Buying a property in Poland by a foreigner

Buying a property in Poland by a foreigner
Marek Cieślak

Marek Cieślak

CEO CGO Finance

More and more foreigners are interested in buying a property in Poland. What does the purchase of real estate entail when it comes to legal aspects? We answer in the article below.

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Table of Contents

What to consider before buying a property in Poland?

Before buying a property, you should analyze its legal status. You can check it in:

  • land and mortgage registers. These are public electronic records that describe the legal status of the property. You can find information about the property’s size, ownership title, or mortgage. The data in these registers are presumed to be accurate and reflect the real legal status.
  • due diligence process. It is a thorough assessment of the property’s legal and formal aspects. It is especially important for properties with significant investment value.
  • the local spatial development plan. It is a local legal act that outlines the current and future land use within a municipality, including urban areas. It is the basis for issuing building permits. It can help verify the location of the property and future investment plans of the area.

Buying a property in Poland by a foreigner – forms of concluding an agreement

A preliminary agreement usually precedes the sales agreement. The purpose of this agreement is to:

  • oblige the parties to conclude a future property sales agreement,
  • secures the interests of both parties. It guarantees the conclusion of the final contract. Especially when the parties are waiting, for example, for a permit or a credit decision.

The buyer is obliged to pay a portion of the agreed price (usually  5-10%) as a deposit. The preliminary agreement should include essential clauses of the sales agreement, such as:

  • the parties involved,
  • the subject of the sale,
  • the price of the property,
  • date of payment,
  • conditions for concluding the sales agreement.

The absence of a specific deadline for the sales agreement means it should be concluded within a period set by the party entitled to request it. If both parties have this right and each specifies a different deadline, the first to make a declaration takes priority. After a year from signing the preliminary agreement, it cannot be enforced.

The preliminary agreement may be concluded in writing. If the agreement is not executed, the buyer can demand compensation. Conclusion in the form of a notarial deed:

  • provides greater protection for the parties. You can pursue the conclusion of the contract in court.
  • is the basis for entering the buyer’s claim in the land and mortgage register.

Parties may also enter into a developer’s agreement. Based on it, the developer undertakes to establish or transfer to the buyer, after completion of the development project:

  • the right of separate title to a residential unit,
  • the ownership rights to a property with a single-family house,
  • perpetual usufruct of land and ownership of a single-family house.

The buyer undertakes to fulfil monetary performance for the developer as a payment for the acquisition price of this right. The developer’s agreement should be in the form of a notarial deed and include, among other things:

  • the property’s description, including the area and layout of the premises,
  • the date of transferring ownership,
  • price, date and terms of payment,
  • interest and contractual penalties for the parties.

The actual sales agreement for the property is concluded in a notarial deed. Failure to follow this form renders the transaction invalid. The agreement signed at a notary public should specify at least:

  • the parties involved,
  • a detailed description of the property and its legal status,
  • the price,
  • the payment method,
  • date of payment,
  • date and conditions for handing over the property.

The presence of both the seller and the buyer is required for concluding the sales agreement. The document should be in the Polish language. If either party is a foreigner, a translator must be present. Upon signing the sales agreement, the property’s ownership is transferred to the buyer.

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Buying a property in Poland by a foreigner – payment methods

The buyer must pay for the property within the agreed time frame. This payment can be made at the notary’s office and in his presence:

  • by bank transfer,
  • in cash.

The notarial deed may include a declaration from the buyer, consenting to execution and obligating themselves to pay a specified price or fulfil other obligations indicated in the deed. In case of problems with payment, the creditor can request the execution clause for the enforcement title. Then, he can initiate an enforcement procedure (Art. 777§ 1 points 4 and 5 of the Code of Civil Procedure).

What should the property transfer and acceptance protocol look like?

After the sale, the parties arrange to inspect the property. The property transfer and acceptance protocol is prepared. It confirms:

  • technical condition of the property at the time of transfer (including equipment and meter readings),
  • the transfer of the property to the buyer.

The protocol should be prepared in two identical copies. It should include all remarks about the technical condition of the property. After signing the protocol, the seller provides items necessary for accessing the property. Usually, these are keys and codes.

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What is a perpetual usufruct?

Perpetual usufruct is a special form of ownership of state-owned lands. The transfer into perpetual usufruct occurs through an agreement between the State Treasury or a local government unit and the perpetual usufructuary (a natural or legal person) for a period of 99 years, or in exceptional cases, 40 years.

The land granted for perpetual usufruct remains the property of the State Treasury or the local government unit. The perpetual usufructuary must pay an annual fee for the perpetual usufruct. He has the right to own, use, and dispose of the real estate. Any buildings constructed on the land become the perpetual usufructuary’s property.

How can a foreigner buy a property in Poland?

Foreigners need a permit to buy a house in Poland, except for specific legal exceptions. They can obtain ownership or perpetual usufruct rights based on any legal event.

The permission is granted in the form of an administrative decision. The Minister responsible for internal affairs issues the document. It is granted upon the foreigner’s request, provided that:

  • it poses no threat to the defence and security of the state or to public order,
  • it does not contradict social policy or public health considerations
  • he demonstrates ties with Poland.

The permit should specify in particular:

  • the buyer’s and seller’s data,
  • the subject of the acquisition,
  • special conditions set by the Act.

A foreigner intending to buy a property may apply for a promise of a permit issuance. It is valid for one year from issuance. During this time, permission to buy property cannot be denied unless statutory exceptions apply.

Buying a property in Poland by a foreigner – summary

Buying a property in Poland is a serious decision. It requires thorough consideration of various legal aspects and adherence to specific procedures. This ensures the safety of all parties involved and the integrity of economic transactions.

If you are interested in the above article and want to know more about the subject, we invite you to cooperate with us. Our experts are eager to support you. Contact us today and let us help you. If you simply need help establishing a family foundation, send us a message.

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Marek Cieślak

CEO CGO Finance