**4. A new trend - ownership of premises**

The beginnings of the free market in the area of housing in Poland were characterized by dynamic processes consisting in the starting of activities in the area of housing construction by entities other than housing cooperatives. The construction of buildings for the purpose of creating company flats was stopped, as most of the workplaces were undergoing a deep restructuring and were getting rid of their property, or went bankrupt. In response to the needs of the housing market, a category of entrepreneurs which we call developers was created dealing with the construction of buildings and the sale of flats. They carried out the entire investment and construction process, partially from their own funds in conjunction with investment loans, and partially from the funds paid in by flat buyers, also from mortgage loans. The number of flats put into use in the developer system grew very rapidly. In 1995 it was 2,800 flats, in 1998–9,000 flats, and in 2004 - as many as 24,300 flats [11].

Many people in the late 1990s and early 2000s decided to buy a flat in the development system, either to meet the housing needs of their own family, or for investment purposes. At that time, the demand for new flats was huge, and it was considered that those built by developers were more attractive. This was owing to the fact that multi-family buildings were erected by developers using modern technologies, according to individual designs in the shaping of functional and spatial layouts of flats. As a result, they differed significantly from the uniform, repeatable shapes of blocks of flats erected earlier by housing co-operatives.

However, the lack of appropriate legal regulations, in particular in the area of consumer protection, sometimes resulted in negative phenomena, which entailed the loss of funds paid by those interested in buying flats. There were cases of bankruptcy of developers and other cases of failure to perform contracts owing to the fault of the developer, and the financial loss was suffered by people waiting for flats, which was a serious problem in the early period of growth of the development market in Poland. The imposition of contract templates by developers was an important problem, which resulted in a worse position of the consumer [13]. In this case, the free market led to behavior prejudicial to the weaker party to the contract, which was the buyer of the premises, and there was no legal regulation to protect the contractor.

The problem of the protection of flat buyers has been discerned in the literature [14] and in the jurisprudence of courts. On September 16, 2011, the act on the protection of the rights of buyers of a flat or a single-family house (Journal of Laws No. 232, item 1377), in Poland commonly known as the Developer Act, was passed. This regulation appeared relatively late, as appropriate legal provisions were already in force in other European Union countries. This act applies to the primary housing market. Its main purpose is to protect the rights of buyers of flats or single-family houses as part of legal relations with entrepreneurs professionally involved in erecting buildings. Before concluding a contract with a potential buyer of premises, the developer is obliged to provide the buyer with full information on its legal status, a history of completed investments, and details of the planned investment. The regulations impose an obligation on the developer to prepare a prospectus in accordance with the template specified by the legislator. The standard of performance of the flat and its price must be agreed at the stage of concluding the developer contract. This means that the buyer of the premises, even before the construction of the building, receives information about how the building was constructed, its interior and knows the price for which the apartment is to be purchased. Another example of securing the rights of the buyer of premises is the statutory definition of the minimum content of the development contract, which must be concluded in the form of a notarial deed. The claim to build the premises and transfer its ownership to the buyer is entered in the land and mortgage register. Another important factor is the obligation for developers to set up special bank accounts dedicated to a specific investment, the funds from which cannot be allocated to other projects. Owing to the introduction of this Act, the buyers of premises gained effective legal protection in their relations with developers. Currently, the developer construction market in Poland continues to grow, with 130,900 flats delivered for use in 2019 [11].

In April 2021, a new developer act was adopted - the act on the protection of the rights of buyers of a flat or single-family house and on the Development Guarantee Fund, which is to replace the 2011 Act. The purpose of introducing the new act is to increase the protection of buyers of premises, improve the security of legal transactions, and increase the level of acceptance of the regulations by entrepreneurs. The range of the act was extended to the purchase of garages and commercial premises. The new act provides for the establishment of a Development Guarantee Fund, to which developers will pay contributions. Guarantees of payment from this Fund will cover all contracts concluded by the developer with the buyer of premises. Raising the standards of protection of the flat buyer will make the purchase transactions of flats or premises for other purposes on the primary market safer for buyers.

Housing communities are established by law in multi-family buildings where the premises are separated for ownership. Polish law distinguishes between small and large housing communities. According to the current regulations, a small community has up to 3 separate premises, so there are few of them and they do not play a significant role at present. Housing communities in Poland do not have legal personality, but have been endowed with legal capacity, so they are entities separate from their members [15]. Their basic role is to manage the common property, i.e. to maintain the building and the area around the building in a proper condition, and conclude appropriate contracts with service providers. The owners of the premises are obliged to bear the costs of maintaining the common property by making advance payments to the bank account of the housing community. A share in the

#### *Housing Law in Poland—From the Cooperative Model to Flat Ownership DOI: http://dx.doi.org/10.5772/intechopen.98644*

communal areas is a right related to the ownership of the premises, which means that the sale of these rights is only possible jointly.

The management regime in large housing communities is based on the distinction between essential activities, which are decided jointly by all owners of premises by a majority of votes, and ordinary activities, where the management decides [16]. The owners of the premises or people from outside the group of owners may be elected to the community board. The community board conducts current affairs and represents the housing community. In a housing community, a manager may be appointed under a contract, then the community board is not elected. Each owner has the right to share control of the activities of the board, which includes inspection of the community records and the right to know all relevant information. Voting in the housing community is proportional to the shares in the communal areas, which means that the person who has a larger flat has more votes. The same rules apply to the costs of the communal area - in proportion to the size of the share.

The functioning of housing communities in Poland is based on simple and clear rules. It works perfectly in the case of small and medium-sized communities, as it provides real influence on the part of each owner of the premises on the decisions made by all owners. Sometimes, however, housing communities have several hundred flats which, with such a large number of owners, may cause practical problems related to the management of the real property.

Flats in housing communities are very popular, especially in new buildings, in newly built housing estates. Buyers of flats very often use mortgage loans, thanks to which they can afford to buy a flat. In 2018, there were already more flats in housing communities in Poland than in housing cooperatives, the statistical data indicate the number of 2,967,000 flats [12].
