Real Estate Law in Poland

The Constitution of the Republic of Poland, which sets out the fundamental rights of the state, includes in its constitutional protection the right to property, the right to other property rights, and the right to inheritance. The right to property may be restricted only by law and only to the extent that it does not violate the essence of the right to property. The right to property is enjoyed by everyone, i.e., by natural persons irrespective of their nationality and by legal persons under private law, including commercial companies and housing cooperatives.

The fundamental legal act regulating real estate law including the acquisition of assets in Poland is the Act of 23 April 1964 – the Civil Code (Journal of Laws of 2024, No. 1061) (in Polish: Kodeks Cywilny). Among other things, it contains, the general definition of real estate and agricultural real estate, which is the basis for further interpretation of specific provisions. According to Article 46 of the Civil Code, real estate is a part of the surface of the ground constituting a separate object of ownership (land), as well as buildings permanently connected to the ground or parts of such buildings, if they constitute a separate object of ownership from the ground in accordance with specific provisions. On the other hand, according to Article 461 of the Civil Code, agricultural real estate (agricultural land) is real estate that is used or can be used for agricultural production activities in the field of plant and animal production, with the exception of horticulture, fruit, and fish production.
A special form of property rights in Poland is the perpetual usufruct. Land owned by the State Treasury and located within the administrative boundaries of cities and towns, as well as land owned by the State Treasury and located outside these boundaries but included in the city's spatial development plan and transferred for the performance of city management tasks, and land owned by local government units or their associations, may be transferred to natural and legal persons for perpetual usufruct. The usufructuary may use the land to the exclusion of other persons within the limits established by the laws and principles of social coexistence and by the agreement to lease the land to the State Treasury or to local government units or their associations for perpetual usufruct. Within the same limits, the perpetual usufructuary may dispose of his rights. The provisions on the transfer of ownership of real estate apply mutatis mutandis to the transfer of land for perpetual usufruct to the State Treasury or to local government units or associations thereof. A special feature of the right of perpetual usufruct is that buildings and other facilities erected by the perpetual usufructuary on land owned by the State Treasury or land owned by local government units or associations thereof are his property. The same applies to buildings and other structures acquired by the perpetual usufructuary in accordance with the relevant regulations when concluding a perpetual usufruct lease agreement. Land owned by the State Treasury or by local government units or their associations shall be leased in perpetual usufruct for a period of 99 years. In exceptional cases where the economic purpose of the perpetual usufruct does not require the land to be leased for 99 years, it may be leased for a shorter period, but not less than 40 years. During the last five years before the expiry of the term provided for in the agreement, the perpetual usufructuary may request an extension for a further period of between 40 and 99 years; however, the perpetual usufructuary may request such an extension earlier if the period of depreciation of the intended expenditure on the land used is significantly longer than the time remaining before the expiry of the term provided for in the agreement. The extension may be refused only on grounds of important public interest. An agreement to extend the perpetual usufruct should be concluded in the form of a notarial deed. The perpetual usufructuary must pay an annual fee for the duration of his right. An agreement for the transfer of land to the State Treasury or of land belonging to local government units or their associations for perpetual usufruct may be terminated before the expiry of the term specified therein if the perpetual usufructuary uses the land in a manner clearly incompatible with the purpose specified in the agreement, in particular if, contrary to the agreement, the usufructuary fails to erect the buildings or installations specified therein.

In the Polish legal system, there is also an institution of limited rights in rem, which are: usufruct, easement, pledge, co-ownership of premises and mortgage.

The basic forms of transfer of ownership are:

• Sale and Purchase Agreement;
• Exchange Agreement (Umowa Zamiany);
• Donation Agreement (Umowa Darowizny);
• Real Estate Transfer Agreement; or
• Any other agreement obliging the transfer of ownership of the object specified as to identity.
  

The transfer of ownership of the real estate may not be subject to any conditions or time limits.

In the Polish legal system, it is possible to acquire ownership of real estate by means of a prescription. This means that a holder of real estate who is not the owner of the real estate acquires the ownership of the real estate if he/she has held the real estate for 20 years without interruption as a spontaneous possessor unless he/she has acquired the ownership in bad faith. After 30 years, the owner of the real estate acquires the ownership of the real estate, even if he or she acquired the ownership in bad faith.

