Preliminary agreement and the right to dispose of real estate for construction purposes

In a judgment dated July 12, 2017, issued in the case ref. no. II OSK 2316/16, the Supreme Administrative Court resolved a legal issue of significant importance for entrepreneurs engaged in the acquisition and development of real estate. According to Article 3 sec. 11 of the Act of July 7, 1994. – Construction Law (Dz.U. of 2017, item 1332, as amended), the legal title to dispose of real estate for construction purposes may also arise from a contractual relationship providing authority to perform construction work.

The Supreme Administrative Court unequivocally challenged the interpretation of the regulations, which is unfavorable to investors, according to which the right to dispose of real estate for construction purposes cannot be effectively derived from preliminary contracts, but only from contracts that are obligatory and definitive in nature. In the justification of the judgment, it was pointed out that the narrowing of contractual relations exclusively to the category of “obligatory definitive contracts”, does not find any justification.

At the same time, the Supreme Administrative Court stressed that the right to dispose of real estate for construction purposes can arise from any obligatory relationship, provided that it stipulates in its content the authorization to perform construction work.