The compulsory sale of premises in a housing community is an extraordinary instrument for protecting the interests of the community, used in situations of long-term arrears in payments or gross or persistent violations of house rules. This mechanism, provided for in Article 16 of the Polish Act on the Ownership of Premises, leads to far-reaching interference with property rights and may only be used after strictly defined conditions have been met and in accordance with the principle of proportionality.
The basic function of Article 16 of the Polish Act on Ownership of Premises is to ensure the undisturbed use of premises and common property by other owners and, consequently, to restore ‘peace’ in the housing community. However, this instrument is exceptional and repressive in nature, as it leads to the forced sale of the premises and thus to interference with the right of ownership.
In practice, this right consists in the possibility for the housing community in Poland to bring an action for an order to sell the premises by auction if the statutory conditions are met. However, this mechanism is not automatic and does not apply in every case of arrears in payments or behaviour by the owner that can be considered reprehensible. The application of Article 16 of the Polish Act requires an assessment of the degree of violation of the community’s interests, the persistence or gross nature of the violations, and the principle of proportionality of the measure.
In this article, we attempt to answer questions regarding the scope and conditions for the application of Article 16 of the Polish Act on the Ownership of Premises.
When can a housing community demand the compulsory sale of a flat?
Article 16(1) of the Polish Act on the Ownership of Flats lists three grounds which justify a housing community’s request for the compulsory sale of a flat in Poland by auction:
- long-term arrears in the payment of due fees,
- gross or persistent violation of the applicable house rules,
- making the use of other premises or common property burdensome through inappropriate behaviour.
In practice, the last two premises are closely related in terms of function and often boil down to the same set of behaviours on the part of the owner, for example:
– vandalism of common areas,
– aggressive behaviour towards neighbours,
– notorious disturbance of night-time peace and domestic order in connection with conducting business activity in the form of short-term rentals, which we described in more detail in our publication on short-term rentals in housing communities.
However, housing communities should bear in mind that formal fulfilment of any of the statutory conditions does not automatically lead to the claim being upheld and the possibility of deprivation of ownership rights to the premises. This is because the provision is an exceptional measure and, as a rule, applies when other available legal measures have proved ineffective or insufficient (e.g. payment requests, debt collection proceedings, disciplinary interventions, actions for cessation of infringements).
This does not mean that Article 16 of the Polish Act on Ownership of Premises is dead letter – on the contrary, it can be an effective instrument for protecting the housing community. However, it requires a detailed analysis of the specific facts of the case, taking into account the degree of infringement, its persistence or flagrant nature, and the case law in similar cases, as consistently emphasised by the Supreme Court.
Practical example from Polish case law:
“Admittedly, as already mentioned, bringing such a claim (for cessation of immissions) is not a necessary prerequisite for demanding the sale of the premises (…), it is, however, a significant circumstance, because it cannot be ruled out that such an action would prove effective and lead to permanent changes in the defendant’s behaviour, which would make it unnecessary to resort to the most extreme measure, which is the most intrusive in terms of property rights, namely ordering the sale of the premises” (judgment of the Polish Court of Appeal in Poznań, 1st Civil Division, of 17 June 2014, ref. no. I ACa 372/14).
Long-term arrears in payments – when do they meet the conditions of Article 16?
In practice, the question often arises as to whether a housing community can sell a debtor’s flat for rent arrears. The answer is yes, but only under the conditions specified in Article 16(1) of the Polish Act on Ownership of Premises and after meeting strict material and formal conditions.
A housing community has the right to file a claim for the compulsory sale of a flat, primarily in the event of ‘long-term arrears in the payment of fees due from the owner of the flat’. But what does this mean in practice, given that the provision uses vague terms such as ‘long-term’, “arrears” and ‘fees due’?
What does ‘long-term arrears’ mean?
The term “long-term arrears” used in Article 16(1) of the Polish Act on Ownership of Premises is a general clause and has not been defined by law. This means that its interpretation has been left to doctrine and case law.
In practice, there will be no doubt in a situation where the owner of a flat is in arrears with payments for an extremely long period, for example 10 years. Such a state of affairs undoubtedly meets the condition of ‘long-term’. It will be equally obvious that a delay of one or two months does not fall within the concept of ‘long-term arrears’. Interpretation problems therefore arise in the case of intermediate periods, such as 5-6 months or one year, which is very often the case in practice.
