On 1 July 2022 came into force the so-called new development bill, which repeals the existing Act dated 16 September 2011 on the protection of the rights of the purchaser of a dwelling or a single-family house. What changes does it bring?
Act dated 20 May 2021 on the protection of the rights of the buyer of a residential or single-family house and the Developer Guarantee Fund, i.e. the so-called new development bill, entered into force – after 12 months after publication – day 1 July 2022, repealing the existing development law, i.e. Act dated 16 September 2011 on the protection of the rights of the purchaser of a dwelling or a single-family house.
Scope of the Act
The new development bill sets out the measures to protect payments made by the purchaser, the rules for the payment of funds from the residential trust account, the obligations of the developer before the conclusion of the contract, the rules and procedures for the conclusion of the contract and the content of the booking agreement, the development agreement and other agreements concluded between the buyer and the developer, the rights and obligations of the parties to the development agreement and other contracts concluded between the buyer and the developer, the rules and procedures for the receipt of the residential or single-family premises, and the principles of the liability of the buyer and the developer in this respect, as well as the principles of the operation and scope of the responsibility of the Developer Guarantee Fund.
The analysis of the scope of the new development act itself leads to the conclusion that it is wider than the previous development act, in particular regulating the reservation agreement and the Developer Guarantee Fund. However, these issues will be discussed in detail separately.
As justified by the new development bill (print no. 985), As a result of the assessment of the functioning of the Development Act, it was established that the objectives to be pursued by the amended regulation were (1) improving the protection of purchasers of a dwelling or a single family house (2) improving legal trade safety or (3) increased level of acceptance of regulations on the business side [...] The aim of the proposed solutions is not to weaken the development industry, but to increase the security of purchasers' resources, also at the time of market collapse.
Extension of the contract directory
An extremely significant change compared to the existing development bill is the extension of the catalogue of contracts to which the provisions on the protection of the rights of the buyer of a residential or single-family house apply.
To date, these provisions have only applied to development contracts, and therefore to contracts on the basis of which the developer undertook to build a building, separate the dwelling and transfer ownership of the premises.
From 1 July 2022 they apply in principle to all contracts concluded between the buyer and the developer and therefore also to contracts requiring the transfer of ownership as well as pre-existing contracts.
Limited directory of deposit protection measures
From the point of view of the measures, it should be noted that the catalogue of deposit protection measures has been narrowed. Namely, the new development bill only provides for two types of residential trust accounts – open and closed, while the previous development bill allowed the use of open residential trust accounts with a bank or insurance guarantee.
New shape of the reception procedure
The procedure for the reception of a dwelling or a single-family house, and for reporting defects and their removal, as compared to the existing development bill, has been significantly expanded. The new regulation also waives the reservation that in the area of non-responsible liability of the developer for physical and legal defects of the residential or single-family premises, regulations apply. Act dated 23 April 1964 – The Civil Code for the Guarantee.
Extended catalogue of circumstances authorising withdrawal
The catalogue of circumstances authorising the buyer to withdraw from the contract (both the developer and other contracts concluded between the buyer and the developer indicated in the new development bill) was also extended, including cases where the valuer finds that there is a significant defect or that the developer fails to remove a significant housing disadvantage or a single-family house on the terms laid down in the new development act.
In the new development bill, the determination of interest and contractual penalties for the parties to the development agreement ceased to be a mandatory element of this agreement. Consequently, the new solution is that if a development contract or other specific contract concluded between the buyer and the developer does not provide for a contractual penalty or interest, the developer is obliged to pay the buyer compensation for failure or inadequate performance of the contract to the extent that the statutory interest due to the delay of the buyer in the performance of the cash benefit resulting from the development contract or that other contract is equivalent to that of the developer.
Oliwia Wójcik
Lawyer. Graduated from the Faculty of Law and Administration at Maria Curie-Skłodowska University in Lublin and Postgraduate Studies of the Legal and Economic Fundamentals of the Investment Process organized by the Warsaw School of Economics. Its professional interests are economic law, with particular emphasis on the law of commitments. He also has practical experience in conducting litigation.