1. DEFINITION OF REAL ESTATE

Real estate means parts of land areas that constitute separate proprietorship subjects (land), as well as buildings permanently attached to land, or parts of such buildings, if these may constitute separate proprietorship subjects under specific regulations.

2. SCOPE OF LEGAL REGULATION

Execution of real estate debts encompasses:

• 1)real estate execution,
• 2)simplified real estate execution,
• 3)fractional real estate execution.

Regulations concerning real estate execution are respectively applicable to:

• 1)perpetual usufruct execution,
• 2)execution of premises constituting a separate property,
• 3)execution of cooperative member’s right of ownership of premises,
• 4)execution of sea vessels listed in a ship register,
• 5)execution by means of vending a company or farm.

3. COMPETENCE OF THE LAW ENFORCEMENT AUTHORITY

Real estate execution lies within the competence of a judicial officer registered with the court of local jurisdiction for the property. When real estate execution takes place, provisions of law do not allow the possibility to select the judicial officer in the Republic of Poland.

4. PARTICIPANTS IN REAL ESTATE EXECUTION PROCEEDINGS

Apart from the creditor and debtor, participants in the proceedings are individuals entitled to limited property rights, claims or personal rights secured on the property, and when perpetual usufruct is the subject of execution, also the body that concluded the perpetual usufruct agreement.

5. ATTACHMENT OF REAL ESTATE ON THE BASIS OF A WRIT OF EXECUTION ISSUED AGAINST A MARRIED INDIVIDUAL

A writ of execution issued against a married individual constitutes the legal basis to attach a property being a constituent of assets jointly owned by spouses. Further execution proceedings are allowed on the basis of a writ of execution issued against both the spouses.

If the debtor’s spouse objects the attachment, the judicial officer will immediately inform the creditor of this objection, who, within one week, should apply for execution clause to be issued against the spouse, otherwise the real estate execution will be discontinued.

6. DUNNING NOTICE, ENTRY INTO LAND REGISTER, MOMENT OF ATTACHMENT

Simultaneously with the notice being sent to the debtor, the judicial officer sends, to the court of competent jurisdiction for keeping the land register, an application to make an entry into the land register, concerning the execution being in progress, or to submit the application in the document collection. The application of the creditor to launch execution of real estate described in the application causes the judicial officer to call the debtor to pay the debt within two weeks; otherwise, description and valuation procedures will commence.

The debtor’s real estate is attached the moment that he/she receives the notice. With respect to debtors who have not received the notice, as well as with respect to third parties, the real estate is attached the moment that an entry is made in the land register, or when the judicial officer submits the application in the document collection. However, with respect to anyone who was aware of the execution proceedings being commenced, attachment consequences occur the moment that the interested party acquired knowledge thereof, even though the notice may not yet have been sent to the debtor, or no entry has been made in the land register. The judicial officer notifies the debtor of the attachment.

7. JOINING REAL ESTATE EXECUTION

The creditor who launched real estate execution after the property was attached by another creditor, joins the previously commenced proceedings and may not demand that the previously completed procedures be repeated; apart from this, he/she has the same rights as the original creditor.

8. TRUSTEE FOR ABSENT PARTIES

In order to secure the rights of an individual whose place of residence is unknown, and who - due to his/her absence - cannot receive notices, the court, upon an application from the judicial officer establishes a trustee to represent such an absent individual. The trustee will perform his/her duties also in the interest of other individuals who cannot receive notices, during the further course of proceedings. The trustee may, however, represent several individuals jointly only when their interests do not collide.

9. ATTACHMENT SCOPE

The attachment applies to the property and to all items that, under provisions concerning property rights, may be subject to mortgage.

These are:

• 1)real estate constituents,
• 2)real estate fixtures,
• 3)natural and civil profits a prendre.

10. CONSEQUENCES OF REAL ESTATE ATTACHMENT

Disposal of the property after it has been attached, has no influence on further proceedings. The purchaser may participate in the proceedings in the capacity of a debtor. Each time, execution proceedings are valid both with respect to the debtor and the purchaser.

