Your flexible friend

The Ministry of Justice is working on introducing a new institution into Polish civil law: a land development right which, if enacted, should lead to greater flexibility on the real estate market and a widening of investment possibilities. Legal experts from BSJP Taylor Wessing provide a short overview of the anticipated legal innovations

Dr Katarzyna Domańska-Mołdawa

partner, adwokat

The land development right would make it possible to establish a temporary (from 30 up to 100 years) encumbrance on land with the right to build or use already existing buildings or other facilities located on or under (but not over) the surface of the land. Such a solution resembles the right of perpetual usufruct; however, unlike with a perpetual usufruct, the land development right can also be granted for land owned by private entities, and not solely by the State Treasury, local authorities or their departments. The essence of the planned amendment is to allow developers to be granted with the ownership rights for buildings and other facilities constructed on or under the surface of the encumbered land (or buildings or facilities already existing at the moment of the establishment of the land development right) as the right connected 
with the land development right. This right should be established in an agreement concluded in the form of a notarial deed specifying the development type, and the form and the range of usage of the encumbered land, as well as the period for which the land development right is to be established. The land development right will be created upon the plot’s entry in the land and mortgage register established for this right and it will be disclosed in the land and mortgage register for that land.

The rationale behind the amendment is that implementing the land development right should enable the execution of a variety significant projects (residential developments, road transport, transition facilities etc.) on real estate encumbered with such a right. The establishment of a land development right can also become an attractive alternative to expropriation, in cases where public utility investments are being realized.

Remco van der Kroft

partner, advocaat

The introduction of the land development right to the Polish civil code would allow for the effective use of many attractive sites which today are dilapidated and to which investors have limited access. Railway stations and their surrounding 
areas located in the very centre of Polish cities are one example. This legislation could also introduce more flexibility into the execution of different types of projects, including infrastructure projects, such as the construction of pipelines, transmission networks or wind farms, which would undoubtedly encourage potential foreign investors, as well as increase the competitiveness of the Polish economy.The current draft amendment does not include any legal provisions regarding the possibility of the development of space above railway tracks or streets, i.e. the creation of so-called “air plots”, even though similar solutions have proved successful in other countries.

Agata Jurek-Zbrojska

partner, radca prawny

The aim of the act on transmission corridors for public use is to introduce legal provisions regarding transmission corridors and devices which, if enacted, will be determined by the solutions contained in the act of April 10th 2003 on detailed principles for the preparation and execution of public road projects. According to the project, the issuance of a decision regarding the establishment of a transmission corridor will be the responsibility of a ‘starost’ (starosta) or a ‘voivode’ (wojewoda), depending on the scope of the investment. Proceedings related to the establishment of a transmission corridor will be initia-ted through a motion of a company, the devices of which are to be located in the transmission corridor and which will be included in a closed list of entitled companies. The transmission company will be charged with the responsibilty for paying damages for the establishment of a transmission easement. The scope of the transmission easement established as a result of the creation of a transmission corridor will include a ban on construction in the transmission corridor and on undertaking any actions which may result in its damage, destruction or the limi-tation of access, as well as the right of entry to the real estate.

Dr Christian Schnell

managing partner, Rechtsanwalt

The draft amendment to the act on spatial planning and development of March 27th 2003 introduces a range of significant changes. Most importantly: a reduction in unnecessary administrative procedures, the preparation of plans for areas with the most intensive projects, and the strict co-ordination of environmental development procedures with planning procedures. Besides local planning, national and local urban regulations will be introduced. Local urban regulations will involve the de-signation of urban zones, which will allow development conditions to be determined for areas which do not require the adoption of a local plan. In fact, the disputed decision on development conditions will in fact be replaced by an urban execution plan. Another important solution introduced in the draft is the strengthening of the importance of surveying the conditions and directions of a municipality’s spatial development. Pursuant to the amendment, this is to be the primary and complex spatial planning document for a municipality. The draft also proposes the introduction of two new institutions – the urban agreement and the infrastructural agreement, which are to be concluded between the investor and the municipality. The agreement will determine the conditions for an investor’s participation in the infrastructure development pursuant to the local or national urban regulations.

Dr Jörn Brockhuis

partner, Rechtsanwalt

On February 20th 2011, revolutionary changes in mortgage law will come into force. The most important changes are: the abolition of capped mortgages, a reduction in the requirements regarding the receivables being secured, particularly the securing of future (and conditional) receivables with a contractual mortgage maintaining priority when replacing receivables, the abolition of the principle of the ‘forward-movement of mortgages’, and the introduction of the legal institution of mortgage administrator. Only the contractual mortgage, which will have the character of a capped mortgage, will remain. Other receivables, such as claims for interest and proceedings costs will be secured up to the security amount. Contractual mortgages will also secure future (and conditional) receivables and the many receivables of the same creditor resulting from different legal relations, as well as the receivables of creditors resulting from the same legal relation. In such a case, a mortgage administrator shall be appointed. The mortgage administrator signs the agreement on the establishment of a mortgage and is entered in the land and mortgage register. There is also the possibility of replacing the secured receivable with another receivable without losing priority. The system of ‘forward-movement of mortgages’ has been abolished. If a mortgage of a higher priority expires, the owner will have the right to dispose of the property left after the expired mortgage.