Poland - Developers - UOKiK's report
Over 1,100 contract templates examined and nearly 600 information brochures scrutinized. Almost 500 contractual provisions have raised UOKiK’s reservations. The Office has verified legal compliance of developers. It was the first audit of this type carried out by UOKiK following the entry of the new Act into force.
The Act on the protection of the rights of residential premises or detached house buyers entered into force on 12 April 2012. After it had been in effect for one year, UOKiK performed an audit that covered entrepreneurs rendering development services. The inspectors focused on the fulfillment of obligations that the new regulations have imposed. During the audit that lasted from April to December 2013, the President of the Office scrutinized 1,162 contract templates concerned with the sale of new houses and apartments, analyzed 565 information brochures and checked 1,239 already concluded contracts. The objective was to eliminate those practices and contractual provisions that put the consumers at a disadvantage. Verification of the developers’ compliance with the provisions of the new legal act was the other of the audit’s aims.
The audit covered 93 entrepreneurs, including 9 co-operatives conducting development activity. Practices of 89 entities have raised the Office’s reservations — the President of UOKiK has questioned the total of 470 unlawful contractual provisions.
Protection of financial means
The Act that has been in force for 21 months has imposed a number of obligations on the entrepreneurs, aiming to ensure better overall protection of the consumers’ interests. The most important of these obligations require the entrepreneurs to offer a means for protecting the customers’ funds should the developer declare bankruptcy — this type of protection is ensured by an escrow account available in four configurations. The escrow account may be of the closed variety, it may be open and may offer an additional security instrument in the form of an insurance or a bank guarantee, or may have the form of an open account without any additional security instruments. This particular obligation has been violated only by one of the audited developers, and the Office has charged him with the use of practices that violate the consumers’ collective interests.
Information brochure
The President of UOKiK has analyzed 565 information brochures submitted by 84 developers. Despite their statutory obligations, 9 entrepreneurs have failed to provide the required information therein. In such a case the buyer has the right to withdraw from the contract within 30 days after its conclusion, without bearing any related costs. The most frequently missing information concerned the time schedule of the build (7 cases), a mention of the right to withdraw from the contract, and the attachments required (e.g. a floor plan of a given level with the specific apartment marked). The omission of crucial information by the developer may exert, in the opinion of UOKiK, a considerable impact on the buyer’s decision, as in many cases these are made solely based on the brochure, without the ability to inspect the apartment or the house that is being built in person. Incomplete information brochures served, for UOKiK, as a basis for pressing 11 charges.
Contracts used by the developers
Under the new regulations, the contracts are required to include specific information. These include, inter alia: price, description of the manner in which the escrow account is maintained, usable area of the premises and the method of its measurement, commencement and completion date of the construction work, and the date on which the rights to the premises will be transferred to the buyer. The lack of any of the aforementioned pieces of information authorizes the buyer to withdraw from the contract without bearing any costs of such a withdrawal. 10 of the audited developers have failed to include, in the wording of their contracts, information required under the Act. Hence, UOKiK has pressed 12 charges.
Moreover, as identified in the course of the audit, as many as 470 contractual provisions were unlawful. Those that were question by the President of UOKiK most frequently included exclusion or limitation of the developers’ liability for improper performance of for failure to perform the contract. 75 entrepreneurs were evading responsibility for untimely handover of the apartment or house, for modifying its area, for workmanship defects and for introducing changes into the design. In addition, the developers were preventing the customers from withdrawing from the contract if the price had been changed, and were imposing unjustified obligations on the consumers, e.g. related to the insurance or decoration of the premises purchased. In some cases data required under the Act was not made available in the brochures as well.
Read the press release in Polish.