Poland: Acquisition of real estate
Key titles to real estate include freehold title to any real estate (land, buildings and apartments), perpetual usufruct to land and leasehold titles to any real estate.
A freehold title allows a property to be used within the limits set by general and local regulations. The holder of a freehold title can use, encumber (e.g. with a mortgage) and dispose of the real estate.
Perpetual usufruct is a common title to land. It is established by a local or central government authority and resembles a freehold title. It is established for a specific purpose (usually to erect a building) and for a period of up to 99 years. The perpetual usufruct holder pays an annual fee (between 1-3% of the value of the land). A perpetual usufruct is disposable (though there may be some limitations) and can be encumbered (e.g. with a mortgage).
A leasehold title is created by a contract concluded with the owner of the land, building or apartment for a period of up to 30 years (or 10 years, if the landlord is not a business entity). The rights, obligations and transferability of leasehold title are regulated in a contract. A leasehold title cannot be encumbered.
Companies incorporated in countries belonging to the European Economic Area (EEA) and citizens of these countries can acquire freehold and perpetual usufruct titles to non-agricultural and non-forest real estate without a special permit. No permits are therefore required for freehold or perpetual usufruct titles to be acquired by companies incorporated in Poland (regardless of who their shareholders are). Very strict restrictions apply to the acquisition of agricultural and forest land by anyone. Entities incorporated outside the EEA and citizens of other countries must obtain a permit prior to acquiring real estate (with some exemptions for residential apartments), which is granted in a time-consuming procedure if the real estate is needed for business purposes. No restrictions apply to the leasing of real estate.
The acquisition of freehold and perpetual usufruct titles to real estate requires a contract to be concluded before a notary – an independent lawyer whose job is to ensure contract validity and fairness. Owners are registered in the land and mortgage registers kept by local district courts. Registers are accessible online.
Acquiring freehold and perpetual usufruct titles can be a lengthy process, requiring at least a basic due diligence investigation and several documents having to be obtained from local and central government authorities. The documents must be provided to the notary. Rights of first refusal are very often held by one or more local government authority and other government-related entities. If a right of first refusal applies, a conditional agreement must precede the final agreement.
