Property Law – Introduction

Kamil Zaradkiewicz
Property Law Editor
Habilitated doctor, associate professor at the Institute of Civil Law, University of Warsaw, director of the Department of Jurisprudence and Studies in the Office of the Constitutional Tribunal of Poland, and expert of the Polish Codification Commission for Civil Law.

1. Basic principles

The provisions on property law have been incorporated into the Second Book of the Civil Code (CC). There are eight basic principles of property law:

  1. the numerus clausus of the real rights,
  2. the consolidation principle
  3. the priority of real rights,
  4. the principle of specialty,
  5. the principle of publicity,
  6. the consensual (pure obligatory) agreement principle,
  7. causality,
  8. droit de suite (res transit cum onere suo – the right to follow the property into whosever hands it may be)

Only a thing in the strict sense, i.e. a physical (corporeal) object – personal property (movable asset) or real property (land, building or apartment), may constitute an object of real rights. A building or apartment may be established as a separate real property only when and in the manner expressly authorised by law. If specific provisions provide so, e.g. in the case of usufruct and pledge, the scope of objects of the real rights may also include transferrable and pecuniary rights (the usufruct on rights, see Art. 265 CC; the pledge on rights, see Art. 327 CC). Unless otherwise provided by law, any real right may exist on one asset. Only a predial servitude, mortgage and registered pledge may charge more than one asset simultaneously. No real right may be granted on future property.

According to the numerus clausus principle, only the Legislator has the competence to create types of real rights through statutory provisions. This principle concerns both creating entirely new types of real rights (Ger. Typenzwang) and transforming (modifying) the content of existing real rights (Ger. Typenfixierung). Therefore, the principle of freedom of contracts (as for the law of obligations, see Art. 3531 CC) does not apply either to real rights or to agreements relating to such rights (e.g. ownership transfer agreement). The Civil Code enumerates the limited rights in rem (iura in re aliena) in its Art. 244. Polish civil law sets out the following types of real rights: 1) Ownership (Art. 140-231 CC), 2) Perpetual Usufruct (Art. 232-243 CC), 3) Usufruct (Art. 252-284 CC), 4) Servitudes (real, personal and, ‘transmission’ servitude, see Art. 285-3054 CC), 5) Co-operative proprietary right to an apartment (in the Act on Housing Co-operatives of 2000), 6) Pledge (simple and registered, see Art. 306-335 CC and the Act on Registered Pledges and the Register of Pledges of 1996, Ustawa z 6 grudnia 1996 r. o zastawie rejestrowym i rejestrze zastawów, Dz. U. z 2009 r., Nr 67, poz. 569 ze zm. – RPA), and 7) Mortgage (see the Act on Land and Mortgage Registers and Mortgages of 1982, Ustawa z 6 lipca 1982 r. o księgach wieczystych i hipotece, Dz. U. z 2013 r., poz. 707 – LRMA). Except for the co-operative proprietary right, registered pledge and mortgage, all real rights are regulated in the Civil Code. The main characteristic of limited real rights is that they “follow the object”. They follow the property into whatever hands the property may pass, and they may be exercised in whosever hands the property lies. It means that limited real rights continue to encumber the object upon any transfer of its ownership, as they constitute an absolute right (having an erga omnes effect). There is no separate regulation in relation to the community of rights. Both the doctrine and judiciary accept the opinion that, in such cases, the provisions on co-ownership pro indiviso (e.g. civil law partnership and community of matrimonial proprietary rights) should be applied per analogiam.

All real rights are protected by actions in rem (rei vindicatio, actio negatoria etc.), which are effective against any person who violates the exclusive sphere (content) of the right and its exercise (see in particular – as concerns the protection of ownership – a right to revendicate and actio negatoria, see Art. 222-223 CC, as concerns limited real rights – Art. 251 CC). The owner of a thing is entitled to recover it from anyone who possesses or detains it without right. The assignment of the action for the recovery of that asset (for the transfer of its ownership) is not allowed. A possessor in good faith does not need to render account of the fruits and revenues of the asset. A possessor in bad faith should return the fruits and revenues from the time he began to be in bad faith.

A person entitled under another real right may institute all actions against the owner or third persons that are necessary to insure the enjoyment and preservation of his right.

2. Ownership

Ownership (własność, Art. 140-231 CC) constitutes the real right with the most extensive scope of content. It is defined in Article 140 CC, which states that “within the boundaries established by law and the principles of social coexistence, the owner may, excluding other persons, use the asset in accordance with the social and economic purpose of ownership; in particular he may collect fruits and other revenues of the asset. Within the same boundaries, the owner may dispose of the property (asset).” Art. 140 CC indicates the abstract boundaries of ownership (indicated, for example, by provisions on neighbours rights – vide Art. 143-154 CC). Ownership of the soil within the limitations of the social and economic purpose of the soil carries with it ownership of what is above and what is below the surface(Art. 143 CC).According to the doctrine, one has to distinguish between such boundaries on one side, and any external limitations of the real rights (J. Wasilkowski, Prawo własności w PRL: zarys wykładu; in cooperation with M. Madey, Warszawa 1969, pp. 105-106). The last may be established using contractual provisions and is aimed at preventing the performance of the owner’s rights within the scope of another person’s rights (third parties, e.g. contractual).

