Settlement of the legal status of the property acquired through bailiff enforcement

Experience / 13.11.2020

Lawyers of the Law Firm legally supported and represented the Client, who is an investor and owner of one of the first and largest shopping malls in southeastern Poland, in matters related to the regulation of the legal status of real estate.

The Client had acquired, through a bailiff’s auction, land property developed with a building with a retail and commercial function, which was under construction. The previous investor had begun construction by obtaining all the necessary permits and administrative decisions, but nevertheless, due to financial problems, he did not have the funds to regulate his obligations and continue the investment. On the date of the bailiff’s auction, the state of progress of the investment was about 30%, with the main body of the building already formed.

After the final adjudication of the ownership of the real estate with the commenced construction, the Client proceeded to complete the investment, but it turned out that as a result of the actions of the previous investor, the investment covered not only the area of plots of land owned by him, but also, in part, communal plots. The above concerned an area of about 20 acres (with the total area on which the mall complex was realized amounting to about 300,000 m2).

The Client, with the approval of the municipality, carried out further work, obtaining all necessary administrative decisions in this regard, and concluded agreements with the municipality, which were characterized by complete gratuity for the use of municipal plots. At the same time, in view of the discovery after the acquisition of the property of circumstances related to the crossing of land boundaries, of which the Client had no prior knowledge, he took steps to regulate the legal status of the property.

In an effort to resolve the problem, the Client filed a lawsuit against the municipality for the transfer of ownership of the property against payment of appropriate compensation. The case was completed with the conclusion of a court settlement between the parties, by virtue of which the municipality undertook to transfer ownership of the real estate to the Client, while the Client undertook to pay the municipality the remuneration determined on the basis of a previously prepared appraisal. It would seem that the case thus found a happy ending, however, nothing could be further from the truth. It was the beginning of further problems for the Client.

The municipality repeatedly declared the implementation of the court settlement and kept the Client in belief that the provisions of the settlement would be implemented. However, time passed, the deadline under the settlement expired, more years passed, and the municipality, despite the declarations made, did not proceed to sign the notarial deed aimed at transferring ownership of the property. The Client was forced to apply for court enforcement and continued to hold talks with the municipality regarding the transfer of ownership of the plots, as a result of which the parties signed a letter of intent, in which the municipality reaffirmed its willingness to implement the court settlement. However, less than three months later, the Municipality filed a lawsuit in court seeking to render the previously concluded court settlement unenforceable, claiming that it violated mandatory provisions of law and remained invalid, and thus could not be implemented. The municipality claimed, among other things, that the settlement agreement was contrary to the provisions of the Real Estate Management Law or the Law on Municipal Self-Government.

The above resulted in the party’s involvement in another court dispute, which lasted almost five years. However, it ended with a favorable verdict for the Client, in which the validity and effectiveness of the court settlement was determined. The arguments of the Law Firm’s lawyers gained the approval of the courts of both instances. The verdicts in the case confirmed that the municipality for more than 6 years unjustifiably evaded the transfer of property ownership to the Client.

The verdict in the case not only enabled the Client to acquire ownership of land located partially under the mall building, but also opened the possibility of settling further disputes.