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Restrictions in the real estate transactions according to the bill on the counteracting usury

On February 18, 2019, the Ministry of Justice published on its website a bill amending certain acts in order to counteract usury, called the anti-usury law, with the justification for the bill (link).

The intention of the authors of the bill was the new regulations aiming to „undertake comprehensive and coordinated actions, both on criminal grounds and through interference in civil law relations, aimed at eliminating the pathology of granting loans of usurious character” (see: justification to the anti-usury bill – link). The bill implements number of changes in the regulations, not only regarding the rules for granting loans by banks, loan institutions or private individuals, but is also introducing some restrictions in the real estate transactions. The bill includes, among others:

1.the prohibition of conclusion of an agreement requiring a natural person to transfer ownership which satisfies his housing needs in order to secure claims arising from a contract not directly related to the economic or professional activity of that person. Conclusion of such agreement transferring ownership with a natural person, including a flat or a house, to secure the repayment of its liability under the loan agreement will result in the invalidity of the contract under the law. However the above prohibition will not apply to mortgage credit contracts;

2.restrictions on the ability to sell the real estate in enforcement proceedings. The bill provides that the auction of a residential flat or land property built-up with a residential building, which satisfies the debtor’s housing needs, can take place if the amount of the principal charge is at least the equivalent of one-twentieth of the total estimated amount of this property. The above rule will not apply to receivables due to the State Treasury, arising from a judgment issued in criminal proceedings or to a situation where the consent to set the date of the auction was expressed by the debtor to whom the property belongs or by the court. The court’s consent to the real estate auction may be granted at the request of the creditor, if it is supported by the amount and nature of the claimed receivables or the inability to satisfy the creditor from other assets of the debtor. The court’s decision to give consent will be subject to a complaint. The planned changes are to prevent the enforcement against the real estate in order to satisfy relatively small claims of the creditor at the expense of depriving the debtor of a house or flat. On the other hand, those changes will affect the extension of the enforcement proceedings in the event that the only property of the debtor suitable for execution is the property that he or she inhabits. In such a situation, the creditor will have to obtain the consent of the Court to set the date of the auction, which will involve additional formalities and extending the time of execution.

Currently, the anti-usury bill is at the stage of interministerial consultations, public consultations and opinions.

Author team leader DKP Legal Marcin Kręglewski
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