Disposal of items subject to attachment along with the property, after the attachment took place, is not valid. The above does not apply to disposals carried out by the property administrator, within his/her statutory entitlements. Encumbrance of the property after its attachment and disposal of the abandoned mortgage space is not valid. Should a tacit mortgage entry be made after the property is attached, the liability secured thereby does not have the priority of satisfaction, as assumed for liabilities secured with mortgages.

11. ADMINISTRATION OF THE ATTACHED PROPERTY

The attached property is administered by the debtor, to whom regulations concerning administrators will then apply.

If the correct administration so requires, the court may take away administration from the debtor and will establish another administrator; same applies to the administrator so established.

The court will dismiss an application to appoint another administrator, if the administration generates costs that cannot be covered with current incomes, and the applicant fails to deposit the amount required by the court within one week.

If the debtor, who ceased to be the administrator, was using rooms in the property at the moment of attachment, these rooms should be left for his/her use. The court, however, may, upon an application from the creditor, rule that these rooms should no longer be available, if the debtor or his/her household member hinders administration duties. The administrator may employ the debtor and his/her family against remuneration established by the court.

Introduction of the administrator

Should the administrator, when taking over his/her office, face difficulties, the judicial officer introduces him/her into the property administrative duties, upon an instruction from the court.

Incomes from the attached property

One the administrator is established, the judicial officer calls individuals appointed by the creditor to hand over both overdue and future benefits, owed by them and constituting income from the property, to the administrator. The notice should contain a warning that handing over monies to the debtor will be of no benefit to the creditor.

Obligations of the attached property administrator

The attached property administrator should perform activities necessary to ensure correct management. He/she is entitled to collect, instead of the debtor, all profits a prendre from the property, cash these within the scope of regular administration and deal with issues that may be necessary in the course of such administration. In issues associated with the property administration, the administrator may sue and be sued.

The administrator may only assume such liabilities that may be satisfied from the property incomes and are commercially viable.

The administrator may perform activities exceeding the scope of regular management only upon consent of the parties; should such consent fail to be granted - upon permit of the court, which, before the ruling, will hear the creditor, the debtor and the administrator, unless a delay thereof poses a risk of damage.

Obligation to submit reports by the attached property administrator

The administrator will, within specific deadlines, and at least once a year, and after the completion of administration duties reports from his/her activities, as well as documented accounting reports.

The court, having heard the creditor, debtor and administrator, and having become acquainted with reports, paying special attention to accounting items therein, will approve, or refuse to approve the administrator’s reports, partly or in their entirety.

Responsibility of the attached property administrator

The administrator is responsible for damages resulting from negligence to perform his/her duties in a diligent manner.

The administrator, who, without justification, did not submit a copy of the report within the required deadline, or failed to abide by other instructions issued by the court, may be fined.

The administrator’s right to remuneration and return of expenses

The administrator may demand remuneration and a return of expenses that he/she has borne from own funds, in association with the performance of administrative duties. The remuneration value will be defined by the court, in proportion with the work involved and property profitability.

However, an administrator being a debtor is not entitled to receive remuneration; he/she may only cover the most basic needs of his/her own and of his/her family from the profits a prendre, to an extent defined by the court, and cover expenses associated with the administrative duties.

12. DESCRIPTION AND VALUATION OF PROPERTY

After the period indicated in the dunning notice elapses, the judicial officer, upon demand of the creditor, will prepare a description and valuation of the property. The aforementioned period is 14 days.

Application to prepare a description and valuate the property

When preparing an application to prepare a description and valuation of the property, the creditor should:

• 1) submit an excerpt - and, if needed, a transcript from the land register, or a confirmation from the court, issued on the basis of the document collection held for the property in question, indicating the property owner and a list of encumbrances disclosed in the collection, and if the property is registered in a cadastre - also a suitable excerpt must be produced;
• 2) indicate the place of residence of participants of the proceedings.

If the property is not listed in the land register, the creditor should submit another document confirming the debtor’s ownership.

Also, the judicial officer may demand that the above documents should be produced by competent bodies.

Confirmation of the description and valuation

The judicial officer notifies participants known to him/her of the description and valuation date.

Moreover, the judicial officer, by placing a public announcement in the court building and in the office of the commune head (city mayor), calls participants of whom he/she has no knowledge, as well as other individuals who may claim rights to the property and to other attached items, to notify of their rights before the description is completed.

Such announcements and notifications should be made not later than two weeks before the description commencement.

