Poland: End of the transitional period for developers: new obligations and application of the old act

 

On 1 July 2024, the transitional period of the Act on the Protection of the Rights of the Purchaser of a Residential Unit or a Single-Family House and the Developer Guarantee Fund of 20 May 2021 ended. Until that date, developers could carry out a development project under the so-called old Developer Act of 2011, provided that only before the entry into force of the 2021 regulations, sales had commenced and at least one development agreement had been concluded. After 1 July 2024, developers must already apply all the provisions of the new act. In this article, we discuss the most important of them.

Developers must pay contributions to the Developer Guarantee Fund. The basis for their calculation is the value of the amount paid by the buyer to the housing trust fund in connection with the conclusion of a development agreement or other binding agreement, which is then multiplied by the percentage rate. The maximum rate is:

1% of the deposit for an open account,
0.1% for a closed account.

The entity paying the contribution to the Developer Guarantee Fund is not the developer, but the bank maintaining the residential escrow account.

Residential escrow accounts

The Act imposes an absolute obligation on the developer to have a residential escrow account (open or closed). Failure by the developer to provide this account for accepting payments made by buyers towards the price may result in criminal liability of the developer. Importantly, the developer is required to conclude an escrow account agreement separately for each development project or investment task. The obligation to have a residential escrow account ceases after the transfer of rights under the last development agreement or commitment agreement under the same development project or investment task.

The developer is obliged to prepare and make available to buyers an information prospectus in accordance with the template constituting appendices to the Act. In addition to information used to identify the developer and indicate its basic data, the prospectus should contain:

information about the developer’s experience: the developer indicates the data of three completed development projects (including the most recent ones),
information on the property and the development project: it is not only plot numbers, land and mortgage register numbers, information on mortgage encumbrances, but also information on surrounding facilities affecting living conditions,
information on the provisions of the local spatial development plan, also in relation to plots located at a distance of 100 m from the border of the area covered by the development project.

The Act regulates the content of the reservation agreement, which should specify not only the parties to the agreement and the details of the premises excluded from sale, but also:

the time of concluding the agreement (e.g. one year from the date of its conclusion),
the amount of the reservation fee, provided that the parties have agreed on the obligation to pay it by the buyer, it may not exceed 1% of the price of a residential unit or a single-family house, and in the case of concluding a development agreement or other similar agreement, the reservation fee must be transferred to the residential escrow account.

 

And what about the old law?

There is a doubt whether developers can apply the provisions of the old pond to any extent after 1 July 2024. One exception applies to developer agreements that were concluded within 2 years from the date of entry into force of the new act, i.e. from 1 July 2022 to 1 July 2024, in relation to which there was no transfer of ownership. Developers can still apply the old act to these contracts, with minor exceptions regarding the obligation to apply the provisions of the new act.

 

For further information, contact:

Katarzyna Łochowska, Lawyer

Gorazda, Świstuń, Wątroba i Partnerzy adwokaci i radcowie prawni, Kraków

e: katarzyna.lochowska@gsw.com.pl

 

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