Polish law amends the Code of Civil Procedure for the Sale of Real Estate

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The law of May 28, 2021 amends the Civil Procedure Code and some other acts (Journal of Laws of 2021, paragraph 1090). In addition to the controversial changes regarding the existing rules for the consideration of cases in civil, criminal and administrative proceedings and the rules for the delivery of letters to professional representatives in civil proceedings, it also introduces rules governing the sale of real estate through electronic auctions. The essential parts of the provisions of this Law entered into force on July 3, 2021; however, the provisions governing electronic real estate auctions will not take effect until September 19, 2021.

With regard to the registration of real estate, this is a completely new solution, since the previous rules allowed the sale by electronic auction only in the case of movable property. In general, such sales will be similar to the current execution in respect of real estate, except as provided for by new legislation. While maintaining the specificity of this decision, regulated in Part Three, Section II, Section VI and the new Chapter 6a of the Code of Civil Procedure (Articles 986¹ – 986¹¹), and taking into account the exclusion of the application of certain provisions, the existing provisions concerning, in particular, the announcement of an auction ( Chapter 4), the terms of the auction (Chapter 5), the auction (Chapter 6) and the acceptance (Chapter 7) are still applicable to the sale of real estate by electronic auction.

It is possible to sell real estate through an electronic auction. only at the request of the creditorand if the property is confiscated to pay off several debts claimed by different creditors, its sale via electronic auction will be mandatory if any of the creditors submits a request. Thus, a different decision was made than in the case of electronic auctions of movable property, where the sale procedure is determined by the creditor, at whose request the first seizure was made. The bailiff is obliged to notify the debtor that he has received from the creditor a demand for the sale of immovable property through an electronic auction within one week, indicating the immovable property or its part to which the demand applies. Currently, the debtor will have the right to specify the procedure in which individual properties should be auctioned if several properties or parts of the same property are to be sold under this enforcement procedure. It will also be possible to apply for the start of the sale of real estate through an electronic auction if you apply for a re-auction or a second auction.

As in the case of electronic movable property auctions, the sale of real estate through an electronic auction will be carried out through the ICT system, where the condition for participation in the auction will be the creation of an individual account in the ICT system. The announcement of the sale of real estate through an electronic auction must be posted on the website of the National Council of Bailiffs at least two weeks before the date of the auction. According to this method of sale, the obligation to place an advertisement for an electronic real estate auction on the website and on the notice board of the court supervising this execution in relation to real estate (including in different judicial districts, if the enforcement proceedings include one or more real estate objects located in jurisdiction of various courts) or on the premises of the municipal authority competent in relation to the location of the property, as well as an optional announcement in another way, including, in particular, in a daily newspaper widely distributed in the area, will no longer apply. The announcement of the sale of real estate through an electronic auction must include, including:

§ information about the real estate being sold (its location and economic purpose, the number of the land register and mortgage register, as well as the place of its storage or an indication of the collection of documents of the land and mortgage register and the court in which the said collection is stored));

§ information that the auction is held in electronic form, as well as the start and end times of the auction;

§ information on the obligation to pay for the guarantee and its amount;

§ the time when the object can be viewed within two weeks before the auction;

§ total cost estimate and starting price.

Unlike the classic enforcement proceedings for real estate, when announcing the sale of real estate at an electronic auction, the bailiff does not indicate the name and surname of the debtor. The term for making a security deposit also differs from the classic version for real estate. In the case of the sale of real estate through an electronic auction, the deposit must be transferred to the corresponding bank account no later than 2 business days before the start of the auction, and the date of the deposit is the date when it is credited to the bank account of the bailiff (in the classic case, the auction participant participating in the auction must make a security deposit no later than the day preceding the auction). The fact of making a security deposit and providing the data necessary for making a decision on acceptance, the bailiff confirms immediately after receiving them, allowing the bidder to participate in the auction. The bailiff shall notify the interested person about the refusal to admit to the auction through the ICT system. A complaint about the denial of admission to the auction and the procedure for holding the auction may be filed within 3 days from the date of denial of admission to the auction or from the date of the end of the auction, respectively. Bidders and those excluded from the auction will only be able to file a complaint through the ICT system, while others will benefit if they have an account with the system.

The electronic real estate auction must be scheduled by the bailiff in such a way that it is held from 9:00 to 14:00 on weekdays. The duration of the auction is also determined by law, that is, 7 days. After the close of the auction (but no later than within a week), the bailiff sends a report on the progress of the auction, unresolved complaints and documents required for acceptance of the acceptance to the appropriate court. The acceptance decision will be made in closed meeting within one week and will be communicated to the highest bidder.

The implementation of rules for recent decisions is still under development, including, inter alia, rules on how to authenticate users of an ICT system, ensure system accessibility and secure the use of electronic documents.

Within one year after the entry into force of the Law, it will be allowed to sell real estate through an electronic auction only if it is possible for technical reasons on the part of the bailiff. Thus, from the moment the provisions governing the described decision come into force, its availability will largely depend on the effectiveness of the work of bailiffs and their technical capabilities to take advantage of the new provisions.

© Miller, Canfield, Paddock & Stone, 2021 Review of National Legislation, Volume XI, Number 200



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