Ownership is a pecuniary right giving full legal control over an asset, but it does not constitute an absolute right (i.e. ius infinitum). It confers direct, immediate, and exclusive authority over an asset. It is protected by Article 64 of the Constitution of the Republic of Poland, which states that “1. Everyone has the right to property, to other pecuniary rights and the right of succession. 2. Ownership, other pecuniary rights and the right of inheritance are equally protected by the law. 3. Property may be limited only through a statutory act, and only as long as it does not violate the essence of ownership.” Property, i.e. pecuniary rights including the expectation of a future right, is also protected by Article 21 of the Constitution (which allows expropriation only for public purposes and in exchange for just compensation. Ownership, as stated in Article 64 of the Constitution, refers not only to the ownership as defined in Article 140 CC, but also to any absolute proprietary rights to other objects, e.g. author’s rights (copyright), patents, trade marks, industrial design rights, etc.

The owner of land enclosed by that of others in such a way that there is no access, or inadequate access, to it from a public road may require his neighbour to provide him with the necessary servitude of way in exchange for compensation (Art. 145 CC).

Generally, CC does not recognise any right to own an asset other than ownership (iura in re propria, except for certain cases of pledge, see Art. 325 CC, and a co-operative proprietary right to an apartment). The owner of an asset may not establish any other real right for his own benefit (such as the German Eigentümerhypothek or Eigentümergrundschuld).

CC indicates two kinds of co-ownership (współwłasność) – joint, i.e. without shares, and common, i.e. undividedpro indiviso (Art. 196 § 1 CC). CC regulates only common ownership (see Art. 197-221 CC). Each common co-owner has an undivided share and may freely dispose of his share (also alienate, or encumber). To dispose of the share in co-ownership, the consent of other co-owners is not necessary (Art. 198 CC). The shares of the co-owners are presumed to be equal.To dispose of (transfer or encumber) an asset under co-ownership, or to make substantial alterations or substantial improvements to the asset, the consent of all the co-owners is required (Art. 199 CC). Each co-owner is entitled to use the thing held pro indiviso, but he cannot prevent another co-owner from making use of it. A co-owner may, without the consent of any other co-owner, take necessary steps to preserve the asset pro indiviso. The use and management of the asset held pro indiviso may be determined by an agreement between the co-owners. The co-owners are liable, proportionately to their shares, for the costs of administration and other common charges related to the asset.

The institution of common co-ownership is foreseen as temporary (interim). No one may be compelled to hold an asset pro indiviso with another person. Therefore, the co-ownership may be abolished at any time, at the demand of each co-owner (actio communi dividundo, see Art. 210 CC). The right to demand the abolition of a common right, especially by dividing the asset, may be excluded by agreement for up to five years. This term may be prolonged. The form of the abolition may be determined by all the co-owners in an agreement, or, if there is no such agreement, any of the co-owners may demand a judicial partition. The court should decree a partition in-kind when the asset can easily be divided. Otherwise the court should decree a partition by licitation or by way of adjudication to one of the co-owners, with an obligation to repay the others.

3. Perpetual usufruct

Perpetual usufruct (użytkowanie wieczyste, Art. 232-243 CC) is a specific institution of property law, a kind of quasi-ownership right that includes both rights and some specific obligations binding the holder of the right (perpetual usufructuary). It grants a person the full benefit and enjoyment of real property owned by another person. Therefore, the right of perpetual usufruct is not perceived as one of the limited real rights, but it is said to be a separate kind of right in rem. In addition, the definition of perpetual usufruct in Article 233 CC is very similar to the definition of ownership in Article 140 CC. The first stipulates that a perpetual usufructuary may use the encumbered land within the boundaries indicated by statutory provisions, the principles of social coexistence and by an agreement under which the perpetual usufruct is established. He may also – within those boundaries – dispose of his right (but not of the land itself) and exclude other persons (ius omnes alios excludendi). The right should be registered in the land and mortgane register.

The aims of perpetual usufruct are the same as those of emphyteusis, the German Erbbaurecht, the Austrian Baurecht or the French superficie. Perpetual usufruct may only encumber land owned by the State Treasury and local authorities, especially municipalities, and their unions (see Art. 232 CC). The main obligation of the perpetual usufructuary is to pay an annual fee, and in some cases to erect a building or install another kind of device (installation) on the land. Buildings and other installations existing or erected during the period of perpetual usufruct become the property of the perpetual usufructuary as separate assets (as an exception to the superficies solo cedit principle, see Article 47 and Article 191 CC – a movable asset incorporated into an immovable one becomes its component part). The ownership thereof is related with the perpetual usufruct and is treated as a component part.

