The Supreme Administrative Court held that one may not independently transform a single-family house into a multi-family one. However, in the examined case, such transformation was accepted by authorizing the building’s use. As a result of the Supreme Administrative Court’s judgment, the developer has to demolish apartments which have been already sold.

It would seem that delivery by the developer of keys to a house or apartment to the investor concludes construction works. Obviously, there may still be a need for minor adjustments, however, there can be no question of any significant works. Nothing could be further from the truth. Recent decisions of administrative courts prove that a developer may be obliged to return to the construction site even where the erected apartments have already been sold. Especially if the investment was carried out against the law – or rather contrary to its adopted interpretation.

Single-family house or apartment block?

On 10 May this year, the Supreme Administrative Court (file reference II OSK 1521/16) resolved a dispute concerning construction in one of Warsaw’s single-family housing areas. The developer – according to building supervision authorities and administrative courts – under the guise of constructing two single-family houses – actually erected apartment blocks. The case was brought in November 2013, when neighbours of the investment informed the Poviat Construction Supervision Inspector that the modification of the object’s use did not comply with the provisions of the local zoning plan. The plan envisaged that on the property where the disputed building was located only single-family houses could be erected. On the contrary, neighbours claimed that the developer had in fact constructed a multi-family house.

The construction supervision found in their favour, by concluding that in the disputed building there were altogether five floors, and each of them contained “room complexes” with separate entrance from the staircase, equipped with installations and horizontal water and sewage branches. In effect, it was concluded that a change had been introduced to the use of the single-family residential building by its transformation from a two-apartment into a multi-family house. One of the main arguments against the developer was that the developer obtained a certificate from the City Mayor attesting that the apartments met the requirements set for independent housing premises. As noticed by the construction authorities, the document indicated that in the disputed building there were more than two such premises. In consequence, the developer was obligated to restore the building’s original condition – and yet, the developer failed to do so.

Arguments of the developer

The developer excused himself by saying that, in his opinion, more than one family can live in a single apartment – which would mean that in the building not more than two apartments had been separated. Besides, the construction works had been implemented under a building permit, and competent authorities authorized the use of the disputed building. The developer also contended that apartments had been separated under a valid decision of a civil court dissolving co-ownership. In the end, the case was brought to an administrative court.

The Voivodeship Administrative Court in Warsaw, in the judgment of 3 September 2016, file reference VII SA/Wa 1087/15, held that the administrative authorities had mistakenly assessed the changes made by the investor between the issue of the building permit and the authorization for use. According to the Court, the changes, in effect, enabled separation of more housing units, which in fact made the building a multi-family house. The Voivodeship Administrative Court in Warsaw found that the building administration authorities did not fulfil their obligations concerning the assessment whether the changes were material, and, in the same way, required fulfilment of additional requisites involving amendment of the building permit. This led to a situation in which the erected building failed to meet the conditions set out in the building permit and the provisions of the local zoning plan. Such argumentation was shared by the Supreme Administrative Court in the decision cited at the beginning.

The sold apartments must disappear

In practice, this means that the developer will have to demolish the apartments separated beyond the limit. And here an essential problem arises – the developer has already sold them. Most obviously, this puts both the developer and apartment owners in a very difficult position. The developer is responsible for legal and physical defects of the investment, which means that those who bought apartments may seek, e.g., compensation or provision of another apartment. However, considering the possible duration of such proceedings, this is of little consolation. Most importantly, such cases expose very important problems of the Polish construction market.

Above all, it must be emphasized that the investor acted in reliance on decisions of administrative authorities. Those might have been actions following from an extensive interpretation of the applicable legislation, however, in Polish conditions – with unstable law and its susceptibility to various interpretation – such situations are no exception. Simply stated, it is “the job” of the state authorities to verify regularity of investments underway. Since it was authorized for use – both the developer and buyers of the apartments – could have reasonably expected that everything would be all right. In this context, it should be considered if such irregularities in the operation of the building administration do not open the way to compensation from the State Treasury for illegal exercise of public authority. At the end of the day, both the owners and the developer have suffered an inarguable damage.

Not just developers’ problem

Such problems are a worry not only for investors, who, despite being granted different positive administrative decisions, are obliged, after a while, to come back to the construction site. It turns out that it is not enough to examine the developer agreement or the land register to ensure safe purchase of an apartment. A buyer should rigorously monitor the course of construction and all the related administrative procedures pending. Otherwise, it may turn out that, already after moving to the apartment, it will simply be demolished. The cited decision should provide an important hint to the legislator in respect of the direction of the construction law reform, which is still in preparation. It turns out that one of the major problems in that area is the absence of legal security – both to developers and apartment buyers.