Buying Apartment in Poland
- Property purchase in Poland
- Buying Apartment
- Buying a House
- Buying Land
- Property Due Diligence
- Polish Property Registers
- Mortgage in Poland
- Property Purchase and Tax
- Buying Property by Foreigner
- Property lease
- Construction Law
Apartments in Poland
Apartments are one of the most popular assets in the Polish real estate market. In Poland, apartments are purchased not only to satisfy own housing needs of the buyer, but also as to invest in assets that are considered safe, grow in value over time and can generate profit from rent. The sustained and strong demand is additionally driven by the fact that foreign nationals can buy property in Poland with practically no restrictions.
Learn more about: buying a property in Poland by foreign nationals.
An apartment from the perspective of Polish law
Polish law allows purchase of an apartment that meets the condition of being self-contained dwelling unit, i.e. a room or a set of rooms separated from the rest of the building with permanent walls, to be inhabited by people, which – along with auxiliary rooms – is intended to satisfy housing needs.
Each apartment in Poland has a separate land and mortgage register number which contains details about, among others, the location and the area of the unit and keeps a record of its current legal status (title, mortgages, third-party rights).
Co-ownership of common areas and land related to the apartment
The owner of an apartment located in a building is also a co-owner of the common areas in the building where the apartment is located, as well as the land under the building. A share in the common areas is attached to the title to the dwelling unit. This means that when you buy an apartment, you also buy a share in the common areas and become a member of a housing community that is made up of all the owners of all apartments within a given property. Polish law does not allow to the purchase an apartment without a share in the common areas or the purchase of a share in the common areas without the title to an apartment.
Buying new or second hand apartment
The type of an agreement that you should execute to buy an apartment in Poland depends mainly on who is the seller of the apartment and the market (primary or secondary) in which the transaction takes place.
Primary-market apartments are sold by developers on the basis of a development agreement executed in the form of a notarial act when the project is still under construction. A developer is a business entity whose business operations involve real estate development. Under a development agreement, the developer undertakes to erect a building and transfer the title to an apartment to the buyer. Once the construction of the building ends and the apartment acceptance procedure is completed, the developer and the buyer enter into another agreement in the form of a notarial act whereby they transfer the title to the apartment to the buyer.
Learn more about: development agreements.
Secondary-market apartments are sold by entities other than developers. These apartments can be purchased on the basis of a sale agreement in the form of a notarial act.
Obligatory elements of apartment purchase agreement
An agreement to sell an apartment in Poland should include at least the following:
- the exact designation of the apartment, including the location and the area as stated in the land and buildings register, the number of the land and mortgage register kept for the apartment and of the land and mortgage register kept separately for the common areas,
- the sale price and the due payment date,
- provisions binding the seller to hand over the apartment to the buyer on a specific date.
In practice, apartment sale agreements include as well:
- parties’ representations (warranties) relating to the technical condition of the apartment, the legal status of the property, including the entries in the land and mortgage register and the existence of third-party rights and claims that have not been disclosed in the land and mortgage register (or the absence thereof),
- price payment terms – e.g. notarial deposit, wire transfer immediately after the execution of the agreement, payment using funds from a mortgage loan,
- provisions relating to the repayment of a mortgage on the apartment with a portion of the sale price,
- parties’ statements on submission to enforcement in respect of the obligation to hand over the apartment and the obligation to pay the sale price – these provisions open the way to a simpler enforcement procedure with respect to contractual obligations in the event that the other party fails to keep their end of the transaction within the agreed time limit.
Research of legal status of an apartment
Before the execution of the apartment sale agreement, you should request the seller to hand over documents confirming the current legal status of the property in question.
- some documents will be required by law,
- while others are not require but diligent / careful buyer should be able to review and analyze them prior to the transaction in order to rule out certain risks.
