How to Safely Purchase Real Estate in Poland

Legal Status of a Czech Citizen When Buying Property in Poland

A fundamental rule of the Polish legal system states that foreigners from outside the EEA need a special permit from the Minister of the Interior to purchase real estate. As an EU citizen, you are exempt from this permit requirement for standard apartments and non-agricultural land under Art. 8(2) of the Act on the Acquisition of Real Estate by Foreigners (Ustawa o nabywaniu nieruchomości przez cudzoziemców). The transfer of real estate is always governed by Polish law, and you cannot choose Czech law in the contract, a fact that many investors overlook.

Lawyers at the ARROWS law firm deal with this issue daily. If you are planning to buy agricultural land, a forest, or property in a border zone, the situation can be more complex and require meeting specific conditions. It is therefore essential to obtain a precise legal assessment of your situation to ensure your investment is not jeopardized by formal shortcomings.

Types of Property You Can Buy Without a Special Permit

The Polish legislator distinguishes between different types of real estate. The most easily accessible properties that an EU citizen can buy without an additional permit are residential units and land designated for housing development in built-up areas. If you are buying a separate apartment, garage, or house in a city, you do not need a permit from the ministry, as stipulated in Art. 8 of the Act on the Acquisition of Real Estate by Foreigners.

The situation changes fundamentally when purchasing agricultural land, where strict restrictions exist even for EU citizens. The purchase of agricultural land over 0.3 hectares is subject to regulation under Art. 2a of the Act on the Shaping of the Agricultural System and may require the status of an individual farmer. The lawyers at the ARROWS law firm will guide you through the correct process and verify whether the land is actually designated as building land in the local zoning plan.

Initial Steps in Buying Property: From Reservation to Purchase Agreement

The process of buying property in Poland has its specifics and usually begins with selecting a property and signing a reservation agreement. This agreement is often signed only in writing and its purpose is to temporarily withdraw the property from the market in exchange for a reservation fee. However, be aware that a standard written form offers weak protection, and enforcing the transfer is impossible without a notarial deed.

For new projects under construction, the development agreement must, by law, be concluded in the form of a notarial deed, which is a key condition for buyer protection. Because you are a foreigner and if you do not speak Polish at a native level, a sworn translator must be present at the notary's office, as required by Art. 2(3) of the Notary Law (Prawo o notariacie).

The final step is the ownership transfer agreement, which is also signed before a notary upon completion of construction or when buying an existing property. This is a key legal act that must be absolutely precise, as an error in the contract text can have irreversible consequences.

The Decisive Role of the Notary and Formal Requirements in Poland

A fundamental difference compared to the Czech Republic is that in Poland, the property transfer agreement must be in the form of a notarial deed. A contract drawn up only by a lawyer without the participation of a notary is absolutely void under Art. 158 of the Polish Civil Code. The Polish notary acts as a "gatekeeper" and guarantees the legality of the process.

The Polish notary verifies identity, the legal status of the property, and collects taxes and court fees, which are then remitted to the state. The notary also sends the application for entry into the land and mortgage register in accordance with Art. 92(4) of the Notary Law. As a Czech citizen, you will need a valid identity document, and public documents must be accompanied by an official translation into Polish.

The cost of interpreting the notarial act is in the order of hundreds of zlotys, but it is an essential part of the process for foreigners. Public documents issued in the Czech Republic are recognized in Poland without the need for an apostille thanks to a bilateral treaty, but you cannot do without a sworn translator at the signing.

The notary's fee is regulated by a decree and depends on the value of the property, with 23% VAT added. For example, for an apartment worth 500,000 PLN, the maximum rate is around 3,000 PLN + VAT, but in practice, the price can be negotiated with the notary. Half the rate is usually paid for the preliminary agreement and the rest for the final one.

Financial Costs and Tax Obligations When Buying Property

In addition to the purchase price, you need to account for ancillary costs, which vary depending on whether you are buying a new or an existing property. On the secondary market, the buyer pays the tax on civil law transactions (PCC) at a rate of 2% of the property's market value. This tax is collected directly by the notary at the signing of the contract, pursuant to Art. 7(1)(a) of the Act on Tax on Civil Law Transactions.

For new builds from a developer, the PCC tax is not paid because the price includes VAT, which is 8% for standard apartments or 23% for larger apartments. The reduced VAT rate applies to apartments up to 150 m², while for commercial premises or separate garages, you must expect the standard rate.

If you are buying a "new" apartment, but from a company that is not a VAT payer, or it is a specific resale, PCC may apply. Always have the tax regime of the transaction confirmed to avoid unpleasant surprises with additional costs.

The registration of ownership rights in the land register costs a fixed 200 PLN, and the same amount is paid for registering a mortgage.

Verifying the Legal Status of the Property and the Land and Mortgage Register

Legal due diligence is essential, and the Polish land and mortgage register is publicly accessible online on the Ministry of Justice portal. To view it, you need to know the księga wieczysta number, which the seller or real estate agent must provide.