Perpetual usufruct is a temporal right (or rather a specific legal relationship) that may be established for a period of 99 years. In some specific cases (when the purpose of the right does not require the use of the land for such a long period) it may be also established for a shorter time, but not less than 40 years. Within the last five years of the term of the usufruct, the perpetual usufructuary may demand that the right be re-established (extended) for a new period. The owner of the encumbered land (i.e. the State Treasury or the local authority) may not refuse to enter into a re-establishment (extension) agreement. Refusal is only possible when the land is considered necessary to achieve important social objectives (see Art. 236 CC).

After the right of perpetual usufruct expires, where a building that was the property of the perpetual usufructuary is incorporated in an immovable property, a mortgage on the perpetual usufruct may subsist as an pledge on a claim to restore or compensate for the value of the building (see Art. 1011 LRMA).

4. Usufruct

Usufruct (użytkowanie, Art. 252-279 CC) is a real right to use an asset – both movable and immovable property – and to collect benefits therefrom (both natural, i.e. fruits – products of the earth or of animals, and civil. i.e. revenues derived from an asset by operation of law or by reason of a juridical act). The entitlement to the fruits may be limited. The parties may exclude particular benefits or limit the execution of the right to a part of an immovable property. The object of usufruct does not have to be only an asset (movable or immovable property), but can also include transferrable pecuniary rights (see Art. 265 CC). Usufruct is a non-transferrable right, and so it cannot be subject to inheritance (Art. 254, 266 CC). However, the usufructuary has the right to let or lease an encumbered asset for a term that extends beyond the termination of the usufruct. It expires at the death of the natural person, or at the dissolution of the legal person. However, if a usufructuary is a legal person, the right may theoretically last ad infinitum. Timeshare constitutes a specific type of the right, which also is transferable and hereditary (it is regulated in the Act on Timeshare of 2011 – Ustawa z 16 września 2011 r. o timeshare, Dz. U. Nr 230, poz. 1370).

The usufructuary should keep and preserve the substance of the encumbered asset. He should also observe its existing (previous) purpose (Art. 256, 267 § 1 CC). The usufructuary is responsible for ordinary maintenance and repairs to keep the asset under usufruct in good order (Art. 160 CC), whether the need for such repairs arises from the normal use of things.

 An ‘irregular’ usufruct may be established on money (coins and notes being assets in commercium) and other assets identified as to species (in-kind, res fungibles). In such cases, upon delivery, the usufructuary becomes the owner of the assets. After the expiry of the usufruct, he has a duty (obligation) to return assets of the same quantity and quality as they had at the commencement of the usufruct (according to the provisions of the loan agreement, Art. 264 CC).

The usufruct terminates ex lege by the prescription of non-use, if the usufructuary has not exercised his right for ten years (Art. 255 CC). Upon termination of the usufruct, the former usufructuary should return the asset to the owner in a good state of repair.

5. Servitudes

The CC recognises three separate types of servitudesreal or predial (Pol. służebności gruntowe), personal (Pol. służebności osobiste) and ‘transmission’ (Pol. służebności przesyłu, Art. 285-3054 CC).

A predial servitude (e.g. a right of aqueduct, of drawing water, of watering animals, of passage, of pasturage) is a real right encumbering a servient immovable property for the benefit of a dominant immovable property (i.e. its actual owner). The two properties must belong to different owners. Neither the contiguity nor the proximity of the two estates is necessary. There are three categories of predial servitude (Art. 385 CC). Their content may be such that: 1) the actual owner of the dominant immovable property may use the servient (encumbered) immovable property in a specific (particular) way (positive servitude) and the owner of the servient immovable property is required to tolerate such certain acts of use, 2) the actual owner of the servient immovable property has a duty to abstain from performing a specific action on his property, as indicated in the agreement on encumbrance (negative, prohibition servitude), 3) the actual owner of the servient immovable property may not benefit from his right of ownership (should refrain from the exercise thereof) to a certain extent, which confers on him any influence over the dominant immovable property according to the provisions on the scope and performance of ownership (e.g. neighbours’ rights). There must be a benefit to the dominant immovable property – the only objective of a predial servitude may be an increase in the advantage or utility of the dominant immovable property, or of its part (Art. 386 CC). A servitude of way by necessity (służebność drogi koniecznej) is a specific type of predial servitude (see Art. 145 CC) that may be compulsorily established for remuneration by the court. The predial servitude may only be exercised in a manner that is the least inconvenient to the servient immovable property. Therefore, it may extend only to what is necessary for its exercise.

The servitudes are indivisible – no legal shares in servitude can be indicated. A servitude is due on all of the dominant immovable property and on all parts of it. The right may be exercised by all the co-owners of a dominant immovable property in its entirely. If a dominant immovable property is physically divided, the predial servitude remains due on each part and encumbers as unchanged and undivided for the benefit of all their owners. Upon the physical division of a servient immovable property, the real right remains and encumbers all of the newly created parts. In addition, the division of the servient land does not affect the right of the owner of the dominant immovable property.