In the case of sale of real estate in Poland, in some circumstances there may be a reservation of the right of pre-emption, which may apply to certain land, e.g., forests, agricultural land, in favor of certain entities such as the State Treasury, local government units, a person engaged in agricultural activity. The property to which the right of pre-emption applies may be sold to a third party only on condition that the person entitled to the right of pre-emption does not exercise it. The right of pre-emption shall be exercised by notice to the debtor. If the conclusion of a sale and purchase agreement of the real estate to which the right of pre-emption applies requires the use of a particular form, the declaration of the exercise of the right of pre-emption shall be made in the same form.

Pre-emption provisions have been included in various acts in Poland, examples of which are listed below:

Civil Code

If a co-owner of an agricultural property sells his co-ownership share or part of it, the other co-owners have the pre-emptive right if they operate an agricultural holding on common land. However, this does not apply if the co-owner who also manages an agricultural holding sells his share property together with that holding or if the purchaser is another co-owner or a person who would inherit the holding from the seller.

The Property Management Act of 21 August 1997 (Journal of Laws of 2024, No. 1145)

The municipality has the pre-emption right of first refusal on the sale of, inter alia, properties listed in the Register of Historic Buildings or the right of perpetual usufruct of such properties.

The Revitalization Act of 9 October 2015 (Journal of Laws of 2024, No. 278):

The Municipal Council may establish the pre-emptive right for the benefit of the municipality to purchase real estate properties located within the revitalization area or the designated as revitalization sub-areas.

The Forest Act of 28 September 1991 (Journal of Laws of 2024, No. 530):

In the case of the sale by a natural person, a legal person, or an organizational unit without legal personality, to which legal capacity has been conferred by law, of land not owned by the State Treasury which is:

• Registered as forest in the land and buildings register;
• Designated for afforestation in accordance with the local spatial development plan or the decision on the conditions for land development; or
• Covered by a simplified forest management plan or a decision of the district governor on forest inventory
  

The State Treasury, represented by the State Forests, has a pre-emptive right by law to purchase such land.

Act on Formation of the Agricultural System of 11 April 2003 (Journal of Laws of 2024, No. 423):

• In the case of the sale of agricultural real estate, the right of pre-emption of the lessee (dzierżawca) is granted by law if:
• The lease is made in writing, has a fixed date and has been exercised for at least three years from that date; and
• The agricultural real estate acquired is part of the family holding of the lessee.
  

In the absence of a person entitled to pre-emption or in the event of failure to exercise the right of pre-emption, the right of pre-emption shall be vested by law in the National Agricultural Support Centre (Krajowy Ośrodek Wsparcia Rolnictwa), acting on behalf of the State Treasury. Where the right of pre-emption of agricultural real estate is vested by law in several entities, the National Agricultural Support Centre acting on behalf of the State Treasury, shall have priority in the exercise of the right of pre-emption, except for the priority by law of another entitled person acting on behalf of the State Treasury.

There are also restrictions on the acquisition of real estate by foreigners in Poland. According to the provisions of the Act of 24 March 1920 on the Acquisition of Real Estate by Foreigners (Journal of Laws of 2017, No. 2278): The acquisition of real estate by a foreigner requires a permit. The permit is issued by administrative decision by the Minister of the Interior if the Minister of National Defence does not object and, in the case of agricultural property, if the Minister of Rural Development does not object.

A foreigner within the meaning of the Act is:

• A natural person who is not a Polish citizen;
• A legal entity domiciled abroad;
• An unincorporated association of the above-mentioned persons with its registered office abroad, established in accordance with the legislation of a foreign country; or
• Legal entities and unincorporated commercial companies having their registered office in the Republic of Poland and directly or indirectly controlled by persons or companies listed in the above points.
  

The acquisition of real estate by a foreigner in violation of the law is void.

There are two main property registers in Poland, which are:

• Land and Mortgage Register (księgi wieczyste); and
• Land and Building Register (ewidencja gruntów i budynków).
  

Land and Mortgage Registers were systematized in the Act of 6 July 1982 on Land and Mortgage Registers (Journal of Laws of 2023, No 1984). Pursuant to the Act, land and mortgage registers are kept for the purpose of establishing the legal status of real estate and may also be kept for the purpose of establishing the legal status of cooperative ownership of premises. Land and Mortgage Registers are open to the public.

