Today's article in our "Tuesday Mornings for Construction" will concern pre-emption and trade bans sanctioned by the Water Law.
preemption actually is – it gives a person the privilege to purchase an item or right (e.g., company shares) first if its owner intends to sell it to a third party. Reserving a preemptive right means that the item (or right) to which the preemption applies can only be sold to a third party if the holder of the preemptive right does not exercise the preemptive right. In short, a preemptive right is a right that undeniably limits the owner's freedom to dispose of their item. Importantly, a preemptive right may arise from a legal act (e.g., a contract, a will) or directly from statutory provisions .
Preemption rights are primarily encountered in transactions involving real estate – in most cases, these are statutory preemptions. In the case of the Water Law, which regulates a specific type of real estate, namely land covered by water, preemption rights apply to real estate under standing inland waters . According to the definition provided in this law, standing inland waters are inland waters in lakes and other natural bodies of water not directly connected, by natural means, to surface flowing inland waters . The provisions on inland standing waters also apply accordingly to waters located in depressions in the land created as a result of human activity, other than ponds (these are areas where water has naturally accumulated as a result of human activity - e.g. areas of gravel pits, excavations (see: Position of the Department of Water Management and Inland Navigation of the Ministry of Infrastructure of 29 January 2024, letter reference: DGWiŻŚ-6.740.1.2024.KG). The assessment of whether the real estate is subject to the right of pre-emption under art. 217 sec. 13 of the Water Law should be made on the basis of data from the land and building register (lands covered with inland standing waters are marked in the register with the symbol " Ws "). In the event of discrepancies between these data and the actual state, the owner of the real estate is entitled to apply for the determination of the nature of the waters by the minister responsible for water management in the form of a decision. Such a decision then constitutes the basis for to make changes to the land and building register.
In the case of the sale of real estate covering land under standing inland waters, the State Treasury has the right of first refusal . This right is exercised by the district head in consultation with the minister responsible for water management. In this situation, the sale of the real estate can only occur if the district head fails to exercise the right of first refusal within one month of the district head's receipt of notification of the sales agreement; otherwise, the agreement will be absolutely null and void. This notification is delivered to the district head by the notary who prepared the sales agreement.
The right of first refusal is exercised at the price agreed upon between the parties in the sales agreement. The district head is authorized to exercise the right of first refusal by submitting a declaration in the form of a notarial deed to the notary who prepared the sales agreement and provided the notification (if this is impossible or encounters significant difficulties, the declaration may, as a last resort, be submitted to another notary). The district head sends the seller a declaration in the form of a notarial deed regarding the exercise of the right of first refusal by registered mail with acknowledgment of receipt, and then publishes it on the subject website in the Public Information Bulletin of the district office. The seller is deemed to have become familiar with the content of the district head's declaration regarding the exercise of the right of first refusal upon its publication on the subject website in the Public Information Bulletin of the district office. Upon submission of this declaration, the property becomes the property of the State Treasury.
Due to many ambiguities and numerous legal considerations regarding the operation of the above-mentioned right of pre-emption, the Department of Water Management and Inland Navigation of the Ministry of Infrastructure, in its position dated 29 January 2024 (letter reference: DGWiŻŚ-6.740.1.2024.KG), emphasized that the right of pre-emption applies only to the sale of land covered with standing inland waters acquired from the State Treasury after the date of entry into force of the Water Law Act (1 January 2018) in the procedure indicated in Article 217. At the same time, it was emphasized that only land property belonging to the State Treasury and sold in accordance with Article 217 section 1 of the Act by the minister responsible for water management is subject to the right of pre-emption.
Moreover, when we asked the State Water Management Authority (Wody Polskie) whether a given property was subject to pre-emption rights, we received the response that "Wody Polskie does not maintain records of standing waters. Determining the existence of inland standing waters within the meaning of Article 23, Section 1 of the Water Law, over which the State Treasury has a pre-emptive right in the event of their sale pursuant to Article 217, Section 13 of the Water Law, rests with property owners, as, according to Article 214 of the Water Law, "inland standing waters, water in a ditch, and water in a pond that is not filled as part of water services but solely with rainwater, meltwater, or groundwater, located within the boundaries of the property, constitute the property of the owner of that property." This means that when purchasing real estate, not only should you verify the land registry entries and obtain a declaration from the owner, but it is also worth checking in the field whether the property you are planning to purchase is covered by water. A sales contract concluded without the statutory right of pre-emption is invalid.
In the Water Law Act, in addition to pre-emption, we also deal with prohibitions on civil law transactions, which generally apply to:
- inland flowing waters that are public waters (what we understand by this term was described in #190),
- land covered by inland flowing waters, territorial sea waters and internal sea waters,
- oxbow lakes.
The above prohibitions mean that no one other than the State Treasury or, currently, local government units can own such land. Therefore, for example, sales agreements or transfers of such real estate under life annuity agreements are invalid. Therefore, these lands have been classified by the legislature as a special category of items excluded from trade – the so-called res extra commercium .
This article is for informational purposes only and does not constitute legal advice.
Legal status as of February 27, 2024
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