What is the acquisition of real estate by foreigners?
Acquisition of real estate by foreigners means the purchase or other legal acquisition of ownership of real estate, or the right of perpetual usufruct, by a person or entity treated as a foreigner under Polish law. In Poland, this area is regulated primarily by the Act of 24 March 1920 on the Acquisition of Real Estate by Foreigners. The rules apply not only to individuals who are not Polish citizens, but also to foreign companies and, in certain cases, Polish companies controlled by foreign persons or entities.
The key practical issue is whether a given transaction requires a permit from the Polish Minister of Interior and Administration. In many cases, especially where the buyer is from outside the European Economic Area or Switzerland, the acquisition of real estate in Poland may be subject to prior administrative approval. If a permit is required and the transaction is completed without it, the acquisition is invalid under Polish law.
The legal assessment is not limited to the buyer’s nationality. It also depends on the type of real estate, its location, the legal title being acquired, the structure of the transaction and the status of the buyer. Additional rules may apply to agricultural land, forest land, real estate located in border zones, or transactions involving companies that own real estate in Poland.
What does the acquisition process involve?
The process usually begins with determining whether the buyer qualifies as a foreigner within the meaning of the Act and whether any statutory exemption applies. Citizens and entrepreneurs from the European Economic Area and Switzerland are generally exempt from the permit requirement under the Act, although specific categories of property and separate sectoral regulations may still require verification.
If a permit is required, the buyer must submit an application to the Minister of Interior and Administration. The authority examines, among other things, whether the acquisition could affect state security, public order or defence interests, and whether the statutory conditions for granting the permit are met. In certain cases, the position of other public authorities may also be relevant, including the Minister of National Defence and, where agricultural land is involved, the minister competent for rural development. The application should describe the buyer, the property, the legal basis for acquisition and the purpose of the transaction, and should include documents confirming the legal and factual circumstances of the case.
Acquisition may take the form of a sale, exchange, donation, inheritance, merger, division of a company, contribution in kind or acquisition of shares in a company holding real estate. For this reason, the permit requirement should also be analysed in corporate transactions. A foreign investor acquiring shares in a Polish company that owns or holds perpetual usufruct to real estate may, in specific circumstances, be required to obtain a permit before completing the transaction.
From a transactional perspective, real estate due diligence is essential. It usually includes verification of the land and mortgage register, ownership title, encumbrances, zoning and planning status, access to a public road, lease agreements, environmental issues, tax consequences and any administrative restrictions. Where the buyer is a foreigner, due diligence should also cover the permit regime and the risk that the transaction could be challenged due to non-compliance with mandatory rules.
When should legal support be considered?
Legal support is advisable whenever a foreign individual, investor, company or fund plans to acquire real estate in Poland or acquire control over a company holding Polish real estate. This applies in particular to commercial properties, development land, warehouses, office buildings, agricultural land, land located in sensitive areas and assets acquired as part of a broader business transaction.
Private buyers may need assistance in assessing whether they can purchase an apartment, house or land without a permit, how to structure the transaction safely, and what documents will be required by a notary. Entrepreneurs and institutional investors often require a broader review covering corporate law, financing, tax, regulatory approvals and the impact of the transaction on existing contracts or permits.
A prompt legal consultation can help avoid errors at an early stage of the transaction. This is important because the need for a permit may affect the timetable, conditions precedent, notarial documentation and closing mechanics. Early verification may reduce the risk of invalidity, disputes with the seller, refusal by a notary to complete the transaction, administrative complications or financial loss resulting from an incorrectly structured acquisition.
Support of a law firm in real estate acquisition by foreigners
Support in matters concerning the acquisition of real estate by foreigners may include in particular:
- assessment of whether the buyer is treated as a foreigner under Polish law;
- verification of whether a permit is required or whether an exemption applies;
- preparation and submission of applications for administrative permits;
- legal due diligence of real estate and transaction documentation;
- advice on acquisitions of shares in companies owning Polish real estate;
- support in negotiations, preliminary agreements and final sale agreements;
- coordination with notaries, public authorities and transaction advisers;
- assessment of related corporate, tax and regulatory risks.
Need assistance with the acquisition of real estate in Poland by a foreigner? Contact us.
See also
- Real Estate Law
- Commercial Law
- Business acquisition
- Tax Law