Separation of property parts

Upon an application of the creditor or debtor, filed not later than during the description and valuation, as well as ex officio, a separated part of the attached property may be put up for bidding; the reserve price of such property part should satisfy the executing creditor. The judicial officer, having valuated the property, decides about the separation.

If a part is separated, further proceedings concerning the property remainder will be suspended until the bidding concerning the separated part is completed.

Protocol from the description and valuation of the attached property.

In the description and valuation protocol, the judicial officer should include:

• 1) the property code, its boundaries, and, if possible, its area and heading from the land register or document collection,
• 2) buildings and other facilities, indicating their economic designation and property fixtures, as well as supplies subject to attachment,
• 3) disclosed rights and encumbrances,
• 4) insurance agreements,
• 5) individuals who are in possession of the property, its fixtures and profits a prendre,
• 6) manner in which the debtor is using the property,
• 7) valuation, with the quotation of its basis,
• 8) reported rights to the property,
• 9) other details relevant for the marking or valuation of the property.

Valuation of the property by an expert

The property valuation is carried out by an expert, authorised to valuate real estate properties in keeping with separate regulations, who is appointed by the judicial officer. If, however, the property was, within six months before the attachment took place, valuated for commercial purposes, and this valuation conforms with requirements concerning property valuation during property execution, then a new valuation is not carried out.

The valuation should include: separately, the value of the property, buildings and other facilities, fixtures and profits a prendre, and, separately, the value of the entire property and of its part that has been separated in order to be put up for a bidding. The above values should be quoted with, and without applicable rights taken into account; the said rights remaining in force without being included in the price, and the value of rights not defined by money sums, which encumber the property, especially benefits resulting from these rights.

Appeals against the description and valuation

The appeals deadline against the description and valuation is two weeks and begins on the day of their completion. If the description and valuation were not completed on the day specified in the notice, the period of appeals will commence on the day on which the participant received a notification of the description and valuation completion, and for those participants who did not obtain the notification, it will commence on the day on which the completion is announced.

Necessity to prepare an additional description and valuation

If, between the description and valuation date and the bidding date relevant changes occur in the property status, then, upon demand of the creditor or debtor, an additional description and valuation may take place.

13. ANNOUNCEMENT OF THE BIDDING

Date of sale of the attached property

The attached property is sold by means of a public bidding. The bidding date may not be appointed earlier than after the lapse of two weeks after the description and valuation become legally valid, and not before the decision on whose basis the execution is launched becomes legally valid.

Announcement of the bidding concerning the attached property

The judicial officer will notify of the bidding by means of a public announcement, in which the following is stated:

• 1) the property to be sold, indicating its location and economic designation, name and surname of the debtor with the land register number and its storage location, or with the heading in the document collection, defining the court with which this collection is held,
• 2) bidding time and venue,
• 3) valuation sum and reserve price,
• 4) value of the bid bond that the bidding participant should submit, with the option for the bond to be submitted in the form of a savings book, with an authorisation of its holder to disburse the deposit in its entirety, in accordance with a legally valid court decision concerning the loss of bond, or in another manner indicated by the judicial officer;
• 5) the period during which the property can be visited two weeks before the bidding and during which documents form the execution proceedings can be inspected in the court.

Moreover, the announcement should specify:

• 1) that rights of third parties will not impede the bidding and legal conveyance of ownership rights to the purchaser without reservations, if these individuals, before the bidding commences, fail to produce evidence that they brought an action to exempt the property or items attached along with it from execution and obtained a decision suspending the execution in this respect;
• 2) that the use, easements and life annuitant’s rights, if they are not disclosed in the land register or by adding a document to the document collection and they fail to be reported within a maximum of three days before the bidding, will not be taken into account in further execution proceedings and will expire the moment that the decision awarding ownership becomes legally valid.

Service of the property bidding announcement

Announcement of the bidding is served to:

• 1) participants in the proceedings,
• 2) commune body, tax office applicable to the property location and a social insurance body, calling them to submit lists of taxes and other public fees due as of the bidding day, not later than on the bidding day.

Announcement of the property bidding

Announcement of the bidding should be, at least two weeks before its date, publicly displayed in the court building and in the office of local authorities, in a newspaper popular in the location, and on the website of the National Chamber of Judicial Officers.