The prevailing view in legal doctrine is a compromise that takes into account the interests of both the housing community and the owner of the premises, according to which ‘long-term arrears’ should, in principle, be understood as a delay of at least six months in the payment of fees due (this position is presented, among others, by A. Turlej, Własność lokali. Komentarz, C.H. Beck 2007, p. 300 and Z. Bidziński, Status prawny lokali i ich dysponentów, p. 41). A similar approach is confirmed in the case law of common courts.
A practical example from Polish case law:
‘The defendants’ failure to pay fees for seven years undoubtedly constitutes “long-term arrears”, justifying an action for an order to sell the premises’ (judgment of the Polish Court of Appeal in Warsaw of 23 April 2013, ref. no. VI ACa 992/12).
What does ‘arrears’ mean?
This premise leaves little room for interpretation. The word ‘arrears’ is understood as failure to pay something (in this case, fees) on time, and this is how it should be interpreted in practice. Of course, as mentioned above, the concept of arrears in fees referred to in the Polish Act on the Ownership of Premises should not be equated with every case of failure to pay on time in the colloquial sense.
Although linguistically arrears actually means failure to pay on time, the Polish Act uses the concept of arrears in a qualified sense, i.e. covering only long-term and gross arrears, i.e. those that are significant in size, persist for a long time and indicate a persistent or at least seriously reprehensible breach of the owner’s obligations towards the housing community.
Is rent arrears the only basis for selling a flat by auction?
The provision uses the premise of ‘long-term arrears in the payment of due fees’. This means that it is not only about arrears in the payment of advances for management costs (commonly referred to as ‘rent’), but also about all other amounts due to the housing community from the owner of the premises. These include, in particular: fees for central heating, water supply and sewage disposal, waste disposal, water heating, contributions to the renovation fund and other fees resulting from community resolutions or utility bills.
A practical example from Polish case law:
‘Arrears in advance payments will be the basis for taking the measures referred to in Article 16(1) of the Polish Act (…) However, it cannot be ruled out that arrears in the payment of other amounts due to the housing community will also be the basis for its application (…)’ (judgment of the Polish Regional Court in Gorzów Wielkopolski, 1st Civil Division, of 21 August 2018, file ref. no. I C 1095/17).
What amount of debt justifies a housing community’s request to sell a flat by auction?
Article 16 of the Polish Act on Ownership of Premises does not specify the minimum amount of arrears that justifies a housing community requesting the sale of premises by auction. The legislator has not indicated a specific amount of debt, a minimum period of arrears, or, for example, the relationship between the amount of arrears and the value of the premises. Consequently, there are no ‘model’ factual circumstances in which a housing community may use this mechanism, and in most cases the assessment of the legitimacy of applying this legal measure must be made on the basis of court rulings, doctrinal views and the specific circumstances of the case.
An analysis of the case law shows that the ‘appropriate’ amount of arrears is one that actually infringes or at least threatens the interests of the housing community, in particular by hindering or preventing it from performing its tasks properly, and above all, from maintaining the common property, settling liabilities towards utility providers or carrying out necessary repairs.
Of course, theoretically, it can be argued that, in principle, any rent arrears to some extent hinders the functioning of the housing community, as the lack of payments by one owner must be compensated for by the funds of the others, otherwise it leads to an increase in the community’s debt to its contractors. However, this does not mean that every (even symbolic) arrears justifies resorting to a measure that is significantly repressive and interferes with the right of ownership, such as the forced sale of a flat.
Consequently, it seems that due to the exceptionally far-reaching consequences of Article 16 of the Polish Act on the Ownership of Premises in the form of the forced sale of the premises, and thus the deprivation of the owner’s right of ownership to the premises, the arrears cannot be incidental, minor or trivial. Such a radical interference with the constitutionally protected right of ownership must meet the criterion of proportionality.
Consequently, it is necessary to analyse the facts of each case individually, taking into account, among other things, the following factors:
– the cumulative amount of debt in relation to the owner’s monthly expenses,
– the period of arrears (incidental delay vs. long-term evasion of payments),
– the impact of the debt on the financial liquidity of the community and its ability to settle its liabilities,
– the recurrence and persistence of payment violations,
– the attitude of the owner of the premises, i.e. an analysis of whether the debt is culpable and persistent, or whether it results from extraordinary, documented circumstances and possible attempts to settle the arrears amicably (settlement, payment in instalments).