A predial servitude is inseparable from the dominant immovable property, and as its part, it is encumbered or passes only along with it. The right of servitude is treated as a component part of the dominant immovable property. A predial servitude may be acquired by prescription, but only in cases of using a device or installation that is stable and visible (see Art. 252 CC).

The owner of a servient immovable property may demand the abolition of the right if it has lost its importance for the dominant immovable property (Art. 295 CC). The servitude terminates ex lege by the prescription of non-use if an entitled person has not used the right for ten years (Art. 293 § 1 CC).

A personal servitude (służebność osobista, art. 296-305 CC) may only be established for the benefit of natural person; it is not transferable or heritable. The right may only confer an advantage that can be established by a predial servitude. The right is regulated by applying the rules governing predial servitudes to the extent that their application is compatible with the rules governing a personal servitude. This kind of servitude may not be alienated, let, encumbered or acquired by prescription. Specific types of personal servitude are personal use right (używanie, Lat. usus) and a servitude of habitation (służebność mieszkania, Lat. habitatio). The latter is a servitude giving the right to dwell in another person’s house. A person with the right of habitation may reside in the house together with his family. Personal use right confers a specified use of an estate less than full enjoyment.

A servitude of transmission (służebność przesyłu) is a separate type of servitude (Art. 3051 et seq. CC). It was introduced to the Polish legal system by the Act Amending the Civil Code of 2008, as a result of doubts concerning the admissibility of encumbering a real servitude in favour of entities transmitting water, gas, electricity, etc. (who were usually the owners of transmission devices.)

6. Co-operative proprietary right to an apartment

A co-operative proprietary right to an apartment (spółdzielcze własnościowe prawo do lokalu) is a limited real right regulated in the Act on Housing Co-operatives of 2000 (Ustawa z 15 grudnia 2000 r. o spółdzielniach mieszkaniowych, Dz. U. z 2013 r., poz. 1222). It is a transferrable right to use an apartment in a building owned by a housing co-operative. Since the adoption of the 2007 amendment of that Act (Ustawa z 14 czerwca 2007 r. o zmianie ustawy o spółdzielniach mieszkaniowych oraz o zmianie niektórych innych ustaw, Dz. U. 125, poz. 873 ze zm.), a new co-operative proprietary right may no longer be established.

7. Pledge

Pledge (zastaw) is the right of a creditor (pledgee, Pol. zastawnik) to benefit from an actual, conditional or future claim of any kind secured with the pledge on movable property or on a transferable right (see Art. 306, 327 CC). A security right that secures a claim other than one for the payment of money secures the claim of the pledgee for damages he may suffer from a breach of the obligation, up to the amount stated in the pledge agreement. The pledge may also (additionally) secure collateral rights relating to a secured claim (especially interest and court expenses, see Art. 314 CC). Such a security measure has priority over other claims not secured with another real right on the same property.

The pledgor (zastawca) may be both a debtor of a secured claim or a third party. A person may establish a pledge over his property to secure the claim of another person. In such a case, the pledgor may assert against the pledgee any defence to the claim that the pledge secures. The pledgor may not claim that the pledge is unenforceable because the claim the pledge secures is unenforceable. A pledge is not a subsidiary right and may be exercised independently of the secured claim. It is a right of capitalisation of encumbered assets or rights (Pol. prawo spieniężenia, Ger. Verwertungsrecht) by way of judicial or administrative enforcement proceedings. The claim may be monetary or non-monetary. It is not necessary for the pledgor to pay the secured claim (especially when he is a third party) according to the principle iura in re in faciendo consistere non possunt. Therefore, it is not clear whether the pledgee may demand payment, or whether he should exercise his right of pledge on an encumbered asset or right through separate judicial proceedings. A secured debt may be paid by the pledgor being the third party (not being a “personal” debtor). In such cases, the claim transfers to the pledgor to the extent that the claim is satisfied, and the pledge respectively decreases or extinguishes (see Art. 518 CC). The pledge extinguishes in each case if the claim is satisfied (including if it is paid by the debtor), and also if the pledgee returns the encumbered asset to the pledgor (Art. 325 § 1 CC).

An asset being the object of a possessory pledge (zastaw zwykły) should be transferred into the possession of the pledgee. The creditor, with the consent of the pledgor, may also hold the asset through a third person. It is not allowed to encumber several assets or rights jointly. A possessory pledge – as opposed to a registered pledge or a mortgage – constitutes a strictly accessory right. This means that its existence, value and scope depend on the existence, value and scope of the secured claim. In particular, a possessory pledge passes to a new creditor (pledgee) upon the transfer of the secured claim, otherwise the pledge extinguishes. The security may not be transferred without a secured claim, and a claim may be transferred without the security only with the effect of extinguishment of the last (Art. 323 CC). The pledge subsists only as long as the claim whose performance it secures continues to exist.Therefore, the right extinguishes by the termination of the secured claim. Upon its extinguishment, the pledgee is obliged to return the asset being the object of a pledge to the owner thereof (pledgor).

