In today's article from the "Tuesday Mornings for Construction Professionals" series, we continue our recently launched series on co-ownership. This topic is of significant practical importance, as many properties in Poland are jointly owned by two or more people. Consequently, the problems associated with this can affect anyone. With this in mind, we would like to devote today's article to discussing the impact of co-ownership on the right to use real estate for building purposes, as the right to develop real estate is one of the main rights of its owner. I encourage those who haven't read our previous articles on co-ownership to catch up, as the issues we will discuss today will become more understandable.
The right to develop real estate is granted to anyone who holds a legal title to use real estate for construction purposes, provided the construction project complies with legal provisions. This right comes from many sources, such as: lease or rental (provided they provide the right to perform construction work), limited property rights (specifically, those that allow for the use and control of real estate, such as usufruct, cooperative ownership rights to residential or commercial premises), and, above all, ownership rights and perpetual usufruct rights. Holding the right to use real estate for construction purposes is a necessary condition for obtaining a decision authorizing development , regardless of whether the investment can be implemented based on a notification or a building permit.
However, it's easy to see that in the case of joint ownership of real estate, the right to use the property for building purposes is held simultaneously by multiple entities. So what happens if, for example, only one co-owner wants to develop a given development, while the others are not particularly interested? Will the will of one co-owner be sufficient to implement the intended project, or is the consent of all co-owners required?
This issue has been repeatedly addressed in administrative court case law, so we have a fairly clear line of case law in this area. So how do courts typically rule in such cases?
For this purpose, it is worth paying attention to, among others, the judgment of the Supreme Administrative Court of March 17, 2022, file reference II OSK 832/21, in which the Supreme Administrative Court stated that " Case law has established the view that the submission by an investor of a declaration of the right to use the real estate for construction purposes, in principle, exempts administrative authorities from the need to examine the veracity of that declaration. However, such a declaration is effective only when the evidence collected in the case does not indicate the contrary or when there are no doubts as to its compliance with the actual legal status (see judgments of the Supreme Administrative Court of April 23, 2013, II OSK 980/12, November 26, 2015, II OSK 760/14). "
If the permit application covers a property held in joint ownership, the investor is required to obtain the consent of the other co-owners. Literature and case law consistently recognize that construction on real estate generally constitutes an act that goes beyond the scope of ordinary management of the joint property. Therefore, Article 199 of the Civil Code applies, making the effectiveness of such an act contingent upon the consent of all co-owners.
Thus, administrative courts take a very clear position that in order to be able to develop real estate, the consent of all its co-owners is necessary .
It is also worth remembering that submitting a declaration by a co-owner of real estate on disposing of the real estate for construction purposes, despite the lack of consent of the other co-owners, may expose him to criminal liability, as such a declaration is submitted under pain of criminal liability under Article 233 of the Penal Code.
Therefore, is a co-owner of a property who is unable to reach an agreement with the other co-owners regarding the development of the property left with no legal recourse? It is possible to seek judicial authorization to exercise such a right, but it should be remembered that such a right is only available to co-owners whose shares in the property amount to at least half.
An alternative to the above solution is the possibility of regulating the rights and obligations of the parties regarding the development of real estate through a share-use agreement (so-called qouad usum agreement), which allows a co-owner to allocate a portion of the property for their exclusive use. It is important to remember, however, that such an agreement does not replace the division of the property and does not abolish the status of co-ownership. It creates effects solely between the parties.
The issue of having the right to use real estate for building purposes arises differently in the case of large housing communities (i.e., when the number of separate and unseparated units exceeds three), where the Act on Ownership of Premises applies. In such a situation, because it goes beyond the scope of ordinary management, consent to use real estate for building purposes is granted by a resolution of the housing community, passed by the co-owners of the property. In such a case, it is sufficient for more than half of the co-owners to vote in favor of the resolution.
And next week we will discuss how joint ownership affects the obligations related to the payment of property tax.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 11, 2023
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