Upon demand of an interested party, and at his/her cost, the judicial officer may also publish the announcement in another manner, as indicated by this party.

14. BIDDING CONDITIONS

Bid bond

The bidder is obliged to submit a bid bond, to an amount of one-tenth of the valuated price not later than one day before the bidding date.

The bond submitted by the winning bidder is retained; other bidders’ bonds are immediately returned to them.

If the purchaser fails to abide by the requirements concerning the payment, he/she loses the bond, and the winning is no longer valid. Partial payments already made are returned. These consequences are confirmed by a court’s ruling, against which appeals can be lodged.

The bond lost by the purchaser covers execution costs associated with the sale, while the remainder is included in the sum obtained in the course of execution, or, if the execution has been cancelled, is booked as profit for the State Treasury.

Reserve price

The lowest sum for which the property can be purchased at the first bidding (reserve price), amounts to three fourths of the valuation price and two thirds of the valuation price at the second bidding.

Defects of the attached property

The purchaser may not demand that the purchase be invalidated or that the price be reduced due to defects of the property or items purchased along with it.

15. PROPERTY BIDDING

Course of the property bidding

The bidding takes place publicly, in the presence and under the supervision of a judge.

After the bidding is called, the judicial officer publicly announces:

• 1) the bidding subject,
• 2) the reserve price,
• 3) the bid bond value,
• 4) the date on which the purchase price needs to be paid,
• 5) overdue sums with which the property is encumbered, such as national taxes or other public fees, if these sums have been notified of, explaining which of them will be transferred onto the purchaser without being included into the purchase price,
• 6) rights encumbering the property, which will remain in force with and without being included in the purchase price,
• 7) changes in the actual and legal status of the property, resulting from documentation, if these occurred after its description and valuation.

The bidding

The bidding subject is the property as of the status as per the description and valuation, taking into account changes announced by the judicial officer on the bidding day.

If several properties, or several parts of a single property are to be sold, the debtor has the right to indicate the sequence in which the bidding should be conducted, with respect to individual properties or parts.

The following individuals may not participate in the bidding: the debtor, the judicial officer, their spouses, parents and siblings, and individuals present at the bidding in their official capacitates; the bidder who failed to fulfil the conditions of the previous bidding, individuals who may purchase properties only upon authorisation issued by an official body and who failed to produce such authorisation.

The presence of a single bidder is sufficient for the bidding to take place.

Plenipotentiary powers to participate in the bidding should be confirmed with a document containing an officially attested signature. Signatures on plenipotentiary powers documents, made by State or local authority organisational bodies, as well as those on such documents granted to attorneys and legal counsels are not required to be attested.

The bidding has a spoken form.

Increments may not be less than one per cent of the reserve price, rounded up to a full Zloty.

The offered price ceases to be binding when another bidder offers a higher price.

When no other increments are offered, the judicial officer, informing the individuals present that after the third announcement no further increments will be accepted, will announce the last offered price three times, close the bidding and name the bidder who offered the highest price.

If the sums owed to the creditor are paid along with costs before the closure of the bidding, the judicial officer will discontinue the execution.

Any complaints against actions of the judicial officer during the bidding and before its closure should be reported verbally to the supervising judge, who will settle them immediately.

Second property bidding

If no bidder appeared at the first bidding, the judicial officer, upon the creditor’s demand, will announce the second bidding, at which the reserve price constitutes two thirds of the valuation price. This price is the lowest at which the property can be bought at the second bidding.

Conveyance of property ownership

If no bidder appears at the second bidding, either, the conveyance of the property ownership may take place at a price not lower than two thirds of the valuation sum, and the right to assume ownership is that of the executing and mortgage creditor, and of the co-owner. The creditor needs to file an application to seize the property with the court, within one week after the bidding, at the same time submitting implied warranty, unless he/she is exempted from doing so by an applicable Act.

If several creditors are filing applications to seize, precedence is granted to the one that offered a higher price; and when the prices are equal - to that whose liability is higher.

16. WINNING BID

After the bidding closure, the court represented by the judge supervising the bidding, issues, in open Court, a decision concerning the winning bid for the bidder who offered the highest price, having heard him/herself and the participants present.