In the register, it is necessary to check for encumbrances, such as life estates or rights of way, as well as mortgages. It is crucial to verify that the seller's debts do not exceed the purchase price and that the bank has issued consent to release the mortgage upon payment.

Pay special attention to the legal title to the land, because in Poland, in addition to ownership, there is also the so-called right of perpetual usufruct. Although most residential land has been transformed into ownership, you will still encounter perpetual usufruct with commercial or recreational properties, which means an obligation to pay an annual fee to the state.

We recommend verifying the technical condition through a property inspector, as hidden defects are difficult to enforce across borders. 

Title of Ownership and Risks Associated with a Purchase Without a Notary

As already mentioned, without a notarial deed, ownership of the property does not transfer. If you were to sign only a "contract" at home, you do not own the property, even if you paid the full price. This formal requirement is absolute and cannot be circumvented.

A specific feature of Poland is that the entry into the land register is carried out by a court, and in large cities, this process can take several months. You become the owner upon signing the contract, but until you are registered, you cannot fully dispose of the property, for example, by mortgaging it to a bank.

This transitional period between signing and registration is critical for financing. Banks often charge a higher interest rate during this period as insurance against risk until you provide them with an extract from the land register showing the registered mortgage.

Financing the Purchase: Mortgage and Conditions

Czech citizens can apply for a mortgage in Poland, but the conditions are stricter than for local residents. Banks usually require an assigned Polish personal identification number (PESEL) and own funds of at least 20–30% of the property price. Sometimes, proof of ties to Poland is also required.

According to the recommendation of the Polish regulator, banks can only provide mortgages in the currency in which the borrower earns the majority of their income. If you earn in Czech crowns, a Polish bank will generally not provide you with a mortgage in zlotys, unless you find a bank that provides loans in CZK, which is rare.

Czech banks will provide a mortgage for a property in Poland only if you secure it with another property located in the Czech Republic. This is a so-called non-purpose mortgage or a mortgage secured by another property, which may be a more viable path for some investors.

Typical Mistakes and Risks When Buying Without Legal Supervision

Investors often make the mistake of underestimating the VAT on investment apartments, believing they are buying an apartment with 8% VAT, when in fact it is a non-residential space with 23% VAT. The price difference is huge and can completely change the return on investment.

Another common mistake is not checking the zoning plan, where land that looks like it's for building is actually classified as agricultural with construction restrictions. It is also risky to rely on a standard contract from a notary, which may not include penalties for the seller for late handover or warranties for defects.

Polish notaries are impartial and do not serve as your lawyers, so it is important to have your own legal representative. Lawyers from the ARROWS law firm will ensure that the contract contains all the necessary protective mechanisms.

Choosing a Real Estate Agency and Key Questions

The real estate agency's commission in Poland ranges from 2 to 4% + VAT of the property price, and it is necessary to clarify in advance who pays it. When negotiating with an agent, ask if the price is final, as it is common to negotiate the price in Poland.

It is also important to find out whether the land title for the property is settled and whether there are any persons registered as residents in the apartment. In Poland, it is very difficult to evict a person with a registered residence, so demand confirmation that all persons have been de-registered before signing the contract.

Notarial Deed and Preparation for Signing

For the signing at the notary's office, you must have a valid identity document, a PESEL number, and cash to cover fees and taxes. If you do not speak Polish, the presence of a sworn translator is essential, without whom the notary will not perform the act.

Lawyers from the ARROWS law firm regularly represent clients based on a power of attorney, so you may not need to travel to Poland in person for some stages. This saves your time and ensures that all legal steps proceed smoothly and without errors.

The Mystery of "Perpetual Usufruct" and What It Means for Your Purchase

The right of perpetual usufruct is a Polish peculiarity where the land is owned by the state or municipality, and you have it on a long-term lease for 99 years. Since 2019, there has been a major reform, and most land under apartment buildings has been legally transformed into ownership under the Act on the Transformation of the Right of Perpetual Usufruct.

When buying an apartment, it is necessary to find out whether the transformation fee has already been paid in a lump sum, or whether the obligation of annual installments will pass to you. If the fee has not been paid, you must account for this regular cost for up to 20 years.

For commercial properties, such as offices or hotels, perpetual usufruct remains in force, and an annual fee is paid, which is usually 3% of the land's value. This is an important factor for calculating the return on investment for commercial projects.

Executive Summary for Management

For investors and management, the key takeaway is that the Polish market is legally secure but administratively demanding due to the necessity of notarial deeds and court registrations. It is necessary to account for taxes, which are 2% for older apartments and usually 8% VAT for new ones. The time lag between signing and registration in the land register can affect liquidity and loan security. ARROWS International lawyers have branches and partners in Poland, and we provide a complete service, including professional liability insurance. More about our team here.

Conclusion

Buying property in Poland is an attractive investment opportunity, but it requires respect for local rules. The system of notarial deeds, specific taxes, and slower land registry courts are factors that must be taken into account. Lawyers from the ARROWS law firm will provide you with the necessary legal certainty, guide you through the due diligence process, and ensure that the contracts protect your interests. If you are planning an investment in Poland, do not hesitate to contact us at consultation@arws.cz.