A practical example from Polish case law:
“Such arrears shall therefore be any arrears that constitute a threat or violation of the interests of the housing community, expressed in its ability to properly perform its functions in the management of the common property. If, as a result of such arrears, it is impossible or significantly difficult for the community to perform its tasks under the Polish Act or the owners’ resolution, it should be considered that recourse to auction sale is justified (judgment of the Regional Court in Gorzów Wielkopolski, 1st Civil Division, of 21 August 2018, file ref. no. I C 1095/17).
Repayment of debt during the proceedings
In practice, an interesting situation may arise when a debt is incurred, the housing community files a lawsuit, and before the hearing is closed, the owner(s) of the premises pay the arrears. The existence of long-term arrears must be confirmed at the time of closing the hearing. The owner of the premises may therefore thwart the community’s claim by paying the outstanding amounts during the proceedings before the court of first instance (cf. T. Barański, in: Izdebski, Commentary on the Polish Act on Ownership of Premises, 2019, Article 16, Nb 11; Szymczak, Commentary on the Polish Act on Ownership of Premises, 2020, p. …).
If the owner of the premises repays the entire debt before the hearing is closed, the court will, as a rule, dismiss the community’s claim for the forced sale of the premises. This is due to the fact that at the time of closing the hearing, the conditions specified in Article 16 of the Polish Act on Ownership of Premises cease to exist – the arrears are no longer long-term or persistent.
Repayment of the debt before the conclusion of the proceedings is the most effective way to avoid the compulsory sale of the premises. However, it should be remembered that a mere declaration of repayment or partial repayment may not be sufficient; the court will assess whether the conditions of Article 16 of the Polish Act have actually ceased to exist, taking into account the owner’s attitude to date and the scale of previous breaches of obligations towards the community.
Gross or persistent violation of house rules
The second condition listed in Article 16(1) of the Polish Act on Ownership of Premises is gross or persistent violation of house rules by the owner of the premises. As in the case of the first condition, the legislator used rather vague terms, i.e. ‘gross’ and “persistent”. Importantly, the use of the conjunction ‘or’ indicates the application of a simple alternative.
Consequently, this condition should be considered fulfilled both when the violation of house rules is characterised by only one feature (only gross or only persistent) and when the behaviour combines both features at the same time (it is both gross and persistent). Our experience shows that in practice this is the case in most instances, i.e. the behaviour is both gross and persistent.
What does ‘persistent violation of domestic order’ mean?
The word ‘persistent’ means ‘lasting for a long time or constantly recurring’. The basic criterion for classifying a given behaviour as persistent is therefore the passage of time. A single action by the owner of the premises will therefore not meet the criteria, and only behaviour that lasts for a long time or recurs constantly will be considered ‘persistent’.
It is therefore important for the housing community that even minor violations of the obligation to observe house rules may be considered persistent if they continue for a long period of time. Case law shows that this may be the case, for example, when the owner (or user) of a flat:
– regularly plays loud music at night for several months,
– parks illegally in the common areas of the building,
– systematically hinders the use of common areas, or
– ignores the community’s cleaning obligations.
What does ‘gross violation of house rules’ mean?
A gross violation of house rules means a situation where the owner of the premises clearly, explicitly and seriously violates the rules of order in a given housing community. Importantly, the provision does not refer to minor or sporadic violations, but to behaviour that is immediately noticeable and constitutes a serious violation. This may be a one-off event or a recurring situation, if it is particularly burdensome for the community.
Examples of gross violations of domestic order include the following situations:
- large-scale vandalism,
- acts of serious violence against neighbours,
- causing a serious fire hazard,
- causing a health hazard,
- blocking escape routes in a life-threatening manner,
- causing an immediate risk of explosion or disaster.
Unlike ‘persistent transgression’, the owner’s actions do not have to be continuous or long-lasting; it is sufficient for the incident to be serious enough to pose a clear threat or nuisance to the community.
The provision refers to ‘house rules’ as a set of standards defining the proper behaviour of persons using the premises in a given property. The rules of house rules may be specified in the house rules, which we have described in more detail in our guide on housing community rules. In such cases, the assessment of whether a given behaviour violates the house rules consists in comparing that behaviour with the provisions of the rules.
If the behaviour is contrary to them, it should be considered a violation of house rules. A separate issue is determining whether the violation is ‘gross’ or ‘persistent’ within the meaning of Article 16 of the Polish Act on Ownership of Premises.
