First a warning, then possibly repeated fines on investors and owners for illegal use of structures: this is one of the effects of recent changes in the Construction Law.
The widely discussed September 2020 amendment to Poland’s Construction Law of 7 July 1994, which mostly entered into force on 19 September 2020, was not only intended to streamline the construction process, reinforce the stability of construction decisions, and clarify doubtful issues. The parliament also sought to achieve better compliance with the lawful use of structures.
In the past: one-time fine for illegal use of a structure
Depending on the type of project, to properly complete the construction process and put a structure to lawful use, it is necessary to (i) notify the construction supervision authority of completion of construction, with no objection to occupancy issued within 14 days of receipt of the notification, or (ii) obtain a final occupancy permit (Art. 54–55 of the Construction Law).
Before 19 September 2020, the use of a structure or part of a structure in breach of these obligations, and thus illegally, resulted in imposition of a fine on the investor (Art. 57(7) of the Construction Law, repealed on 19 September 2020). This fine could be imposed only once, i.e. for illegal use of the facility. In practice, this sometimes meant that despite imposition of a fine, the investor continued to use the structure without notification of completion or obtaining a final occupancy permit, and the competent authority was no longer entitled to impose any further legal measures forcing the investor to bring the structure into compliance with legal use.
Current state: first a “yellow card” and then potentially multiple fines for illegal use
The September amendment of the Construction Law and the “yellow card” mechanism introduced in it, and then the possibility to impose multiple fines for illegal use of a structure (Art. 59i of the Construction Law), are intended to put an end to this practice.
From 19 September 2020, a construction supervision authority that finds illegal use of a structure or part of a structure will first instruct the investor or owner in an inspection report that the structure cannot be used without effective notification of completion of construction works or obtaining a final occupancy permit. If the owner or investor is absent, the instruction will be served in writing.
After 60 days from service of the instruction, the authority will check whether the structure is being used legally. If the investor or owner has not complied with the instruction, the authority will issue a decision imposing a fine for illegal use of the facility.
Then, 30 days from service of the decision imposing the fine, the construction supervision authority will again verify whether the use of the structure has been brought into compliance with the law. If it turns out that, despite imposition of a fine, the facility is still being used illegally, the authority will impose a fine again, and will be able to impose fines repeatedly until they have their desired effect, but each subsequent fine may not be imposed less than 30 days from issuance of the previous decision.
An investor or owner who does not agree with the sanction imposed will be able to lodge a complaint against the decision to impose a fine.
Amount of the fine
The method of calculating fines for illegal use of a facility is specified in the Construction Law (Art. 59f and 59i). A fine is the product of a fee base (currently PLN 500), a coefficient for the category of structure, and a coefficient for the size of the structure.
In the case of imposition of the first fine for illegal use of a structure, calculation of the fee is based on ten times the fee base, and for each subsequent fine five times the fee base.
Prior to the amendment, the amount of the fine for illegal use of a facility was assumed to be ten times the fee base. The proceeds from fines constitute state budget revenue. Failure to pay the fine on time triggers collection under the Administrative Enforcement Proceedings Act.
Significantly, under the Act of 13 February 2020 Amending the Construction Law and Certain Other Acts, the prior wording will continue to apply to cases initiated but not completed on the date of entry into force of the amended Construction Law, i.e. 19 September 2020 (Art. 25 of the amending act). Significantly, if before entry into force of the amending act a one-time fine has already been imposed for illegal use of a structure, the construction supervision authority will not be entitled to impose further fines (Art. 33 of the amending act). This means that despite amendment of the provisions, it will not always be possible to apply the new procedure to combat illegal use of structures.
By introducing the new regulations, the parliament clarified the ambiguities related to the entity on which a sanction for illegal use of a structure may be imposed. It is now possible to impose such fines on the investor and the owner of the structure. The aim of the amendment was to make this sanction more burdensome, assuming that its frequent use (until it compels compliance) will eventually induce the investor or the owner to legalise the use of the structure. Will this effect be widespread? It remains to be seen.
Barbara Wiśniewska, Real Estate Development practice, Wardyński & Partners