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Developer`s agreement content

            One of the most essential changes that was introduced by the Act on the protection of the rights of a buyer of an apartment or a one-family house (Journal of Laws of 2011 No. 232, item 1377) – hereinafter referred to as the “Act” is the obligation to conclude the developer’s agreement in a form of a notary deed. Establishing this obligation, the above mentioned Act stated provisions that should be included in the agreement itself as well as requirements concerning its form. This obligations serve the purpose of protecting the buyer of an apartment or a one-family house, who acts as a consumer, and establishing his rights.

            First of all it is vital to remember that the developer agreement needs to be concluded in a form of a notary deed, under the condition of the agreement being invalid. Secondly any amendments to the agreement need to be made in a form of a notary deed in order to be valid. It is necessary to retain the notary deed form due to the fact that based on the developer agreement entry into the land and mortgage register kept for real estate is being made, as well as the buyers claims concerning completion of the building’s construction, separation of the apartment and transferring the ownership of the apartment including the rights necessary to use it (this applies to one-family house as well). The disclosure of buyers claims in the content of the land and mortgage register kept for the real estate enables its protection, therefore the developers agreement that is being conducted should include the motion to make an appropriate entry into the land and mortgage register. In conclusion it is essential to remember that the developers agreement should be conducted in a form of a notary deed – on one hand obligation to retain this form is imposed under severe condition of the whole agreement being invalid, on the other hand this form is a mechanism of protecting the buyer and his rights.

            Article 22 of the Act describes the minimal content of the developers agreement. Its provisions should include i.e.:

  • specification of the parties, date and place of concluding the developers agreement,
  • purchasing price,
  • information on the land where the investment is planned,
  • description of the floorage and premises layout as well as the standard of finishing of building,
  • date on which the transfer of ownership occurs,
  • conditions of the financial payment,
  • information concerning housing escrow account, bank guarantee and insurance guarantee,
  • date of commencement and completion of the construction works,
  • conditions of withdrawal from the agreement,
  • interest rates and penalties imposed on the parties of agreement,
  • information concerning bank’s or any other creditor’s approval for burden free separation of the apartment and transferring the ownership of the apartment after making the full payment by purchaser or information concerning lack of above mentioned approval,
  • developer’s obligation concerning completion of the building’s construction, separation of the apartment and transferring the ownership of the apartment including the rights necessary to use it.

            Specification of the developer’s agreement content is particularly important in the respect of protecting the buyers rights due to the fact that if the agreement is lacking the provisions stated in Article 22 of the Act the buyer is granted the right of withdrawal from the agreement.

            The obligation imposed on the developer regarding the content of the developer’s agreement is also important in respect of the information that can be obtain by the buyer at the stage preceding the conclusion of the agreement, which was the subject of the previous article. This means that in the event of modification of the data contained in the prospectus or its attachments, which would occur between their delivery and the signing of the developer agreement, any amendments resulting from those modifications should be stressed and highlighted in a clear and undisputable manner. Moreover those amendments would bind the buyer only if he would agree to their inclusion into the agreement. In the event that the developers agreement were to include content that was not compatible with the information gathered in an information prospectus or the attachments, with the exclusion of amendments on which the buyer agreed upon, the purchaser is given the right of withdrawal from the agreement.

            Regarding the subject that is being discussed it is important to notice that according to the articles of the Act, if the provisions of the developers agreement are less beneficial for the buyer than those of the Act, they are invalid and are being automatically replaced by the proper provisions from the Act.

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