Key documents that every buyer should obtain before buying an apartment in Poland:
- a copy of the land and mortgage register – it is a public document confirming the current legal status of a property, containing key information, such as:
- the details of the apartment owner,
- the details of disclosed third-party rights and
- claims relating to the apartment (e.g. the right of habitation, the right of usufruct, lifetime interest in a property);
- extracts from the land and building register (extract from the land register, extract from dwelling unit register (rejestr lokali) or records (kartoteka lokali)) – these public documents confirm the location and the area of a land lot, the location, number and the area of an apartment, the number of rooms, the permitted use of the unit;
- a certificate confirming the existence of a revitalization area or a special revitalization zone (or the absence thereof) in respect of the area where the apartment is located – this certificate shows if the apartment is encumbered with the right of preemption held by the municipality (gmina) where the property is located. The preemption right may be created to the benefit of the municipality if a given address is covered by a revitalization area or a special revitalization zone;
- if the apartment was acquired by the seller by way of inheritance or gift, the seller will need a written consent for the disposal of an apartment acquired by inheritance or gift issued by the tax office head or a certificate issued by the tax office head confirming that the acquisition of an apartment by way of inheritance or gift is exempt from the inheritance and gift tax or the due tax was paid or the statute of limitation on the obligation to pay the tax expired;
- the clearance certificate issued by the housing community – in accordance with legal regulations, not only the housing community, but also the owner of the apartment is responsible for liabilities concerning the common areas. The owner’s responsibility is proportional to the share they hold in the common areas. On the basis of the housing community’s certificate, the buyer can evaluate the potential risk related to the housing community’s debts;
- a certificate confirming that nobody is registered as a resident of the apartment – although the mere fact that a person is registered as a resident of an apartment is not a title authorizing them use of that apartment, the risk that an apartment is occupied by anyone other than the seller is lower if such a certificate is obtained;
- if the land and mortgage register mentions any mortgages, e.g., ones established as a security for a bank loan taken out by the seller, it is necessary to obtain the mortgagee’s statement confirming the current balance of the debt before executing the sale agreement.
- On that basis, the parties will agree in the sale agreement that a portion of the price equal to the outstanding mortgage loan will be paid by the buyer directly to the account of the mortgagee (the bank) as a repayment of the seller’s debt secured with the mortgage.
- In the case where the mortgagee is not a bank or a public institution, but a different entity, it is also advisable to examine the documents establishing the mortgage, in addition to the mortgagee’s statement.
- This way, the buyer can verify whether the payment of the sum specified in the statement will be sufficient to satisfy the entire debt secured with the mortgage.
- Once the mortgagee receives the payment, they are required to issue a document that is necessary to have the mortgage stricken off of the land and mortgage register.
- If there are any doubts as to whether the mortgagee will provide the document after receiving the payment, the buyer should make sure that the document required to have the mortgage stricken off is deposited with a civil-law notary before the execution of the sale agreement. It will be handed over to the buyer upon presentation of proof to the notary that the balance of the mortgage loan was repaid;
- a certificate confirming whether or not the building where the apartment to be bought is located is listed in the heritage register (rejestr zabytków) – some construction works, including apartment renovation, may require an additional permit from a historic conservation officer in the case of old, historic buildings listed in the heritage register;
- a certificate confirming whether or not any proceedings are pending with respect to the building where the apartment to be bought is located in connection with illegal construction or proceedings which may lead to a demolition order – this certificate may be especially important in the case where the apartment about to be purchased is located in an old building with incomplete documentation regarding the construction process;
- an energy performance certificate – the law requires the seller of the title to a dwelling unit to provide this document to the buyer. Otherwise, the buyer may send a written notice to the seller within 14 days from the execution of the agreement to transfer the title, requesting the seller to comply with this obligation within 2 months from receiving the notice. In the case where the energy performance certificate is not provided within 2 months from the receipt of the notice, the buyer can, no later than 12 months from the execution of the agreement, have the energy performance certificate drawn up at the seller’s expense.
Buying an apartment – taxes
If you buy an apartment from the primary market with an area of up to 150 m2, you will pay VAT at the rate of 8%. In the case of apartments with an area of more than 150 m2, the part of the space that exceeds this limit is taxed at 23%. VAT is included in the price paid to the seller, who is usually a developer or a construction business selling ready-to-move-in apartments.
You will not pay VAT, if you buy an apartment from the secondary market. Instead, you will be required to pay the tax on civil-law transactions at 2% of the price of the apartment. This tax is collected by a civil-law notary upon the execution of the property purchase agreement.
Learn more about: taxes paid in connection with buying a property in Poland.