The Act on Acquisition of Real Estate by Foreigners of 24 March 1920, which has been in force in Poland continuously for over 100 years, greatly limits the acquisition of real estate in Poland by foreigners, by requiring them to obtain prior consent from the Minister of Interior and Administration. Conclusion of a real estate acquisition agreement without a required permit is subject to the most severe sanction, resulting in invalidity of the transaction. However, the act permits certain departures from the strict requirement of ministerial consent.
Who has to obtain ministerial consent?
The act defines a foreigner as (i) a natural person who is not a Polish citizen, (ii) a legal person with its registered office abroad, (iii) an unincorporated partnership of the foregoing persons, with its registered office abroad and established under the laws of a foreign country, or (iv) a legal person with its registered office in Poland but controlled directly or indirectly by the foregoing persons.
Consent of the Minister of Interior and Administration will be required in cases where real estate located in Poland is purchased by a foreigner from outside the European Economic Area (i.e. the European Union plus Iceland, Liechtenstein and Norway) or Switzerland. With regard to foreigners from those countries, the minister’s consent will not be required.
What transactions and real estate are subject to the permit requirement?
The act conditions the validity of a foreigner’s acquisition of ownership or perpetual usufruct of real estate, or taking up or acquisition by foreigners of shares in companies with their registered office in Poland which are owners or perpetual usufructuaries of real estate in Poland, on the minister’s consent. However, this rule is subject to significant exceptions.
The minister’s consent is not required, among other things, for:
- Acquisition of an independent residential unit
- Acquisition of an independent utility unit intended for garaging, or a share in such a unit, if intended to satisfy the housing needs of the buyer or owner of real estate or an independent residential unit
- Acquisition of real estate by a foreigner residing in Poland for at least five years after being granted a permanent residence permit or an EU long-term residence permit
- Acquisition by a foreigner who is the spouse of a Polish citizen and resides in Poland for at least two years after being granted a permanent residence permit or an EU long-term residence permit of real estate that will constitute statutory joint matrimonial property as a result of acquisition
- Acquisition by a foreigner of real estate if on the date of acquisition the foreigner is entitled to a statutory inheritance, as defined in Polish law, from the transferor, and the transferor has been the owner or perpetual usufructuary of the property for at least five years
- Acquisition by a foreign-controlled legal person with its registered office in Poland (i.e. an entity referred to in point (iv) above), for its statutory purposes, of undeveloped real estate whose total area in the whole country does not exceed 0.4 ha in cities
- Certain acquisitions of real estate by foreign banks.
These exemptions do not cover the acquisition of real estate in border areas, or agricultural land exceeding 1 ha. The minister’s consent will always be required in such cases.
Significantly, the area of real estate purchased by a foreigner for living purposes must not exceed 0.5 ha. Otherwise, the minister’s consent will be required.
Obtaining ministerial consent
The minister’s authorisation is issued as an administrative decision based on an application.
The application for a permit must include the name and legal status of the applicant, a description of the real estate being acquired, the name of the transferor, an indication of the legal form for acquiring the real estate, and information on the purpose and possibility of acquiring the real estate.
The application must enclose documents confirming the circumstances indicated in the application and confirming the foreigner’s ties with Poland, as well as other documents enabling a determination of the correctness of acquisition of the real estate.
The application must be submitted in Polish, with a sworn translation of any foreign-language enclosures.
The minister should consider the application within two months of submission (one month in the case of real estate in a special economic zone), provided that all legally required documents are submitted together with the application.
The minister’s consent is valid for two years from issuance.
Can the minister refuse consent?
Consent will be granted if the minister determines that the acquisition of the real estate will not result in a threat to defence readiness, state security or public order, and is not inconsistent with social policy or public health considerations, all required documents have been properly submitted, the foreigner’s ties with Poland are duly demonstrated, and the Minister of National Defence does not object to the acquisition (and in the case of agricultural land, also if the minister for rural development does not oppose the acquisition, and other statutory restrictions on trading in agricultural land are met, as mentioned above).
Acquisition of agricultural and forest property
In Poland, agricultural and forest properties enjoy far more extensive legal protection. Therefore, acquiring such real estate is subject to additional restrictions under other laws.
Olga Połowianiuk, Real Estate Development practice, Wardyński & Partners