A very important principle in the Polish legal system is the presumption of conformity of the Land and Mortgage Register with the actual legal status. In the event of a discrepancy between the legal status of a real property recorded in the Land and Mortgage Register and the actual legal status, the contents of the Register are resolved in favor of the person who acquired the property or other real right through a legal transaction with a person entitled to do so according to the contents of the Register; this institution is called the guarantee of public credibility of the Land and Mortgage Register (rękojmia wiary publicznej ksiąg wieczystych). The guarantee of the public credibility of the land and mortgage registers does not protect dispositions made free of charge or to a purchaser acting in bad faith. The guarantee of the public credibility of the land and mortgage register is excluded by a reference to an application, a complaint against a decision of a court registrar, an appeal or a cassation appeal and a warning regarding the discrepancy between the legal status recorded in the land and mortgage register and the actual legal status of a property. In addition to rights in rem, the Real Estate and Mortgage Register may also show personal rights and claims, such as: the right of lease or tenancy, the right of pre-emption, the right of life, the right to transfer ownership of real estate or perpetual usufruct or to establish a limited right in rem.

The Land and Mortgage Register is divided into four sections:

• The first contains the description of the real estate and the entries of rights relating to its ownership;
• The second contains entries relating to ownership and perpetual usufruct;
• The third is intended for entries relating to restricted rights in rem, with the exception of mortgages, for entries relating to restrictions on the disposal of real property or perpetual usufruct and for entries relating to other rights and claims, with the exception of claims relating to mortgages; and
• The fourth is for entries concerning mortgages.
  

Land and Mortgage Registers are created and maintained in the ICT system. The basis for the registration of real estate in the Land and Mortgage Register is the data from the Land and Building Register.

The Land and Building Register is regulated by the Act of 17 May 1989. Geodetic and Cartographic Law (Journal of Laws of 2024, No 1151).

The Land and Building Register contains information on:

• Land - its location, boundaries, area, types of land use and their qualification classes, references to land registers or sets of documents if they have been established for the real estate on which the land is situated;
• Buildings - their location, use, function, and general technical data; and
• Premises - their location, utility functions and area.
  

The data contained in the cadastre form the basis for economic planning, spatial planning, tax and benefit assessment, cadastral designations, public statistics, real estate management and the farm register. The cadastre covers the territory of the Republic of Poland with the exception of the territorial sea.

The surface units of country subdivision for the purposes of records are:

• Evidential unit (jednostka ewidencyjna);
• Evidential district (obręb ewidencyjny); and
• Cadastral plot (działka ewidencyjna).
  

The evidential unit is the area of the municipality. In the case of urban-rural municipalities, two registration units are established - one for the urban area and one for the rural part of the municipality. In cities where there are separate districts or delegations, the evidential unit may be the area of the district or delegation. The evidential unit is divided into evidential districts. In rural areas, an evidential district may comprise the whole village with its adjacent physiographic objects or a separate part of it. In urban areas, an evidential district may comprise the whole town or a delimited part of it. A cadastral parcel is a contiguous area of land within a cadastral district, legally homogeneous and separated from its surroundings by the boundaries of cadastral parcels. Within the cadastral district, a cadastral parcel is identified by its number, which is a natural number.

The land uses shown in the records are divided into the following groups

• Agricultural land;
• Forest and wooded land;
• Built-up and urbanized land;
• Land under water; and
• Other land.
  

Data from the cadastral database is visualized in the form of a cadastral map.

Representations and warranties are widely used in Polish legal transactions. They constitute a form of declaration of will which creates contractual obligations between the parties, and their breach gives rise to contractual liability in accordance with the general principles of the Civil Code. It is important to remember that they are added to a contract by the will of the parties. The Polish legal system does not regulate representations and warranties; however, due to the fact that Polish law applies the principle of freedom of contract, the parties themselves may decide to include them in the contract in order to secure their interests and the distribution of risks. For this purpose, it is appropriate for the parties to seek assistance from attorneys specialized in the field.

