetual usufruct are in breach, the authorities (either the State Treasury or the municipality) are entitled to increase the amount of the annual fee for the perpetual usufruct right or even seek to have such an agreement terminated by the court.

Finally, please bear in mind that in cases of annuities, easements or rights of way established by way of decision of public authorities, compulsory rights of way, and easements established in connection with developing on adjunct plot, the principle of public trust of land and mortgage books does not apply. In such cases, certain encumbrances over the real estate (e.g. easements and covenants) may not be disclosed in the land and mortgage book but will legally impede the use of the plot.

Patryk Figiel is an associate with Linklaters law firm. E-mail: patryk.figiel@linklaters.com