In virtue of the Act of 24 March, 1920 - on the Acquisition of Real Estate by Foreigners (hereinafter “the Act”) the acquisition of real estate in Poland by a foreigner requires a permit. The permit is issued by the Minister of Internal Affairs and Administration, with a consent of the Minister of National Defence, and in the case of agricultural real estate, also with a consent of Minister of Agriculture and Rural Development.
A foreigner in the reading of above Act shall mean;

1. an individual (natural person), who does not hold Polish citizenship;
2. legal person (entity having its seat abroad);
   1. joint venture of parties mentioned in points 1 or 2, without legal personality status, having its seat abroad, and established in pursuance of the provisions of law the foreign country;
   2. legal person and commercial company (partnership) not being legal person, having its seat on territory of the Republic of Poland, controlled directly or indirectly by persons or companies mentioned in points 1, 2 and 3.

The foreign controlled company means the company, in which the foreigner or foreigners possess directly or indirectly over 50% votes at shareholders’ assembly or general assembly either as a pledgee, or user as well as on the ground of agreements with other people or hold a dominating status, which means;

• have a right to appoint/dismiss the most of the members of the board of directors/supervisory board of other limited liability company or joint–stock company (subsidiary company) or cooperative (subsidiary cooperative) as well as on the ground of agreements with other people, or
• possess directly or indirectly the majority of votes in the subsidiary company (commercial, limited, mixed joint-stock and limited one) or general assembly of subsidiary cooperative as well as on the ground of agreements with other people.

The acquisition of real estate within the meaning of Act shall be the acquisition of the right of ownership to real estate or the right of perpetual usufruct on the basis of any legal event. Minister of Internal Affairs and Administration may also define special conditions, on fulfilment whereof the possibility to acquire real estate shall be conditioned. During the review of individual applications for permit, the Minister of Internal Affairs and Administration shall take into account the foreigner’s ties with Poland, in particular;

1. Polish nationality or Polish origin;
2. marriage with a Polish citizen;
3. possession of the residence consent for the determined period of time or settlement,
4. membership of an executive staff of company,
5. conducting business or agricultural activity on the territory of Poland pursuant to the principles of Polish law.

The permit is valid for two years since the date of its issuance. The applicant may also apply for a promise of the permit. The promise is valid for one year since the day of its issuance.
The requirement to obtain a permit by a foreigner for the acquisition or take over of shares in a company, with its seat in Poland and in the case of every other legal transactions concerning the shares applies also in the event, where such company is an owner/perpetual user of real estate in Poland and, in a result of it, such company becomes the foreign controlled company. Also, the requirement to obtain a permit by a foreigner for the acquisition/take over of shares in the company, with its seat in Poland and being an owner/perpetual user of real estate, applies in the event if such company is the foreign controlled company, and a foreign individual, who is not a shareholder in such company acquires/takes over the shares of company. Above mentioned provisions shall not apply to the company which shares can be bought or sold by public on the stock exchange or the company is an owner or a perpetual user of real estate referred to art.8, par.1, points 1, 1a, and 5 under stipulation art.8, par.3 of the Act.
It is not obligatory to obtain a permit by foreigners being citizens of member states of the European Economic Area - during the period of 12 years of the Poland’s Accession to EU i.e up to 2016 in the case of acquisition of agricultural real estate located in;
a) the warmińsko-mazurskie, pomorskie, kujawsko-pomorskie, zachodniopomorskie, lubuskie, dolnośląskie, opolskie and wielkopolskie voivodships (voivodship = Polish province), upon 7 years of concluding the lease contract, if during that period they conducted agricultural activity in person and legally dwelled on the territory of Poland,
b) the lubelskie, łódzkie,małopolskie, mazowieckie, podkarpackie, podlaskie, śląskie, świętokrzyskie voivodships, upon 3 years of concluding the lease contract, if during that period they conducted agricultural activities in person and legally dwelled on the territory of Poland.
Citizens of member states of European Economic Area, being on the day of Poland’s EU membership ( 1st of May, 2004) the shareholders/stockholders of commercial partnerships seated on the territory of the Republic of Poland, may include in the above mentioned lease periods of agricultural real estate (7 or 3 years respectively) the lease period of agricultural real estate by partnership, if during this period, being the shareholders or stockholders of the partnership they conducted agricultural activity in person and legally dwelled on the territory of the Republic of Poland.
In case of acquisition of agricultural real estate the Act of April 11, 2003 on Formation of the Agricultural System (Journal of Laws No 64, item 592) shall be applied respectively. Below, there are some basic principles of that Act and other Acts;