A pledgee does not have the right to use or dispose of the encumbered asset. However, unless otherwise stipulated, he may satisfy his claim by collecting fruits. Generally a claim cannot be satisfied by the pledgee acquiring the pledged asset or right (lex commissoria). Such an arrangement should be treated as invalid (Art. 58 CC). Unless otherwise stipulated, the plegdgee should hand over the fruits collected to the grantor, and should apply the revenues collected to the capital of the secured claim.In all cases, a secured claim can be satisfied by the sale of the pledged asset or right in judicial or administrative enforcement proceedings (Art. 312 CC). The pledged asset or right should be sold by public auction, or freehand by a bailiff. A debtor or a person against whom a mortgage right is exercised, or any other interested person, may stop the right from being exercised by paying the creditor the amount due to him.

In the case of a registered pledge (Pol. zastaw rejestrowy), regulated by the RPA, the claim needs to be monetary and the pledged asset may remain in the possession of the pledgor. The real security may be created with or without the movable asset being delivered to the pledgee (Art. 2 sec. 2 RPA). The registered pledge is, therefore, a non-possessory security right. It may be created on the basis of a pledge agreement upon registering (entering) the pledge in the Register of Pledges conducted by the court (Art. 2 sec. 1 RPA). The registered pledge of a patented invention, trade mark or other industrial property object may also be registered in the relevant industrial property register. In principle, the security measure extinguishes with the termination of the secured claim (Art. 18 sec. 1 RPA), unless another claim or claims may be still secured. In particular, the security measure extinguishes if the claim is paid (including by the debtor thereof), unless the right may secure another (actual or future) claim.

In addition to their personal right of action, satisfaction may be achieved through the sale of the encumbered object in judicial enforcement proceedings (compulsory execution, Art. 21 RPA). Satisfaction may also be achieved by 1) the sale of the object in a public auction performed by a notary or a bailiff; 2) the creditor taking over – in some cases – the encumbered asset (lex commissoria), 3) the lease of the enterprise that is at least partly encumbered with the registered pledge (see Art. 22-27 RPA).

Notwithstanding any stipulation to the contrary, a debtor or a person against whom a pledge is exercised, or any other interested person, may stop the right from being exercised by paying the creditor the due amount.

A registered pledge extinguishes not later than twenty years after the date of its registration, unless the parties agreed to continue the security for a term not exceeding ten years (Art. 18a RPA).

8. Mortgage and the right to dispose of the mortgage ranking

Mortgage (Pol. hipoteka) regulated by the LRMA is a non-possessory security right in rem aimed at securing a claim of the person for the benefit of whom the right is established (the mortgagee). The right gives the possibility of satisfying the obligation in preference over the claims of others. The mortgagee may receive satisfaction out of the encumbered immovable property, or of the legal share thereof (provided that it is the share of a co-owner). The right extends to everything united to the encumbered immovable asset by accession, also to accessory assets, and to the present and future rents or fruits produced by the encumbered immovable property.A mortgage may be conventional or judicial.

A mortgage may be established not only on immovable property or its legal share, but also on the right of perpetual usufruct, a co-operative proprietary right to an apartment or a claim secured by another mortgage (subintabulat, Art. 1081-1085 LRMA). A debtor of a securedobligation may establish a mortgage over his immovable property, or a right may be established by a third person to secure another person’s claim.In this case, the mortgagor may assert against the mortgagee any defence to the claim that the mortgage secures. A mortgagor may not claim that the mortgage is unenforceable because the claim that the mortgage secures is unenforceable.

A mortgage agreement must state precisely the claim or claims to be secured, or the maximum amount of the claim or claims (especially when they are liquid, i.e. their value cannot be determined or is uncertain) that may be outstanding at any time and from time to time that the mortgage secures, and the specific sum for which the real right is granted (hypothecary sum).

 A mortgage constitutes the right to satisfaction from an actual, conditional or future pecuniary claim or claims secured out of the encumbered immovable property or of some transferrable rights (see Art. 65 and Art. 68 sec. 1, Art. 681 et seq. LRMA). The right may not secure an obligation other than one for the payment of money. The right secures the capital, the interest accrued thereon and the legitimate costs within the mortgage sum entered in the land register.

This security measure may be established with an agreement between the creditor and the proprietor of the encumbered object, and the entry in the land and mortgage register. Registration has a constitutive effect (Art. 67 LRMA).

A “new” type of mortgage, introduced by the Act Amending the LRMA of 2009, is similar to the institution of the French hypothèque rechargeable (Introduced by the Ordonnance du 23 mars 2006). It is more flexible than a traditional pledge because may be reused to secure one or more claims other than the original, or it may secure more than one claim of the same creditor (see Art. 682 and 683 LRMA). The sum of mortgages does not need to meet the sum of claims being secured. The security may also be divided into parts (partial mortgages) with the same ranking (see Art. 681 sec. 3 LRMA).