The basic representations that are likely to be included in any contract are representations as to the person of the seller and the seller's ability to enter into the sale agreement. Such representations might include, for example, that the seller has received all necessary approvals from the company's bodies to dispose of the shares; that no bankruptcy or other reorganization proceedings have been commenced against the seller.

Other representations and warranties made by the vendor include matters relating to the legal status of the property itself. These usually arise after due diligence has been carried out on the real estate. Examples of such representations are those relating to the accuracy of the acquisition of title to the property, the determination of the absence of third party rights or claims and the access of the property to a public road.

The seller's assurances regarding the quality of the goods affect the warranty for defects in the goods sold, which is established in the Polish legal system. This defect consists in the fact that the sold item does not comply with the agreement, in particular:

• It does not have the characteristics that such an object should have in view of the purpose specified in the contract or as a result of the circumstances or intended use;
• Does not have the qualities which the seller has assured the buyer of, including by way of a sample or model;
• Is not fit for the purpose stated by the buyer to the seller at the time of the conclusion of the contract and the seller has not expressed any reservations as to that purpose; or
• Has been delivered to the buyer in an incomplete condition.
  

The seller is exempt from liability under the warranty if the buyer was aware of the defect at the time the contract was concluded. If the goods sold have a defect, the buyer may reduce the price or rescind the contract, unless the seller immediately and without undue inconvenience to the buyer replaces the defective goods with non-defective goods or remedies the defect. This restriction shall not apply if the goods have already been replaced or repaired by the seller or if the seller has failed to comply with its obligation to replace the goods or remedy the defect.

In this context, it is important to emphasize the importance of due diligence report, because the more accurate the seller's representations about the real estate being sold, the greater the extent of the seller's liability for its defects, since the moment there is a misrepresentation, the seller's liability is triggered.

The basic rules governing mortgages are set out in the Act of 6 July 1982 on land registers and mortgages (Journal of Laws of 2023, No. 1984).

A mortgage is a limited right in rem. A mortgage requires registration in the Land and Mortgage Register and is entered in Section IV of the Land and Mortgage Register. It is recorded in Section IV of the Land and Mortgage Register. It is created to secure a specific claim arising from a specific legal relationship; a property may be encumbered with a right under which a creditor may seek satisfaction from the real estate irrespective of who has become the owner and with priority over the personal creditors of the real estate owner.

The subject of the mortgage may also be:

• Perpetual usufruct together with the buildings and installations on the land in use owned by the perpetual usufructuary;
• Co-ownership of premises (spółdzielcze własnościowe prawo do lokalu); and
• Debts secured by a mortgage.

A mortgage secures a monetary claim, including a future claim. A mortgage secures a claim up to a certain amount of money. If the mortgage is too large, the owner of the mortgaged property can ask for the mortgage to be reduced. A contractual mortgage can also secure several claims from different legal relationships to the same creditor. A mortgage secures claims for interest and awarded legal costs up to the amount of the mortgage, as well as other claims for incidental benefits, if they are mentioned in the document that forms the basis for the registration of the mortgage in the Land Register. The mortgagor may claim satisfaction from the mortgaged property, notwithstanding the limitation of the debtor's liability under the law of succession.

A mortgage on real estate also encumbers its appurtenances. The appurtenances to the real estate are subject to the mortgage even after they have been removed, as long as they remain on the real estate, unless they have been disposed of in accordance with the principles of sound management and the contract of disposal is evidenced by a written document with an officially certified date. The mortgage covers the owner's right to rent, but until the property is repossessed by the mortgagor, the owner may collect the rent.

The extinguishment of a claim secured by a mortgage result in the extinguishment of the mortgage, unless further secured claims arise in the future from the legal relationship in question.

In addition, pledges are also a common form of security in real estate financing. In Poland, there are various types of pledges, such as a pledge on goods or a pledge on rights, and there is also a special form of pledge, namely a registered pledge. It should be noted, however, that real estate as such cannot be pledged.