Polish government supports the development of family farm,
• family farm is a farm managed by individual farmer personally,
• total agricultural land of family farm (owned and leased) can not exceed 300 ha,
• individual farmer is the owner or leaseholder of family farm, having appropriate qualifications or agricultural experience and living on the area of commune where, at least, one part of property consisting his/her farm is located.

Agricultural Property Agency (APA) can sell the property if - as a result of transaction - total area of agricultural land being in purchaser’s ownership does not exceed 500 ha. Furthermore, a single, separate authorisation of APA President is required for conclusion of sale contract with size greater than 50 ha as well as real estate valued more than an equivalent of 2000 tons of rye (pursuant to provisions on agricultural tax). Moreover, the sale of the real estate with size exceeding 100 ha should be consulted with APA Supervisory Board. APA has a right to re-purchase (buyout) the property on the benefit of the State Treasury in the period of five years, counted from the day of its purchase from APS, with disclose of that right in mortgage register. It does not concern the property located on the area of special economic zones. APA has also the pre-emption right to buy a property re-sold by purchaser, within five years since the date of its acquisition from APS.

Predominant method of APS distribution is lease and sale of property through oral public open auctions or public auctions of written offers. APA has also a right to organise non-open (restricted) tenders for specific target group of bidders such as individual farmers, former workers of state farms, members of liquidated land co-operatives, repatriates and farmers participating in APA settlement program. The list of property offered for sale or lease as well as announcement regarding details of tender is placed in communes (gmina) where property is located as well as in appropriate seat of APA regional branches/subsidiary offices or other APA field units. The list provides information about identification number and size of property recorded in the land and buildings register, type and quality of land, number of mortgage register (if exists), description of buildings and other parts of property assigned for lease/sale. Intended sale of property with estimated value exceeds an equivalent of 10,000 dt (dt = 100 kg) of rye, as defined pursuant to provisions on agricultural tax, is published in newspapers having, at least, provincial wide circulation. The list of property assigned for sale or lease is announced at least 14 days before the invitation (announcement) for the tender. As a principle, the APA lease contracts are concluded for 10 years with the option of prolongation for longer period (maximum up to 30 years). In accordance with rules applied by APA, the lease contract is concluded in writing.

APA evaluates the initial leasehold rent in amount determined by the quality of soil location of land and local demand for the land in the region. The land of class VI (the lowest quality) is statutory exempted from leasehold rent. The volume of leasehold rent is proposed by the leaseholder in his/her oral or written offer and fixed as the final result of the tender. If agricultural land was idle at least one year prior to conclusion of lease contract, the leaseholder can be exempted from leasehold rent for a period of up to 3 years. APA may also exempt the leaseholder from leasehold rent for a period of maximum 5 years in cases justified in view of the conditions of the subject of lease or declared level of investment, whereupon new job opportunities would be assured. The leaseholder can apply for extension of lease contract for further period on new terms and conditions agreed with APA, without tender. If leaseholder is in breach of his/her obligations under lease contract, APA has a right to terminate the contract before the term of its conclusion. Besides the leasehold rent leaseholders pay the land tax as well as real property tax ( to local tax office) and compulsory buildings insurance. The leaseholders are also obliged to bear the costs of repairs and maintenance of leased buildings and structures.

The tender for sale or lease for APS property is carrying out by evaluation committee. The natural and legal persons fulfilling requirements given in tender announcement and have paid the deposit at a given place and time, as well as in a prescribed way, can participate in public open tender. The public open tender is announced, at least, 14 days and restricted tender 21 days before the date of the tender.

