You've probably all heard of the "premises for land" act , or the act of December 16, 2020, on the settlement of the price of premises or buildings in the price of properties transferred from municipal real estate resources . Nevertheless, we want to begin our series on this topic with basic information about this legal act, so that no one has any doubts about how long this act has been in force and what its basic assumptions are.

Let's start with the legislative process. The act was passed by the Sejm on December 16, 2020, adopted without amendments by the Senate, signed by the President on January 21, 2021, and published in the Journal of Laws on February 2, 2021. Pursuant to Article 23 thereof, it will enter into force on April 1, 2021.

It should be noted that the act is part of the National Housing Program. The legislator's goal was to reduce barriers to investment activity and increase its scale by expanding access to real estate with investment potential and supporting municipal governments in implementing their tasks, including housing policy. The justification for the act indicated that (based on data from the Central Statistical Office), despite existing solutions (e.g., the Real Estate Management Act of August 21, 1997), municipalities' efforts to increase access to real estate with investment potential remain underutilized.

Therefore, the act establishes the principles under which real estate belonging to municipal real estate resources can be sold to private investors. Importantly, a portion of the price can be settled by transferring ownership of premises or buildings to the municipality.

The act will apply only to municipalities and lands within the municipal real estate resources. In turn, an investor is defined as an entity that applies for or has acquired real estate from the municipal real estate resources, with the price of the property being included in the price of the premises or buildings transferred by that entity to the municipality.

The municipal council will decide on the disposal of real estate from the municipal property reserve by means of a resolution, accompanied by an appraisal report specifying the value of the property, prepared by a real estate appraiser. The resolution will specify the minimum and maximum number and usable area of ​​units or buildings, their intended use, minimum standard, location requirements, and the price per square meter of usable area of ​​the unit or building.

The requirements regarding the location of units or buildings intended for transfer by the investor to the municipality under a "unit for land" settlement are to include an indication that the units or buildings may originate from: (i) an investment only, (ii) an investment or project other than the investment, or (iii) an investment only.

The total price of the units or buildings intended for transfer by the investor to the municipality under the settlement cannot exceed the value of the property covered by the resolution, as specified in the appraisal report.

The property will be sold through an open tender organized by the commune head (mayor, city president) responsible for managing the municipal real estate stock from which the property being sold originates. The act also specifies detailed information that must be included in the tender announcement and the investor's offer. The act also envisages amendments to other acts supporting the implementation of residential construction, including construction supporting the housing economy of individual municipalities. The act allows tenants of housing stock acquired by the municipality under the "housing for land" scheme and contributed to a municipal company or a State Treasury company to apply for rent subsidies under the "Mieszkanie na start" program. It also expands access to investment-grade properties managed by the National Real Estate Resource (KZN), and provides additional incentives for municipalities to engage in activities that support the implementation of the state's housing policy, giving preference to combining pro-housing activities with other forms of municipal action to benefit local communities.

In the coming weeks, we will be sharing the solutions adopted in the act and their implications. Next week we will highlight the potential benefits for investors and municipalities that will arise as a result of applying the provisions of this Act.

This alert is for informational purposes only and does not constitute legal advice.

At the same time, we are pleased to announce that the Polish Association of Developers has agreed to provide patronage to our series related to the "premises for land" law.

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Aleksandra Jastrzębska

Legal Counsel
+48 514 585 772 | a.jastrzebska@kglegal.pl

Dr. Joanna Barzykowska

Attorney, partner
+48 502 677 504 | j.barzykowska@kglegal.pl