A lease agreement or a tenancy agreement (umowa dzierżawy) is governed by the provisions of the Civil Code, but its content is mainly determined by the arrangements made between the entrepreneurs in the agreement. In accordance with the principle of freedom of contract, entrepreneurs are free to determine the terms of the legal relationship they enter into, as long as they do not contravene the principles of social coexistence or the law (for example, it is not possible to enter into a lease agreement for a specific object in order to use it to commit a crime). Under a lease agreement, the lessor (wydzierżawiający) undertakes to provide the lessee (dzierżawca) with an asset for use and benefit for a specified or unspecified period of time, and the lessee undertakes to pay the lessor the agreed rent. A lease may relate to a “goods” - this definition includes both movable and immovable property (e.g., business premises or a farm).

A special form of contract is provided for:

• An enterprise lease agreement (umowy dzierżawy przedsiębiorstwa) - the agreement should be made in writing with notarized signatures;
• A property lease for more than one year - the agreement should be made in writing; and
• An agricultural lease providing for a right of first refusal - the agreement should be made in writing with notarized signatures.
  

The agreement should contain additional provisions, for example on termination, penalties, damages, jurisdiction for disputes and post-contractual settlements.

The nature of a lease agreement (umowa najmu) and a tenancy agreement (umowa dzierżawy) is very similar, which is confirmed by the legislation itself - in matters not regulated by the Act, the provisions of a lease agreement apply to a tenancy agreement. In both cases, the entrepreneur leasing or renting the object is obliged to pay rent, but in the case of a lease, his rights under the concluded agreement are more extensive. The lessor has the right not only to use the thing, but also to receive benefits.

Please note that in the Polish legal system there are two types of contracts: lease and tenancy. The differences between them have been described above. Importantly, a tenancy (użytkowanie) in English is often translated as a lease. In this analysis we try to distinguish between the two by adding Polish translations.

A business can also be leased. This is not a typical solution, as a lease (dzierżawa) is usually for service premises or farms, but a business can be leased, for example, if an heir does not want to take over the running of the business. The lease of a business should be in writing with notarized signatures. If the business includes real estate a notarial deed is required. The fact that a business has been leased must be disclosed in the Business Register (KRS - ewidencja działalności gospodarczej). In the case of a lease of an enterprise, it is important that the subject matter of the lease be fully specified - a lease of an enterprise may include, for example, patents, concessions, and licenses necessary for the operation of the enterprise.

In the case of a lease (dzierżawy) of company assets, the assets of the company, e.g., machinery, equipment, stock, etc., are the subject of the lease. The lease agreement must specify the exact scope of the assets transferred and their value. If the company's assets are leased, the Accounting Act of 29 September 1994 Law (Journal of Laws of 2023, No. 120) requires the lessee to record the lease agreement in the accounts.

The basic administrative decision issued in connection with the planned construction of an established project is the building permit. The regulation of the building permit is provided in the Act of 7 July 1994 Building Law (Journal of Laws of 2024, No. 725). According to the Act, a building permit is defined as an administrative decision authorizing the commencement and execution of construction or the performance of construction works other than the construction of a building. Construction work may be commenced only on the basis of a decision on a building permit issued by an architectural and construction administration authority. The law contains a closed catalogue of activities that do not require a building permit, but instead require a notification, and those that require neither a permit nor a notification. A building permit shall expire if construction has not commenced before the expiry of three years from the date on which the decision became final or construction has been interrupted for more than three years. A building permit may be transferred to a new developer if, inter alia, the developer attaches to the transfer application a declaration that he has taken over the conditions contained in the decision and the consent of the existing developer. The building permit can be issued after an environmental impact assessment has been carried out, if required, which leads us to the next necessary decision, the decision on environmental conditions.

The regulation of the environmental decision is provided in the Act of 3 October 2008 on the provision of information on the environment and its protection, public participation in environmental protection and environmental impact assessments (Journal of Laws of 2024, No. 1112). A decision on environmental conditions specifies how the investment (project) is to be carried out in order to cause the least possible damage to the environment. It is issued after the authority has carried out an assessment of the project's impact on the environment and is required if the project is considered to have a significant impact on the environment. Projects that may have a significant impact on the environment are divided into those that may and those that may not:

• Always significantly affect the environment; and
• Potentially significant affect the environment.
  

For projects that are always likely to have significant effects on the environment, the authorities are required to carry out an environmental impact assessment. For projects that are likely to have a potentially significant effect on the environment, the authority to which you submit your application will decide whether to carry out an environmental impact assessment. In the environmental decision, the authority may include environmental requirements to be met by the developer.