Being a right in rem, the security has priority over any other claims that are not secured with a right in rem on the same property (immovable property or right). The rankings of mortgages established on the same asset are governed by the general principle prior tempore potior iure. They are determined by the dates of submitting applications before the land and mortgage register court. It is possible to establish a mortgage on several assets and/or rights. In such cases, the mortgage charges more than one property. It may also be created if an encumbered immovable property is divided. In the case of such a joint (combined) mortgage, the entire claim is secured by each property, and the creditor may exercise the mortgage, i.e. satisfy his claim(s) out of each property simultaneously (completely), partly, successively or separately against such properties as he sees fit(also out of some of them, for details see Art. 76 LRMA).The sum of the mortgage may be also divided by mortgagee between the encumbered objects.

Mortgages may not be transferred without a secured claim, but one or more claims may be transferred without the mortgage (see Art. 79 et seq. LRMA). The owner of the asset has the right to freely dispose of the encumbered asset. Any contractual restrictions thereof are invalid (Art. 72 LRMA).

Secured claims may be satisfied according to the ranking of mortgages (see Art. 1025 CCP). In addition to their personal right of action,satisfaction has to be made through the sale of the encumbered object through a judicial enforcement proceedings (compulsory execution). A compulsory auction of the immovable property, carried out by a bailiff, is always required. Earlier ranking creditors take priority over later creditors when exercising their mortgage rights. Sale by a bailiff purges the real rights to the extent provided by the Code of Civil Procedure in respect of the order to sell. A debtor, a person against whom a mortgage right is exercised, or any other interested person, may prevent the right from being exercised by paying the creditor the amount due to him.

Mortgage also extinguish by 1) the satisfaction of a claim, unless another claim is or may be secured and satisfied, 2) its deletion from the land register. Generally, except as provided by law, the mortgagee may enforce the mortgage only to the extent that he may enforce the claim or claims it secures.

The mortgagee has the right against the owner to prevent the destruction or deterioration of the encumbered immovable property, or a material reduction in its value, except through normal use or if it is necessary.Upon the extinguishment of a mortgage with a prior ranking, a mortgage on the same asset or right with a subsequent ranking does not automatically move forward. The owner of the encumbered immovable property (or the right) has the right to manage the mortgage ranking (prawo rozporządzania opróżnionym miejscem hipotecznym, Art. 1011 et seq. LRMA). This institution is similar to some foreign solutions where the Roman principle of successio hypothecaria is not accepted, e.g. the German Eigentümergrundschuld, the Austrian Eigentümerhypothek or the Swiss leere Pfandstellen. It is a specific right arising from and being part of the ownership content. The owner of the immovable property may encumber the object with another mortgage (a new right or mortgage having another ranking) with a ranking of the extinguished security. The owner should apply to enter this right in the land register.

The judicial mortgage may be established by a court to secure an action (Art. 109 et seq. LRMA).

9. Dispositions concerning ownership and other real rights

Any obligatory agreement (i.e. obliging the transfer of ownership, e.g. sale, exchange, donation etc.) that obliges one of the parties to transfer the ownership of a specific asset results in the transfer of the right to the other party (unless otherwise stipulated, Art. 155 § 1 CC). An obligatory agreement is therefore effective not only between the parties (inter partes), but also against third persons.The publication of rights is effected by the possession or theregistration of the rights – when applicable – in the register of movable real rights (e.g. registered pledge) or in the land register. Filing for registry in the land and mortgage register (księga wieczysta), or other register, or possession of the movable asset to be delivered is not necessary, unless otherwise required by law (e.g. constitution of the flat ownership right, the acquisition of perpetual usufruct, registered pledge or mortgage, the replacement of ranking of limited real rights, also the modification, transmission, encumbrance or extinguishment of the real rights already published in the land and mortgage register). However, in cases of future assets, i.e. not belonging to the transferor or not existing, or those identified by type (in-kind), the obligatory agreement is not enough to transfer of ownership. In such cases, it is necessary to transfer possession of the asset. It is necessary to determine and identify the object of the transferred right (see Art. 155 § 2 CC). An ownership transfer agreement (and other real rights transfer agreements) is causal; it is valid only when preceded by a valid obligation arising from an obligatory agreement or other legal event (e.g. unjust enrichment, hereditary notation etc., see Art. 156 CC). Ownership of immovable property cannot be transferred under condition or for a specific period of time (see Art 157). Therefore, the right of ownership of an immovable property may not be subject to a resolutory condition. An immovable property transfer agreement should be concluded using the form of a notarial deed or will be invalid (form required ad solemnitatem, see Art. 158 CC). There can be no stipulation of the inalienability of an asset in general, or such that may be set up against third persons, i.e. such having erga omnes effect (see Art. 57 CC). Such a stipulation may impare a purely personal restriction between the parties, and only as concerns the specific way of alienation.

The provisions concerning the acquisition of ownership apply mutatis mutandis to the acquisition of perpetual usufruct (see Art. 237 CC) and other (limited) real rights (see Art. 245-2451 CC). A limited real right may only be established by a person having the power to alienate the property. The right on immovable property must be granted by such a person in a notarial deed (or will be invalid – ad solemnitatem).Only in some particular cases does the creation of a real right or its transmission need to be entered into the land and mortgage register (e.g. the establishment or transfer of perpetual usufruct or a mortgage). A ranking for entry of a limited real right ahead of a right in rem to be entered in the land and mortgage register may be reserved by the owner of the immovable property for a third party.

