The law on housing cooperatives has passed into effect

Basic objectives of the law

The Law on housing cooperatives and the rules for the disposal of real estate belonging to the communal real estate stock to support the realization of housing projects – which is the law’s full name – stipulates that a group of at least three individuals, who are parties to either a housing cooperative or a civil partnership agreement, will have the opportunity to jointly realize a housing project for their own needs.  The law also provides for the possibility of housing associations to implement a housing project.

Importantly, the realization of projects within the framework of a housing cooperative is not intended to be used to carry out investments aimed at profit from the sale of the apartments created within the project. In fact, the purpose of the law is to facilitate the realization of investments by individuals to meet their own housing needs.

How does the lawmaker encourage the establishment of housing cooperatives?

Individuals wishing to carry out an investment within the framework of a housing cooperative can count on statutory solutions to encourage this type of cooperation. First of all, the law specifies the minimum requirements of a cooperative agreement, which will help strengthen legal certainty and transaction security.

The law stipulates that the municipal council may adopt a resolution to dispose of real estate belonging to the municipal real estate resource to members of housing cooperatives through sale by limited written tender. Within the framework of the tender, the municipality will be able to offer favorable and preferential terms, such as spreading the amount due for the acquisition of real estate in installments, crediting the price of, for example, the units separated in the development, and applying discounts on the price of real estate. At the same time, the municipality may reserve to itself the right to repurchase such real estate in the event that the housing project does not go ahead in accordance with the terms of the tender.

A cooperative is not a developer

It should be remembered that the protection instruments provided for in relations with professional entities, such as developers, as indicated in the Law of May 20, 2021 on the Protection of the Rights of the Purchaser of a Dwelling or Single-Family House and the Developer’s Guarantee Fund, do not apply to the housing cooperative contract. There is also no obligation to acquire property from a municipality in order to develop a housing project on it. The cooperative may also acquire land for investment on a commercial basis or use land owned by members.

We would like to remind you that specialists in the real estate department of our law firm provide specialized legal advice on the planning and implementation of real estate investments.