However, if the house rules of the housing community have not been adopted, then the standard of proper behaviour should be determined on the basis of two provisions, namely:
– Article 140 of the Civil Code, according to which, within the limits specified by law and the principles of social coexistence, the owner may, to the exclusion of other persons, use the property in accordance with the socio-economic purpose of their right, in particular, they may derive benefits and other income from the property. Within the same limits, they may dispose of the property.
– Article 144 of the Civil Code, according to which the owner of a property should, in exercising his rights, refrain from actions that would disturb the use of neighbouring properties beyond the average measure resulting from the socio-economic purpose of the property and local relations.
Making the use of other premises or common property burdensome
The third condition listed in Article 16(1) of the Polish Act on the Ownership of Premises is making the use of other premises or common property burdensome. This concept should be understood as behaviour on the part of a person using the premises which significantly hinders other owners or users from exercising their rights to use their own premises or common parts of the property, making such use burdensome, tiring or difficult to bear.
Importantly, in many cases, the behaviour in question may simultaneously fulfil both this condition and the previous one, i.e. gross or persistent violation of the applicable house rules.
The assessment of whether a given behaviour meets this criterion should be objective and made through the prism of a rationally acting member of the housing community. Consequently, subjective feelings of nuisance, without objective justification, cannot in themselves constitute grounds for granting a claim under Article 16(1) of the Polish Act.
For example, making the use of other premises or common property burdensome may consist of:
– regularly disturbing the peace at night by organising loud parties,
– aggressive behaviour towards neighbours,
– littering the common property,
– gross neglect of the premises, resulting in unpleasant odours spreading to neighbouring premises,
– keeping an aggressive animal and failing to provide adequate security measures.
The obstruction of the use of other premises or common property does not have to affect all other owners. As a rule, it is not required that the nuisance affect all owners, but in practice, courts examine the scale of the impact of the violations and their effect on the functioning of the community as a whole. An isolated neighbourhood conflict, without a broader context, may prove insufficient to apply the mechanism under Article 16 of the Polish Act on Ownership of Premises.
How can a housing community request the sale of a flat in practice?
As indicated above, a request to order the sale of a flat is a measure of last resort (ultima ratio). The housing community should therefore first take realistic and adequate measures to resolve the problem in a less painful manner (e.g. calls to cease violations, attempts at mediation, disciplinary interventions). Only if these measures prove ineffective is it justified for the housing community to resort to legal action to order the sale of the premises.
First of all, the housing community should adopt a resolution consenting to the bringing of an action, as the decision to request the compulsory sale of the premises has been explicitly classified as an action exceeding the scope of ordinary management (Article 22(3)(7) of the Polish Act). The resolution should precisely define the scope of the management board’s authority to bring an action and indicate the premises and the person to whom the request is to apply.
Consequently, the legitimacy of resorting to the measure under Article 16(1) of the Polish Act on Ownership of Premises may be verified in two ways in a specific case:
1. at the stage of reviewing the legality of the resolution pursuant to Article 25(1) of the Polish Act on the Ownership of Premises,
2. at the stage of substantive examination of the action for an order to sell the premises pursuant to Article 16(1) of the Polish Act on the Ownership of Premises.
If the statutory conditions are indeed met, both of these checks should confirm the legitimacy of the community’s actions. However, if the resolution was adopted hastily, without sufficient factual grounds or in violation of the principles of proper management of common property, it may be repealed even before the merits of the case are examined.
Can the basis for an action under Article 16 of the Polish Act on Ownership of Premises be solely the reprehensible behaviour of the owner, or also that of the persons residing in the premises?
There is no uniform position in the doctrine as to the scope of application of the provision. The dispute boils down to whether the statutory premise of ‘gross or persistent violation of domestic order’ refers only to the behaviour of the owner of the premises themselves, or also to the behaviour of persons actually residing in their premises (e.g. tenants, household members, partners, adult children).
Some authors, based on the linguistic interpretation of the provision (‘if the owner of the premises… by his behaviour…’), limit the scope of application of the provision exclusively to reprehensible behaviour on the part of the owner of the premises (for example: T. Barański in: Izdebski, Commentary on the Polish Act on Ownership of Premises, 2019, Article 16, Nb 16). However, this view seems to have a significant weakness: it leads to easy circumvention of the provision. The owner may formally ‘not violate the order’ while tolerating gross misconduct by tenants, lessees or other household members, which in practice would completely undermine the protective function of Article 16 of the Polish Act towards other owners of premises and the housing community.
