Risk and restitution

When investing in warsaw property, it is worth paying attention to the legal aspects. As a result of the city’s troubled history, an investor or developer can encounter some complex ownership issues

Under the Decree on Land Ownership and Use within the City of Warsaw dated 26th October 1945, the Polish state took over the ownership of all land within the capital’s city limits with effect from the date of the decree coming into force (21st November 1945). Once the relevant Warsaw borough had taken over land, property owners had six months to apply for perpetual leases or the right to develop it. In 1961, those rights were converted into perpetual usufructs.

While Article 5 of the decree provided that buildings on the affected land would remain the property of the existing owners, that right was virtually notional, since in the case of severely damaged buildings, which were almost all buildings in those days, the relevant borough could give the owner a deadline to take them over. In the event of the deadline passing without any claim being made to the property, the title to a building would pass to the borough. The ownership title to a building could also be lost if the borough decided to turn down any application. In 1950, the ownership of buildings passed from the relevant borough to the state.

In subsequent years, former owners retained a limited possibility to seek the repossession of property. Firstly, based on the Council of Ministers’ Resolution No. 11 dated 27th January 1965 (concerning a single plot of land with a single-family house planned to be built or already built on it) within six months of the resolution coming into force, i.e. by 31st July 1965. However, the validity of the resolution as the legal basis for returning the property was eventually challenged by the Supreme Court. And secondly, under an act dated 29th April 1985 (concerning plots developed with houses not exceeding 20 rooms), they could file applications for restitution by 31st December 1998.

Possible claims

Former property owners or their heirs, provided they filed appropriate applications to claim the title to a property within one of the deadlines mentioned above and received an administrative decision denying the rights to a property, are entitled to seek the invalidation of such decisions. However, in order to do that, they must prove that the decision was issued in violation of the law. If they have not received any conclusive decisions concerning the demand contained in a properly filed application, they can claim for the property to be returned in kind, provided it has not been sold to a third party. In the event of the property having already been sold to a third party and developed, they may seek for the contracts concluded by the state or the city of Warsaw to be invalidated (if they can prove that the contract was in violation of the law), or they may claim damages from the entity that sold the property as its owner.

Tomasz Kurek, advocate, legal counsel, partner and head of real estate and construction, CMS Cameron McKenna