The new regulations of the developer act will enter into force on July 1, 2022. The act will cause about far-reaching changes aimed at securing the position of the buyer of an apartment or a single-family house.

First of all, a Development Guarantee Fund will be established as a form of consumer protection in case of bankruptcy of a developer or a bank keeping an escrow account for a development investment, as well as in the event of the buyer withdrawing from the contract in the cases specified in the Act. In principle, the Fund is to be financed from developers’ contributions. In the event of open accounts, the premium cannot exceed 1% of the price of the premises, and in the case of closed accounts – only 0.1%.

Another important change will be the significant expansion of the prospectus. The document will have to be handed over to the buyer each time before concluding a developer or reservation agreement (and not at his request as heretofore). There must be specific information on planned investments within a radius of 1 km from the area involved by the development project. The consequence of these changes for the developer will be the necessity to significantly increase the expenditure on obtaining and updating information about planned investments.

New regulations regarding the procedure of acceptance of premises and reporting of defects in the premises will also come into force. There will be introduced, among others new rights for buyers, such as the possibility of removing a defect at the developer’s expense (if the developer does not remove it on time), as well as a fairly severe sanction for failure to respond to the reported defects within 14 days. In such a case, the delay means the full recognition of the validity of the buyer’s claims, and thus the necessity to remove all the defects indicated by the buyer.

The novelty is the introduction of the concept of a significant defect and linking it with the buyer’s right to refuse to accept the premises in a situation where the developer refuses to recognize the existence of such a defect. The new developer act also provides for a number of additional situations (apart from the current ones) in which the buyer will be able to terminate the contract. The novelty is that the regulations clearly allow withdrawal from not only the developer contract, but also from other contracts specified in the act.

Regulations concerning the reservation agreement were also introduced. These provisions define the requirements that this type of contract should achieve, and in particular, that it must be must be expressed in writing under pain of nullity, as well as must define the area, location and layout of rooms in the premises. From the prospective of the buyer, a very important change is the introduction of a restriction on the amount of the reservation fee. The new regulations will have a much wider application, because its regulations will not only apply to residential premises, as of now but also to any other premises built as part of a given development project sold together with residential premises, such as garages or storage rooms. The new regulations require that such premises should also be sold on the terms specified in the new developer act. The regulations will also apply to premises that have already been put into use and to premises created as a result of redevelopment.

To sum up, the changes introduced by the new developer act will affect developers the most. The novelties will impose a number of new obligations on developers, and consumers will gain new rights and better protection.

author: Weronika Szajerka

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