However, the prevailing view in the literature is that the owner of the premises bears the consequences of violations of domestic order committed by persons actually using his premises, i.e. tenants, family members, persons to whom the premises have been given for free use, etc. (see: J. Doliwa, Housing Law, 2021, Article 16 of the Housing Law, Nb 7, E. Drozd, Rights and obligations of flat owners, A. Turlej (in: Strzelczyk, Turlej, Ownership of flats, 2015, Article 16 Nb 2). It is pointed out that the basis for the owner’s liability in this respect is Article 474 of the Civil Code, according to which the debtor is liable for the actions and omissions of persons whom he uses in the performance of his obligations.
By allowing third parties to use the premises, the owner effectively ‘uses them’ in the performance of his duties towards the community. Importantly, liability under Article 474 of the Civil Code arises both when the use of the premises results from a contract (e.g. a lease) and when it occurs on the basis of factual relations (e.g. the residence of relatives).
This broad position is also confirmed by the case law of common courts. The courts accept that for the purposes of Article 16 of the Polish Act, it is sufficient to demonstrate that the nuisance is related to the premises of a given owner, even if the direct perpetrators are third parties.
A practical example from Polish case law:
‘In order for the court to grant the community’s request for a compulsory sale of the premises, the owner’s offences must be sufficiently serious, and the reason for the community’s request may be not only the behaviour of the owner of the premises, but also the inappropriate behaviour of his household member or tenant or lessee of his premises’ (decision of the Court of Appeal in Krakow, 1st Civil Division, of 20 October 2016, ref. no. I ACz 1745/16).
Summary
Article 16(1) of the Polish Act on Ownership of Premises establishes an exceptional, repressive instrument for protecting the housing community against owners of premises who persistently evade their financial obligations or grossly or persistently violate the rules of coexistence in the community. Its purpose is not to ‘punish’ incidental violations, but to restore the possibility of peaceful and safe use of premises and common property.
The application of this mechanism is permissible only after the following conditions have been met:
1. long-term arrears in payments due to the community,
2. gross or persistent violation of house rules,
3. making the use of other premises or common property burdensome
In practice, these conditions often overlap and may result from a single set of behaviours, but merely ‘touching’ on them formally is not sufficient – it is necessary to assess the degree of the violations, their persistent or gross nature, and the proportionality of the interference with the right of ownership.
The measure under Article 16 of the Polish Act is of an ultima ratio nature, and therefore the community should first use less burdensome instruments (summonses, debt collection, actions for cessation of violations, disciplinary interventions). Only their ineffectiveness justifies resorting to the mechanism of compulsory sale of the premises.
Does the housing community have to take into account that after the sale of the premises, the owner will be entitled to replacement premises?
No. Pursuant to Article 16(2) of the Polish Act on Ownership of Premises, an owner whose premises have been sold under compulsory sale proceedings is not entitled to replacement premises. This provision is unambiguous and excludes the obligation to provide the former owner with other premises in connection with the application of the sanction under Article 16(1) of the Polish Act.
The ratio legis of this regulation is clear: if the housing community were obliged to provide the former owner with another flat, the sanction in the form of compulsory sale of the flat would in fact be deprived of its real effect, and the objective of Article 16(1) of the Polish Act – to restore the proper functioning of the community by removing from the community an owner who grossly violates his obligations – would not be achieved.
Who is a party to a case concerning the compulsory sale of premises?
The entity entitled to bring an action is the housing community, represented by the management board or administrator. The defendant should be the owner of the premises whose behaviour meets at least one of the conditions listed in the provision in question.
What should be the content of a claim for compulsory sale of premises?
In practice, various formulations of the claim may be encountered, e.g.:
– ordering the sale by auction, conducted in accordance with the provisions of the Polish Code of Civil Procedure, of premises belonging to the defendant,
– authorisation to sell the premises owned by the defendant by way of enforcement proceedings against real estate,
– ruling on the sale of the premises by auction on the basis of the provisions of the Polish Code of Civil Procedure on enforcement against real estate.
What does a judgment authorising the sale of the premises give the housing community in practice?
The judgment obtained by the community authorising the sale of the premises gives the housing community the right to initiate proceedings to enforce it. The housing community should therefore apply to the bailiff to sell the premises under the provisions on enforcement against real estate.