Generally, the nemo plus iuris in alium transferre potest quam ipse habet (or nemo dat quod non habet) principle applies to the acquisition of rights in rem. However, in the case of the disposition of immovable and movable property, it is possible to acquire a real right from a person not entitled to transfer or establish the right. As far as movable property is concerned, the bona fide acquirer (transferee) may become an owner of an asset under the following conditions: 1) the transferee enters into an onerous or gratuitous agreement with a person not entitled to transfer the asset, 2) the possession of the asset is delivered, giving the transferee actual control over the asset. These rules apply only when the movable asset has been delivered or transferred by the owner to the transferor, who was not authorised to alienate the property. In other cases, i.e. when the asset is relinquished (e.g. lost or stolen) by the owner, the ownership may pass to the bona fide acquirer when the above mentioned conditions are met, and additionally upon the lapse of three years following the loss (except of bearer documents – securities, cash and assets sold in public auction or in judicial enforcement proceedings (compulsory execution), see Art. 169 CC). An acquirer of a movable property is in good faith unless he knows, or should have known, that the transferor was not authorised to alienate the property, e.g. he was not the owner of the asset. A former owner of movable property may not recover it from the purchaser, even on reimbursing the purchase price.

As far as immovable property is concerned, the acquisition of a real right ex fide bona (ownership or limited real rights, and under some circumstances also perpetual usufruct) can occur when such a right is erroneously entered in the land and mortgage register. In this case the acquirer of the real right erroneously entered in the register (which does not exist or if its content is different) may obtain it from the person referred to in the register as entitled to transfer, unless he acquires the right gratuitously and acts in bad faith (mala fide, see Art. 5 and Art. 6 LRMA). An acquirer of a real right that was erroneously entered in the land and mortgage register is in bad faith when he knows, or should have known, that the right was entered erroneously.

Except for a mortgage (see above), upon extinguishment of a right in rem with a prior ranking, the right in rem that encumbers the same object with a subsequent ranking moves forward (the principle of succession). The priority of rights may be modified (inverted, replacement of ranking, Art. 250 CC).The rank of creditors may be inverted, to the extent of their respective claims, but in a manner that does not prejudice any intermediate creditors. The inversion or cession of rank concerning the real rights entered in the land and mortgage register should be published.

The holder of a limited real right may waive his right in a unilateral legal act without any consent of the owner of encumbered object (Art. 246 CC).

10. Other methods of acquiring or losing real rights

A real right may not be acquired by acquisitive prescription, except for the cases provided for by law. Acquisitive prescription is a mode of acquiring ownership or some other real rights (perpetual usufruct or some affirmative predial servitudes) by possession of an asset for a period of time.

 An autonomous possessor (on autonomous possession see below point 11) of immovable property may acquire ownership ex lege by the peaceable and uninterrupted possession for a period of twenty years, when the possession is acquired in good faith. A possessor is in good faith when he reasonably believes, in light of objective considerations, that he is an owner of the asset he acquires. However, if the possessor acquired possession without good faith (in time of acquisition according to the principle mala fides superveniens non nocet), then his term of possession should last for thirty years (see Art. 172 et seq. CC).Until the expiry of that period, the owner may revendicate the movable property from the possessor. The Civil Code does not recognise the Roman claim known as actio publiciana. A successor by particular title may join to his possession that of his predecessors in order to complete prescription (for details see Art. 176 CC).An autonomous bona fide possessor of a movable property may acquire the ownership by acquisitive prescription provided that he has been controlling the asset by peaceable and uninterrupted possession for three years (Art. 174 CC). One may not acquire the ownership of movable property where he is has held it in bad faith (here mala fide superveniens nocet).

Ownership of movable property also extinguishes in the event of its abandonment. A thing is abandoned when its owner relinquishes possession with the intent to give up ownership. (derelictio, see Art. 180 CC), which is not possible as concerns the ownership of immovable property (in a judgment of 15 March 2005, the Constitutional Court indicated the former Art. 179 CC as being unconstitutional – OTK-A 2005, No. 3, item 24). Movable property not belonging to anyone (res nullius) may be acquired by occupancy, i.e. by taking an asset that has been abandoned or not belonging to anyone in autonomous possession with the intent to own it (Art. 181 CC).

Generally, movable property may also be acquired by a finder (except for treasures, money, securities, other valuables and assets of scientific or artistic value, for details see Art. 183 et seq. CC). However, a person who finds a movable asset that has been lost, is bound to make a diligent effort to locate its owner or possessor, and to return the asset to him. In the case of some assets, the finder is obliged to hand them over to a state authority. He may acquire ownership within three years if a diligent effort is made and the owner is not found.The ownership of treasure, being a movable asset hidden in another thing, movable or immovable, for such a long time that its owner cannot be determined, is always acquired by the State Treasury.