The bidders are obliged to pay a tender deposit. Organiser of the tender fixes the amount of deposit. In case of sale it can be between 5-20% of initial price of property. In the case of lease the deposit is fixed with taking into account the cost of tender preparation. The deposit should be given in cash or certified cheques. If the tender winner withdraws from conclusion of contract, no one from bidders of open public auction (oral bidding) offered overbid or no one from bidders of written offers proposed, at least, the initial price or initial leasehold rent, the deposit is forfeited to APA.

Before the tender, in accordance with the rules applied by APA, the foreigner is obliged to present the permit or promise of the permit issued by the Ministry of Internal Affairs and Administration and organizer of the tender can allow the foreigner take part in the tender. The foreigner who wins this tender has to obtain the permit/promise of permit before the conclusion of contract. If not the foreigners’ deposit is forfeited to APA.

Upon the conclusion of sale contract, the deposit is included as part of the property price. In lease contract, the deposit is treated as the payment for purchase of lease inter-related assets (e.g. livestock, machinery, production in progress). If there are no lease inter-related assets, the deposit is refunded. The deposits paid by other bidders (no winners of the tender) are refunded as soon as the tender is over. The deposit shall not be refunded if Voivodship Conservator of Monuments does not accept, submitted by winner of the tender, proposal (program) of use of real estate entered into the register of monuments.

If the first tender remains unsettled, subsequent tenders regarding a particular real estate will be carried out within 6 months from the closure date of the first tender. After that time the next tender is announced and performed as a first-time procedure again. If that tender is not concluded APA, announcing the successive tenders, can determine the lower initial price, but not lower than a half of initial price of first tender. If succeeding tender does not constitute the winner, APA can sell a real estate omitting the tender procedure however, the price cannot be lower than a reserve price of the last tender.

Public open auction (oral bidding) is the basic form of APS lease/sale distribution. The highest prices or leasehold rent wins the auction. The public auction of written offers is managed in cases justified by social and economic circumstances e. g. when farm employing workers is operating on the real estate in question. The auction of written offers (on competitive basis) consists of open and closed door sessions.
The standard purchase offer in writing should include;

• the name and address of the bidder or the name and seat of bidding company;
• proposed purchase price and terms of payment;
• possible proposal of instalment payment scheme (the amount of down payment and the number of instalments);
• proposed security (in case of instalment payment scheme);
• proposed employment;
• program of construction or renovation regarding the maintenance of real estate entered into the register of monuments;
• declaration about the area of agricultural land owned by bidder (only if an agricultural real estate is a subject of the tender);
• bidder’s declaration that he/she is known the subject of the tender.

If several equal offers are furnished, priority will be given to the person subject to provisions on farmers’ social insurance and/or employee or company of employees of the liquidated state farm, purchasing the agricultural land for expanding presently owned farm or establishing a new farm. If more than one bidder is entitled to such priority, the prospective buyer will be selected among bidders promising the best management on the farm.

The written offer for leasing should also present the information determined in the tender announcement. Standard information usually concerns:

• the name and address of the bidder or the name and seat of bidding company;
• proposed lease period and amount of leasehold rent in breakdown according to classes of soil (with exclusion of class no VI), woodland, buildings, structures and permanent crops;
• concept of activity to be run on leased property and information that bidder’s financial situation enables him/her to manage the property in a proper way;
• intended capital investment;
• planned employment;
• terms of purchase of movable and current assets;
• proposed security to provide for the liability incurred as leasehold rents within period of 15 months and the purchase of movable and current assets ( if amount due is to be paid by instalment);
• bidder’s declaration that he/she is known the subject of the tender.

The offer and other necessary documents must be submitted in sealed envelope to authorised notary office or other place on the day specified in public tender announcement. At the time of open public session, bidders are informed on the procedure of the tender. In closed door session the committee evaluates in details all offers presented and proceeds to select the best one. Selecting offers, the committee takes into account the elements which have been included into offer requirement exclusively. If committee has a doubt to some offer elements, the bidder may be requested to give additional explanations (included in the minutes of committee session). Explanations can not modify offered price or leasehold rent, the mode and terms of payment, as well as declared level of employment. If selection of the winner is difficult due to equivalence of offers, the committee announces additional oral bidding (for equal offers only), which concerns the level of leasehold rent or real estate price exclusively.