The winning bid decision is announced immediately after the bidding closure; the announcement may be, however, deferred by no more than one week, if a complaint has been lodged that could not be resolved immediately, as well as for other important reasons.

If complaints or appeals lodged during the execution proceedings are not legally settled, the court may suspend its decision concerning the winning bid.

In the winning bid decision, the name and surname of the purchaser, property code, bidding date and purchase price need to be mentioned.

The court will not issue a winning bid decision due to violations of proceeding regulations during the bidding, if such violations could have been of significant influence on the bidding result.

The court will also refuse to issue a decision if the proceedings were subject to discontinuation or suspension, or when the participant has not received a notification of the bidding, unless there was no violation of his/her rights thereof, or when he/she, while being present at the bidding, did not lodge a complaint against this transgression.

If the court has refused to confirm the winning bid, the judicial officer, upon demand of the creditor, will appoint the date of another bidding. If the winning bid is not confirmed immediately after the bidding closure, the court, upon demand of the bidder who offered the highest price, may, in the event that the debtor is the administrator, deprive him/her of administration duties and appoint another administrator.

The winning bidder acquires the right to be granted the property ownership, if he/she has complied with the bidding conditions.

The winning bid decision that has been made in chambers is notified of to the creditor, debtor, purchaser and to those individuals who, in the course of the bidding, lodged complaints against winning bid procedures, as well as to the administrator who is not the debtor. A decision to refuse a winning bid is notified of to the creditor, the debtor and the bidder who offered the highest price.

Complaints may be lodged against the court’s decision of the winning bid. The basis for the complaint may not be such violations of procedural regulations that do not infringe the complaining party’s rights.

17. GRANTING OWNERSHIP RIGHTS

After the winning bid becomes legally valid, and when the purchaser has complied with the bidding conditions, the court issues a decision to grant ownership. Complaints may be lodged against decisions granting ownership. The basis for such complaints may not be transgressions that occurred before the winning bid became legally valid. A legally valid decision to grant ownership results in the conveyance of ownership onto the purchaser, and constitutes the title to disclose the purchaser’s ownership right in the cadastre, and in the form of an entry into the land register, or by including a document in the document collection. A legally valid decision concerning the granting of ownership constitutes a writ of execution to convey the ownership right onto the purchaser, and to vacate the rooms located on the property without ordering that an execution clause should be applied. Profits a prendre will belong to the purchaser after the decision of ownership granting becomes legally valid. The purchaser is obliged to pay regular public fees associated with the property, beginning on the day on which the decision of ownership granting becomes legally valid. The purchaser will bear non-regular public and legal benefits only when their payment falls on the day on which the decision of ownership granting becomes legally valid, or after that day. On the day on which the decision of ownership granting becomes legally valid, the purchaser acquires rights and obligations resulting from tenancy and leasing, in accordance with provisions of law regulating the same, in the event that a rented or leased item is disposed of. In the event that a property rental or leasing agreement has been concluded for a specific period of time and longer than two years, the purchaser may renounce this agreement, within one month after the decision of ownership granting, becomes legally valid, with a one-year period of notice, unless the agreement specifies a shorter period, even though the agreement was concluded in writing with a certified date, and the item was made available to the leaseholder or tenant.

A legally valid decision of ownership granting, along with a plan to divide the sums obtained in the course of execution constitutes a title to erase, in the land register or document collection, all rights that expired according to the division plan. On the basis of the decision of ownership granting itself, all mortgage encumbering the property is erased, if the decision confirms the payment of the entire purchase price in cash by the purchaser.

18. PLAN CONCERNING THE DIVISION OF SUMS OBTAINED FROM PROPERTY EXECUTION

Immediately after the sum subject to division is transferred onto the court’s deposit account, the judicial officer draws up a draft plan to divide the sums obtained from the property execution and submits it with the court. If necessary, the court introduces changes and amendments to the plan; otherwise, it approves it.

19. EXECUTION FROM PROPERTY FRACTION AND FROM PERPETUAL USUFRUCT

Regulations concerning property execution apply respectively to the execution from property fractions and from perpetual usufruct. The judicial officer informs other co-owners when the attachment of the property fraction takes place, and when perpetual usufruct is the subject of attachment, the property owner and the competent governmental body or commune are also notified.

