Expropriation of real estate under a contract of sale and the amount of damages

In the years 1958 – 1985, the Polish legal system was governed by the Act on the Principles and Procedure of Expropriation of Real Estate of March 12, 1958. Despite the fact that many years have elapsed since the expiry of the above-mentioned Act in 1985, until today administrative courts are pending numerous disputes arose over it.

In one such case, on April 22, 2020, the Supreme Administrative Court issued a judgment (I OSK 4224/18), in which it ruled that if the expropriation of real estate and the determination of damages for expropriation took place under a sale contract, there are no grounds for determination and payment of damages in the course of administrative proceedings conducted pursuant to the provisions of the Act of August 21, 1997 on real estate management. For, in legal terms, an administrative decision ruling on expropriation and determination of compensation cannot be equated with an agreement of the parties.

The above judgment relates to Art. 6 of the Act on the principles and procedure of expropriation of real estate of March 12, 1958, which allowed for expropriation of real estate in the form of a contract. In the contract, the parties stipulated a price that could not be higher than that established in accordance with the statutory rules of compensation.

The Supreme Administrative Court stated that although the analyzed provision limited the amount of the purchase price, the conclusion of the contract allowed the seller to obtain satisfaction faster, and more favorable terms of payment than the payment of compensation installments (see judgment of the Supreme Court of 4.1.2007, V CSK 403/06, Legalis).