The annual leasehold rent is determined in a lease contract and expressed in cash or as the monetary equivalent of the relevant amount of wheat (in dt of wheat/ha, where 1 dt = 100 kg). The leasehold rent is paid in two equal rates at the end of every half-year. The leasehold rent determined in cash is subject of valorisation commencing from the second period of payment. The valorisation is made on the basis of indexes reflecting the changes in purchasing prices of the basic agricultural products (grain of wheat and rye, slaughtered cattle, pigs and poultry as well as cow’s milk) in the half calendar year proceeding the date of payment.

The leasehold rent determined as a cash equivalent of the relevant quantity of wheat is calculated on the basis of country average purchase price of wheat in a half-year of the calendar year preceding the date of payment. The Central Statistical Office publishes the price of wheat and above-mentioned indexes within the term of 20 days after of each half-year lapse.

To secure receivables from leasehold rent, APA asks the leaseholders to establish adequate guarantees when entering into lease contracts. Typical guarantees include warranted bills, transfer of ownership towards movable assets, blockade on a bank account or mortgage upon real estates owned by lessee.

The initial (opening, floor) price of the property is determined by licensed expert taking into account prices of similar real estate on the local market including costs of transaction preparation (assessment of property value, costs of geodesy works and documentation). If the land has no other components (buildings, standing timber) and is assigned for agricultural or forestry utilisation, the initial price of land may be determined by taken into account the rates and price of rye fixed according to the regulations on agricultural tax (without licensed expert’s participation). This method of land value assessment is used predominantly in the case of in real estates seized less than 1 ha when evaluation costs are expected to be higher in relation to the value of the land in question.

The sale of real estate with notable character entered into the register of monuments is executed through the tender, unless any priority rights are applied. The individual or legal person interested in purchase of real estate entered into the register of monuments are obliged to have the program of monument usability approved by Voivodship Conservator of Monuments (VMC).

The tender announcement for sale of real estate entered into register of monuments contains information about discount of monument price. The scale of discount is fixed by APA but it can not be higher than 50%. The 5% of discount for all real estates entered into the register of monuments is given unconditionally. The remaining discount (i.e. 45%) is possible after fulfilment of buyer’s obligations declared in notary deed. According to those obligations the buyer submits to VMC the program describing the scope and value of inputs born no later than 5 years from the effective date of purchase contract. VMC is in a power to confirm that those inputs has been borne in the frame of his/her recommendations concerning real estate in question. The foreigner willing to purchase a real estate with notable character is obliged to obtain a permit issued by Polish Minister of Internal Affairs and Administration.

The leaseholder pays the leasehold rent for land, perennial plants, forests, buildings and constructions. The remaining inter-related assets i.e. working assets (livestock, stocks, ongoing production) as well as movable (machines, devices) are subject to purchase. The terms of payment for lease inter-related assets should be proposed by bidders in their offers. When the value of working assets and movable is calculated in kind, the basis of calculation is the average purchase price of wheat for two half-year periods proceeding the date of tender and defined by contract. Those prices are published by Central Statistical Office.

In the case of purchase of movable and working assets on instalment payment scheme, the down payment should amount at least 20% of their value at the time of concluding the purchase contract. The payment of the remaining dues can be arranged into instalment payment scheme in the maximum period of 10 years counted from the date of first payment. If the lease contract has been concluded for a period shorter than 10 years, the execution of payment cannot exceed the lease period.

Counting since the day of down payment the interest rate of unpaid dues fixed in cash measure is set up by the Minister of the State Treasury. If the unpaid instalment due is expressed in kind of wheat the amount due is not subject to interest payment.

More detailed information about sale lease of APS property is available in the Foreign Co-operation Section of Agricultural Property Agency, 00-215 Warsaw, Dolańskiego 2, Poland. Phone; +48 22 860 65 45, fax; +48 22 860 65 77, e-mail; azadura@anr.gov.pl. Possible contact in Polish, English and German language.

Prepared by:
Dr Andrzej Zadura
e-mail: azadura@anr.gov.pl