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In the Polish legal system, one of the most effective methods of enforcing significant amounts is the seizure of the debtor’s real estate by a bailiff and its sale by public auction. The proceedings are conducted by a bailiff acting at the district court competent for the location of the real estate. If the real estate is located within the jurisdiction of several courts, the creditor chooses where to initiate the proceedings. All proceedings concerning the same property will be combined.
Who participates in the proceedings?
In addition to the creditor and debtor, participants also include persons with limited property rights or other claims related to the property, e.g., perpetual usufruct rights or easements.
Stages of executions in Poland
- Seizure of real estate
The proceedings are initiated at the request of the creditor. The bailiff summons the debtor to repay the debt within 14 days, warning them of the next stage – the description and valuation of the real estate. At the same time, the bailiff submits a request to the court for an entry in the land and mortgage register, informing it of the commencement of enforcement proceedings.
The property is considered seized upon delivery of the summons to the debtor or, if it cannot be delivered, upon entry in the land and mortgage register. From that moment on, the debtor cannot effectively dispose of the property (e.g., sell it or encumber it with a mortgage). In practice, the property remains under the debtor’s management, but enforcement proceedings continue.
- Description and valuation of the property
After 14 days, the creditor may submit a request for a description and valuation of the property. The request must be accompanied by documents confirming the legal status and ownership. The bailiff draws up a report containing information on the technical condition, value of the property, and persons associated with it. The valuation is carried out by an independent expert. The debtor and creditor have the right to raise objections.
- Public auction and hammering
Once the description and valuation have become final, the property is put up for auction. The date must be announced publicly, including on the Internet and at the court’s headquarters. Participants must pay a deposit (10% of the valuation). The starting price at the first auction is ¾ of the appraisal value, and at the second auction – ⅔. If the property is not sold, the creditor may take ownership of it.
- Award of ownership
If the winning bidder pays the full price, the court issues a decision awarding them ownership of the property. From that moment on, they become the owner.
- Distribution of the amount obtained
The bailiff draws up a plan for the distribution of the funds obtained among all creditors in accordance with the provisions of the Polish Code of Civil Procedure. The plan indicates which rights expire and which remain in force.
Costs of enforcement proceedings
Under Polish law, the costs of enforcement are generally borne by the debtor. However, the creditor must pay advances for certain actions, such as appointing an expert. If the enforcement is successful, these costs are added to the debt. If the enforcement is unsuccessful, they are not refunded. In addition, the creditor must pay, among other things, PLN 60 for entering a warning in the land and mortgage register. If the proceedings are discontinued due to the creditor’s fault, e.g. due to a lack of further action, the creditor must pay a fee of 5% of the unenforced benefit.
What happens after enforcement?
If the debtor does not repay the debt and the property is not sold or taken over by the creditor, the proceedings will be discontinued. However, if the property is acquired by a third party, there is a risk that enforcement against that property will continue (e.g., if not all creditors have been satisfied). Therefore, the purchaser must be aware of the risk that their ownership rights may be challenged in the future.
