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• The sale contract is legally binding on the parties from the
time of its execution.
• The transfer deed is then submitted, usually by a notary,
for registration by the local court in the land and mortgage
register and also by local authorities in the land register.
• Title to ownership is transferred at the time the final contract
is executed. However, where perpetual usufruct is transferred,
registration thereof in the land and mortgage register is
required for its effectiveness.
• The seller is responsible for the correctness of legal title to
the real estate under the Civil Code, based on warranty for
physical and legal defects. Nevertheless, it is a common
practice for sellers to make representations as to title and
other issues. If representations on the legal or physical
conditions of the real estate are untrue, the seller may be
liable towards the buyer. The seller may also be responsible
under certain specific conditions for environmental damages.
Development agreement
• It is an agreement used for selling residential apartments
that have not been constructed yet. This special act provides
the purchaser with certain rights connected, inter alia, with
information about the investment and other issues.
COMMERCIAL LEASES
• Leases of buildings used for commercial purposes are covered
by general rules defined in the Civil Code. The Code provides
for a tenancy contract (najem) where the tenant is authorised
to use the thing (property, premises, etc.) or a lease contract
(dzierzawa) where the lessee is not only authorised to use the
thing but also to collect profits generated by the thing.
• Although many issues are freely negotiable (rent level,
rent indexation, potential renewal of the tenancy/lease,
contract duration – to certain extent – etc.), there are certain
restrictions under mandatory regulations that affect contents
of tenancy/lease contracts. These restrictions apply mainly to
defining the parties’ rights and obligations connected with:
Duration
• There are generally no restrictions on the tenancy/lease term;
the term can be either fixed or non-fixed. Nevertheless, in the
case of commercial tenancy contracts and all lease contracts,
an agreement executed for a period of more than 30 years is
deemed, on expiry of the 30-year period, to be executed for a
non-fixed term.
• Tenants/lessees do not have a statutory right to renew a
tenancy/lease. Under the freedom of contracts principle,
however, some provisions in this respect can be incorporated
in contracts.
Maintaining the subject of tenancy/lease
• Basically, the landlord/lessor has to hand the subject of
tenancy/lease over to the tenant/lessee in a condition
suitable for the agreed use and maintain it in this condition
throughout the tenancy/lease period. However, minor repairs
connected with day-to-day use are carried out by the tenant/
lessee.
Termination rules
• If the tenancy/lease term is non-fixed, it can be terminated
by notice; no grounds have to be given to make the notice
effective. A fixed term tenancy/lease can be terminated
for the reasons specified in the contract (e.g. arrears in
tenancy/lease payments, other breaches of major contractual
provisions).
• Moreover, there are certain statutory possibilities for the
landlord/lessor to terminate a tenancy/lease, which include:
–– the tenant/lessee using the subject of tenancy/lease
contrary to its purpose or in a manner contrary to that
agreed in the contract;
–– the subject of tenancy/lease is misused in a way leading
to the risk of it being lost or damaged;
–– the use of neighbouring premises in the building is made
difficult; and
–– arrears in rent payments for at least two full payment
periods occur (in the case of tenancy of premises and
lease contracts, termination on this basis has to be
preceded by additional actions taken by the landlord/
lessor).
• The tenant is entitled to terminate the tenancy effective
immediately if there are defects in the premises posing a
hazard to human health, even if the tenant was aware of
the defects when entering into the tenancy agreement. The
tenant can also terminate the tenancy if defects which make
the agreed use of the tenancy subject impossible are not
removed by the landlord when requested to do so, or if they
are not removable.
Transfer of business or real estate
• In the case of the landlord’s/lessor’s business being
transferred, the purchaser assumes the tenancy/lease. If
the real estate is sold, the new landlord/lessor is entitled to
terminate the tenancy/lease by notice, unless it is a specific
fixed-term tenancy/lease.
TAX
Direct acquisition of a property
CIT/PIT
• Income generated from the sale of real estate by corporate
income tax payers is subject to 19% CIT.
• The sale of real estate by individuals within the course of
business activities is subject to PIT at 19% or at a progressive
rate, depending on the taxation scheme chosen.
• The sale by an individual not performing business activities is
generally subject to 19% PIT. However, after a lapse of 5 years
counting from the end of the year in which the property was
acquired or built, the sale is PIT exempt.
• The sale price must not differ from the property market value.
Otherwise, tax authorities may assess revenues in accordance
with the market value.
VAT
• The sale of buildings, infrastructure or parts of buildings or
infrastructure, to the first acquirer or user after their:
–– construction; or
–– significant improvement (increase in the initial value by
30% or more), defined as the “first occupation”, or the
sale accomplished before the lapse of two years from
the first occupation is subject to VAT at 23% (8% for
residential real estate with certain limitations).
86 Investors Guide to Europe 2015