 The ownership of movable property may also be acquired by accession (in particular according to the principle superficies solo cedit), confusion, specification and transformation (Art. 191 and Art. 193 CC).

Real rights do not terminate by extinctive prescription. Actions to enforce real rights on immovable property do not prescribe (see Art. 223 CC), but actions to enforce real rights on movable property are prescribed after ten years, which results in the possibility of pleading the non-admissibility of an action. Limited real rights also terminate: 1) by confusion when the limited real right and the ownership are united in the same person, i.e. the same person becomes both entitled to the limited right and the ownership of the encumbered asset (the union of the qualities, consolidation, Art. 247 CC); 2) the destruction of the encumbered asset or the extinguishment of the encumbered right, 3) by their deletion from the land and mortgage register; 4) by abandonment by the entitled person; and 5) by the expiry of the term for which the real right was established.

11. Possession

Possession (posiadanie) is legally recognised and binding actual control over an asset. It gives a factual power to exercise physical acts of use, detention, or enjoyment over a thing. Therefore, possession is just a matter of fact. To possess does not necessary mean to have actual physical contact with the corporeal object (German tatsächliche Gewalt über eine Sache), but rather the possibility of disposal. The Civil Code does not recognize the German division between direct and indirect possession (mittelbare and unmittelbare Besitz). It also does not include expressis verbis the possession of rights (possessio iuris, other than ownership).

There are two kinds of possessionautonomous (Pol. posiadanie samoistne) and dependent (Pol. posiadanie zależne, see Art. 336 CC). Firstly, there is the kind of possession that enables an asset to be held as an owner, secondly – as a person entitled to another right giving actual control over the asset (e.g. as usufructuary, pledgee, lessee, tenant, etc.). This means that possession should always correspond to the content of right that gives actual control over the asset (e.g. ownership, usufruct, lease).

There are two necessary elements of the possessionactual control over an asset (corpus) and a possessor’s will to have such control (animus). A person only having an actual control without the element of animus (control on behalf of another person) is not the possessor of an asset but rather its holder (or detentor, dzierżyciel, Art. 338 CC). Detention does not serve as the basis for acquisitive prescription.

Unless the contrary is proved, possession should be deemed as legal, i.e. giving actual control to the person being entitled to use the asset (Art. 341 CC). A possessor is therefore presumed to hold the right he is exercising. The possessor of an asset is presumed to be its autonomous possessor. Possession is also deemed as not extinguished in all cases where actual control is only temporarily interrupted (see Art. 340 CC). Possession is continuous even if its exercise is temporarily prevented or interrupted.

There are several forms of transferring possession: 1) traditio vera, Art. 348 CC 2) traditio symbolica (ficta) – constitutum possessorium, traditio brevi manu, traditio longa manu (see Art. 348 et seq. CC). Traditio vera is the form of transfer whereby  possession is acquired by transmitting actual control over an asset. Traditio sybolica takes place when possession is transferred by giving actual control over the means that enables such control over the asset.

It is not clear whether possession passes to the heirs of the actual possessor, i.e. if it is included as a part of an inheritance (see § 857 BGB). According to Article 176 § 2 CC, in case the possessor is a heir of the previous possessor, the first may include the time of the previous possession (i.e. of his predecessor in possession) to his own time of possession. Possession may be lost when the possessor 1) manifests his intention to abandon it; 2) is evicted by another by force or usurpation; 3) loses an asset.

Possession is protected by the possessory action.

12. Land and mortgage register (księga wieczysta)

The publication of rights concerning an immovable property is made in the land and mortgage register. The land and mortgage register and a register of mentions are kept in the Land and Mortgage Registry Department of the District Court. Unless otherwise provided by law, entry is obtained by the entitled person presenting an application.

The publication of real rights over immovable property allows them to be set up against third persons. As mentioned, an obligatory agreement is effective not only between the parties (inter partes), but also against third persons.Filing for registry in the land and mortgage registry is not necessary. Therefore, the publication of rights in the land and mortgage register is obligatory to establish such right only for the cases provided for by law. Such exemptions are: 1) constitution of the flat ownership right, 2) establishment or transfer of the perpetual usufruct, 3) establishment or transfer of the mortgage, 4) replacement of ranking of limited real rights on immovable property, 5) modification, transmission, encumbrance or extinguishment of the limited real rights already published in the land and mortgage register. Such rights do not produce their effects before publication (even between the parties).

A right that is registered in the land and mortgage register is presumed known to any person acquiring or publishing a right in the same property. Registration of a right in the the land and mortgage register carries the presumption of the existence of that right. The registration in the land and mortgage register of a real right established by agreement or of an agreement concerning a real right takes effect not from the registration of the title, but from the time of application was presented. Where several registrations concerning the rights of the same type are requested at the same time, the rights rank concurrently.

The registration of reservations of real rights is possible through an agreement between the owner of the immovable property and the person whose real right is to be actually published.

When the entry is erroneous or incorrect, any interested person may, upon noting such an error or omission, request the registrar to make the appropriate correction or entry.