Buying a flat by assignment

For the seller, an assignment (cesja) of the rights to a flat is a way to make a quick profit; for the buyer, it is an opportunity to acquire an attractive property that is no longer available on the market. This solution, like any other, has its downsides as well as its advantages, which are worth knowing before you sign the agreement.

• What is an assignment?
• Does the developer have to consent to the assignment?
• What should you look out for in the developer agreement?
• Check the developer before the assignment
• How can you check whether the plot is mortgaged?

What is an assignment?

Assignments usually concern projects that are still under construction. Sometimes, even at this stage, the developer has no units left for sale. In that case you can acquire the rights to a flat by assignment from a person or company that has reserved the apartment you are interested in.

In such a situation the buyer pays the other party to the agreement only part of the value of the property, and settles the rest later, when collecting the keys to the flat, but this time the payment is made to the developer's account. This is because the subject of the transaction is in fact not the unit itself but only the right to it, which was obtained by paying the down payment, usually 10% of the value.

In legal terms, in an assignment the creditor, also called the assignor, transfers his or her rights and obligations under the agreement with the developer to another person (the so-called assignee) for a fee. In this way the creditor disposes of the claim, which is taken over by the other party. The debtor in this arrangement is the developer, who has undertaken to build the flat.

Does the developer have to consent to the assignment?

In theory a claim can be acquired without the debtor's knowledge, but developers often protect themselves against such transactions. For this reason, many clients regard assignments as risky, because they may fall through. Developers include provisions in their agreements that restrict or even rule out transferring the rights to a flat to another person.

What should you look out for in the developer agreement?

To make sure that an assignment is possible at all, you should first analyse the developer agreement. It is also a good idea to do this in order to check whether it contains other provisions unfavourable to the buyer. This applies in particular to the date on which the units are to be handed over, changes to the final price of the flat, the financing of the project, contractual penalties and the possibility of withdrawing from the agreement. It is also worth checking whether the agreement with the developer was concluded in the form of a notarial deed (akt notarialny), which in the event of a court dispute will allow the provisions of the agreement to be effectively enforced.

Check the developer before the assignment

Because assignments usually concern buildings that are still under construction, before carrying one out it is best to take a close look not only at the agreement with the developer, but also at the developer itself. First, you should read online reviews to see whether other clients have had problems with the company; second, check its share capital and financial standing at the commercial court, where you can inspect company files such as financial statements and the profit and loss account; and third, go to the district court to look at the land and mortgage register (księga wieczysta) for any mortgage and possible claims by other parties. This will protect you from the kind of situations you see on television, when a developer goes bankrupt and its clients are left with an expensive hole in the ground.

READ ALSO – UNFAIR CLAUSES IN DEVELOPER AGREEMENTS

How can you check whether the plot is mortgaged?

Only when you are sure that there are no risks in the developer agreement, that the developer is reliable and that the legal status of the plot is in order can you proceed with the assignment. At this stage we recommend using the services of a lawyer, who will make sure the agreement is drafted in a way that protects your interests. It is worth having it drawn up as a notarial deed, which will provide greater security in the event of a dispute.

Buying a flat by assignment carries considerable risk. We advise against going through this process on your own. By working with experienced property specialists you can avoid serious trouble that you might not foresee when acting alone. The REMAX Gold office has the necessary expertise in this area, so you can trust us when the rights to a flat are being transferred. We encourage you to contact us.