Tax & Legal Highlights for Real Estate – July 2019
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1. Planned simplifications in issuing environmental decisions
On 9th July 2019 the Polish Government submitted to the Polish Parliament (PL: Sejm) a draft of amendment to the Act on Access to Information on the Environment and its Protection, Public Participation in Environmental Protection and Environmental Impact Assessments and some other acts. The draft project aims, among others, to simplify procedures related to execution of an investment process, in particular these related to obtaining environmental decisions, including preventing necessity to suspend proceedings aimed at issuing an environmental decision, in the event of death of a party to the proceedings or outdated data sa of the date proceedings were initiated. Subject of the amendment is also a definition of the area of investment’s impact, which will be determined according to a fixed distance criteria of 100 meters from the border of the area, where the project is planned to be carried out, regardless of the subdivision survey of this area.
2. Simplified conversion of perpetual usufruct under residential buildings
On 15th July 2019, an amendment to the Act of 20th July 2017 on Domestic Real Estate Resources and certain other acts was published in the Journal of Laws. The act should eliminate the problem of hindering transformation of land on which, apart from multi-family housing, coexist, among others, service, economic or commercial facilities, including garages or utility buildings. Transformation will be possible if the total usable area of non-residential buildings does not exceed 30% of the usable area of all buildings erected on a given property. In addition, the Act shall simplify execution of investments on lands, in which case, as a result of permanent change in the manner of land use, it is necessary to amend the purpose of perpetual usufruct determined under the decision or agreement. The amendment to the Act seems to solve for the benefit of investors the existing conflict between the intended use of the property in the local spatial development plan (or in the zoning decision) and the purpose of perpetual usufruct determined under the agreement or decision of a relevant authority, which is quite common in large cities. The new regulations will also affect housing communities – the Act introduces, among others, an obligatory appointment of a management board for communities including not seven, but three separate premises.
3. Developer being punished for using prohibited clauses in the standard agreements
Almost PLN 160,000 must be paid by one of developers in Poznań as a result of the decision of the President of the Office of Competition and Consumer Protection, according to which proposed standard developer agreements contain a number of prohibited clauses. The authority challenged, in particular (i) provision limiting the total amount of contractual penalties to 5% of the gross price for residential premises, in case the developer is in delay with meeting deadline for handover of residential premises, (ii) contractual stipulation that there is no obligation to settle the price for residential premises if the total premise area turns out to be lower than the contracted area by up to 2%, and (iii) an inaccurate provision pursuant to which the buyer grants the developer powers of attorney to vote and to perform all other actions related to the division of the common property. According to the President of the Office of Competition and Consumer Protection, this provision may ensure that the Company has too much freedom while deciding on the common property and has an unjustified, direct impact on operation of the housing community, simultaneously without taking into account consumer interests.