Hidden charges and overriding interests

1. Are there any such hidden charges in your system? If so, please list them, and explain how a buyer can discover them. Explain if there is any simple way that the property can be freed from them.

According to Polish law there are 5 limited proprietary rights, which have to be registered in the Land Register, in order to have effects against third parties:

• usufruct
• easement:

easement appurtenant
easement in gross

• pledge
• the housing co-op ownership right to a unit (apartment, flat)
• mortgage

All limited proprietary rights mentioned above always, which are registered in LR, always has priority over other rights to an immovable property.

As regards cases provided for in statutory law land and mortgage registers may evidence also personal rights and claims.

The following may in particular be evidenced:

• a right of lease or tenancy, a right of repurchase and pre-emption, a right of annuity;
• a claim to convey the ownership of immovable property or perpetual usufruct or to establish a limited right in rem; the above shall also apply to future claims;
• a claim arising out of the specifying the way of management or out of the manner of use of the immovable property by co-owners or perpetual usufructuaries;
• a claim raised by co-owners precluding the right to dissolve co-ownership;
• a receivable debt of a mortgage bank secured by mortgage and information about it having been entered in the register of mortgage bonds security, referred to in the Mortgage Bonds and Mortgage Banks Act of August 29, 1997 (Dziennik Ustaw 1997, No. 140, item 940; 1998, No. 107, item 669; 2000, No. 6, item 70, No. 60, item 702; 2001, No. 15, item 148, No. 39, item 459);
• right under a timeshare contract, as referred to in the Act of 16 September 2011 on Timeshare (Dziennik Ustaw 2011, No. 230, item 1370).

There  are other charges that are not mentioned in the land register.

For example :

•   adverse possession
•   statutory liens
•   claims of third parties
•   tax arrears
•   arrears of rent
•   municipal or other public rights of pre-emption.

Usually the notary requires the seller to give a declaration that the property is free of any encumbrances, including any statutory liens, and claims of third parties. The seller is obliged to present tax clearance  certificate from the tax office. There isn’t  a public register where  a buyer can find  needed  information. The buyer can check  documents attached  to perpetual book and  sometimes  find  hidden charges.

2. Do any of these, or any other similar matters, have priority over a mortgage, where the lender was acting in good faith and was unaware of them? Explain if there is any simple way that the property can be freed from them.

A limited right in rem on the immovable property, as evidenced in the land and mortgage register, shall have priority over such a right not having been evidenced in the land and mortgage register.

The priority of a limited right in rem on the immovable property entered into the land and mortgage register shall be determined by the date beginning from which the effects of the entry made in it are reckoned.

The rights entered upon applications made simultaneously shall have equal priority.

Upon establishing a limited right in rem to be entered in the land and mortgage register the owner shall have the right to reserve the priority of another right over that right or reserve the priority equal to that right.  Such a reservation may also be made after said right has been established, if done with the consent of the person who enjoys that right.  The reservation of the priority of a limited right in rem shall require making a relevant entry in the land and mortgage register.

If, before the entering of the right in respect of which priority has been reserved, another right has been entered, the entry of the right with the reservation of priority shall not require the consent of the person enjoying that other right, unless the right for which priority has been reserved is to be entered to an extent larger than that allowed for by the priority reserved.