The purchase process for buying a property in Krakow
Overall, buying a property in Poland is a relatively simple process and can be completed with one or two contracts. If the buyer is in a position to buy a completed property quickly and has the funding in place, the transation can be completed with one final contract. More often, however, a preliminary contract will be required which commits both parties to the sale of the property, but allows for arrangements to be made before completion of the sale. A preliminary contract may be used for example if the purchaser needs to raise finance, or in the case of a renovation project, where work will need to be completed to finish the property before the sale can be finalized.
Buying a Property in Poland using one ‘Final’ Contract.
This is the simplest way to purchase a property in Poland, when both parties are in a position to move quickly on the sale. After agreeing the price with the vendor, a contract will be drawn up by a notary for the sale between the two parties. For such a transaction, the notary should have an off the shelf contract which they can prepare inexpensively and quickly.
Prior to the signing of the contract, which normally takes place in the notary’s office, the notary will check the title of the property to ensure that there are no undisclosed claims or encumbrances registered against the it, such as undeclared mortgages. They also check that the name registered on the title corresponds with the person/s selling the property.
Once the terms of the contract have been agreed, the contract is signed by both parties and stamped by the notary which represents completion of the transaction. The notary contract is the buyer’s proof of ownership and the notary is required by law to instruct the land registry transfer the title of ownership into the purchaser’s name, which can take up to 3 months.
After signing the contract, the purchaser is required to transfer the funds to the vendor, normally by bank transfer. It is an advantage to have the funds cleared in a Polish bank account as this means the transfer can be executed in one day (or same day if the same as the vendors bank) as opposed to up to three days if the transfer is being made from overseas.
Buying a Property in Poland using a Preliminary Contract
Not every investor has the cash upfront and ready to purchase a property. This may apply to buyers for who need to sell shares or release money from a deposit account, or perhaps draw down a mortgage after receiving a loan promise. On the other hand, the vendor may not be in a position to complete the sale immediately, for example, he may need to vacate the property, or complete some work on it before the sale can complete.
Nevertheless, before committing to any of the above, both parties will want a legally-binding commitment to ensure that the sale will go through.This can be achieved by entering into a preliminary contract, which typically will require the purchaser to put down a deposit of between 10-30% which can often be negotiated with the seller. The preliminary contract is signed with a notary.
During the preliminary contract phase, a date is set for the signing of the final contract, which again is negotiable and will depend on the position of both the buyer and seller. A typical period can be anything up to 3 months, even longer if you are entering into a contract to purchase an off-plan property.
The procedure for the signing of the final contract is described above.
Putting down a Reservation Deposit on a Polish Property
Before entering into a preliminary contract, it may be possible to make a reservation deposit on a property. This may be done in a situation, for example, where the purchaser would like the property to be taken off the market with immediate effect to prevent it being shown to other potential buyers. A reservation deposit is typically non-refundable and not legally-binding, and requires good faith on behalf of both parties in order for the contract to be entered.
Buying a property in an off-plan development
In Krakow, an off plan development generally takes one of two different forms.
- The renovation of an old Kamienica – large townhouse/tenement building – which is normally unoccupied and close to the city centre.
- A new-build development which has not yet started construction, but for which plans will be presented.
In each case, the developer will normally propose layouts of each of the apartments that he intends to build, which are sold by the square metre. It should be noted, however, that particularly in the case of completely new developments, the layouts and even sizes of the apartments can be adjusted according to the requirements of the purchaser.
A pre-agreement contract is always used when you purchase a property off-plan in Poland, in which the required specifications, schedule of building works and schedule of payments for the apartment will be laid out. Normally, penalties for both parties are written into the contract stating that, for example, if either the payments are not made or if the building work is not completed as described (or within the required time frame), penalties must be paid.
Off-plan developments in Poland are characterized by fairly strict payment schedules in which the payments are made as the construction work is completed, unlike for example the UK, where work will generally be carried in advance of required payments from the buyer.
Bearing in mind the additional complexity of such contracts, and the upfront nature of the payment schedules in Poland, Property Krakow recommends that you employ a lawyer to at least check over the contract on your behalf. It is also suggested that you take time to research the developer to ensure that they have a track record, a good local reputation and other assets within the company against which you will have security should you encounter problems.
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