If perpetual usufruct is the subject of attachment, the attachment applies to perpetual usufruct of the land and the building that constitutes the property of the perpetual lessee, along with fixtures.

If the property fraction is administered, the administrator acts only within the rights of the debtor, as the co-owner.

If the execution applies to perpetual usufruct, the proceedings are suspended if the competent body demanded that the perpetual usufruct agreement should be terminated. Execution may begin upon demand of the creditor, if the court decides that there is no basis to terminate the perpetual usufruct agreement. When the perpetual usufruct agreement is terminated, the judicial officer discontinues the execution proceedings.

When execution applies to the property fraction, the entire property must be described and valuated. The valuation sum for such a fraction is a corresponding part of the sum being the valuation sum of the entire property.

If perpetual usufruct is the subject of execution, in the description and valuation protocol, the perpetual usufruct final date needs to be included, as well as the manner of land use by the perpetual lessee, disclosed in the land register.

20. SIMPLIFIED PROPERTY EXECUTION

Regulations concerning property execution apply to a non-developed land properties, and to properties with a residential or commercial building, if, at the moment at which an application for execution is filed, no notification was submitted, concerning the construction completion.

Sole-source sale

If a non-developed land property has been attached, which is not encumbered by rights of third parties, the judicial officer will offer it for sole-source sale, at a price not lower than the valuation sum. If the parties have not agreed on the manner in which the purchaser is to be sought, this manner will be decided by the court.

The sale will take place two weeks after the description and valuation day. The judicial officer will inform the participants in the proceedings of the sale.

If the sole-source sale does not take place within one month from the description and valuation day, the property is sold in a bidding, to which regulations concerning bidding procedures in property execution will apply.

Sale protocol

When performing activities associated with the sale, the judicial officer will draw up a protocol in which he/she will include the last name of the individual who accepted the purchase offer, as well as the purchase price paid by that individual in full, following which he/she will immediately submit the protocol with documents with the court.

On the basis of the protocol drawn up by the judicial officer and of the case file, the court issues a decision to grant ownership, which conveys the ownership rights onto the purchaser. Only the debtor is entitled to complain against this decision, and only when the minimum price regulations have been violated. If a violation is disclosed with respect to regulations applying to the valuation and minimum sale price, the court will refuse to grant ownership and return the file to the judicial officer, who resumes proceedings.

If the property may not be sold in keeping with regulations concerning simplified property execution, the court will order the judicial officer to continue execution following the regulations applying to property execution.

When the court issues a ruling ordering a repetition of the sale, or to perform further action under the regulations applying to property execution, the judicial officer will immediately return the sums paid towards the purchase to the bidder.

Sale in bidding

If the property fails to be sold in a sole-source sale, it is then subject to bidding, in which the regulations concerning property execution will apply. The judicial officer notifies the participants of the bidding date.

After the purchaser pays the price, the court will immediately issue a decision granting ownership. After this decision becomes legally valid, the judicial officer prepares a plan to divide sums obtained from the execution.

21. EXECUTION FROM SEA VESSELS ENTERED INTO SHIP REGISTER

In the execution of sea vessels entered into ship registers, regulations concerning property execution apply respectively.

The execution lies within the competences judicial officer of the court within whose jurisdiction the ship was located when the execution commenced.

To the execution application, the creditor should attach evidence showing that the ship is entered into the register.

When sending a dunning notice to the debtor, the judicial officer will at the same time apprehend the ship and establish administration.

Movables execution regulations will apply respectively to the administrator.

The ship becomes attached the moment that it is apprehended. The debtor and the owner who is not a debtor should be notified of the attachment. Announcement of the bidding should be displayed by the judicial officer in the court building, in a newspaper popular in the location, and on the website of the National Chamber of Judicial Officers.

Announcement of the bidding should be displayed in the court building, in a newspaper popular in the location, and on the website of the National Chamber of Judicial Officers at least two weeks before the bidding, and made available to maritime administrative bodies competent for the port at which the ship is located, and for the port of registry, so that it can be displayed in those ports.

Execution from ship shares is the duty of the judicial officer of the court in whose area the port of registry is located.

Execution from ships not listed in the ship register is carried out in accordance with regulations concerning execution from movables.