Subsequently, if there is no valid zoning plan for the property in question, it is necessary to obtain a zoning decision, which is regulated by the Law of 27 March 2003 on Planning and Spatial Development (Journal of Laws of 2024, No. 1130). As a rule, the zoning decision is issued by the mayor or president of the city. The zoning decision shall not create any rights over the land and shall not infringe the property rights and entitlements of third parties.

The zoning decision and the environmental decision must be obtained before applying for building permit.

As part of the investment process, it may also be necessary to obtain a decision to exclude land from agricultural production or permission to cut down trees. In some cases, it may also be necessary to obtain a water permit in accordance with the provisions of the Act of 20 July 2017. Water law (Journal of Laws of 2024, No. 1087). A water permit must be obtained, among other things, in the following cases: water services permit: abstraction of groundwater, discharge of sewage into water or land, special water use: use of water in ponds and ditches, land drainage.

The final approval that completes the investment process is a permit to use the constructed facility which is called the occupancy permit. Regulations concerning this decision are also included in the Building Act. This decision must be obtained before the facility can be used. The construction supervision authority issues a decision on the occupancy permit after a mandatory inspection. In the occupancy permit, the construction supervision authority may specify the conditions for the use of the object or make its use dependent on the completion of certain construction works within a specified period of time.

The Corporate Sustainability Reporting Directive (CSRD) serves as the primary legal framework governing ESG reporting requirements in Poland, incorporating the obligations previously set forth under the Non-Financial Reporting Directive (NFRD).

Scope of application

The CSRD imposes reporting obligations on the following entities:

1. Listed entitles: Companies listed on regulated markets within the European Union (EU), including small and medium-sized enterprises (SMEs).

2. Threshold criteria: Companies that meet at least two of the following criteria:

• Have a workforce of more than 250 employees;
• Report a net turnover exceeding €40 million; or
• Possess a balance sheet total exceeding €20 million.

3. Non-EU entities and EU presence: Entities incorporated outside the EU but operating with the EU that:

• Generate a net turnover exceeding €150 million within the EU, and either have subsidiary companies within the scope of the CSRD or maintain a branch within the EU with an annual net turnover exceeding €40 million.

Exemptions: It should be noted that subsidiary entities may be exempted from the requirement to publish sustainability reports, if they satisfy specific conditions as prescribed under the CSRD

• Implementation timeline for the CSRD
• 2025: Applies to entities covered by the NFRD and those meeting CSRD thresholds in 2024;
• 2026: Applies to all large companies; and
• 2027: Extends to all SMEs listed on regulated markets.

European Sustainability Reporting Standards (ESRS)
The ESRS are applicable to entities governed by the CSRD as detailed above. The ESRS are comprised of two principal sections:

1. ESRS 1 (General Requirements): Establishes the conceptual framework for reporting rules and definitions; and

2. ESRS 2 (General Disclosures): Outlines cross-sectional requirements for the disclosure of information, including aspects related to management and strategy.

Reporting process

1. Disclosure requirements: The ESRS delineate requirements for the location and presentation of disclosed information. The report must include four components:

• General information (ESRS 2);
• Environmental information (ESRS E1);
• Social information (ESRS S1); and
• Governance information (ESRS G1).

2. Double materiality: Reports must adhere to the principles
of double materiality, addressing both impact and financial
aspects.

3. Assessment: Double materiality is assessed by identifying
Impacts, Risks, and Opportunities (IROs), engaging
stakeholders, and determining the relevance of IROs.

4. Documentation: Identification and documentation of
material IROs.

Tax rate and payment obligation: The real estate tax is imposed at a rate of 19% on the capital gain derived from the sale of real estate. The tax is payable by the end of April of the year following the year in which the sale occurred, and it must be calculated in accordance with the annual PIT-39 tax return.

Exemptions from tax liability: The seller may be exempt from the obligation to pay the real estate sale tax under the following conditions:

• The sale occurs more than five years after the acquisition of the property, with the five-year period commencing on 1 January of the year following the acquisition;
• The proceeds from the sale are allocated towards the seller’s personal housing purposes within three years from the end of the tax year in which the sale took place; or
• The transaction does not result in capital gain.

Download: Handbook for Real Estate Transactions