Maintaining of construction documentation by the owner of a building
Is it cause for concern if, with the passage of time, construction documentation for buildings and other structures gets mislaid?
In transactions involving land developed through the construction of buildings many years before, the problem of missing construction documentation often arises. Due to the complicated ownership and structural changes following the systemic changes in Poland after 1989, during due diligence many current owners of developed real estate have serious difficulties locating the documents concerning construction, particularly building permits and occupancy permits. These documents are sought by thorough lawyers representing cautious and foresighted buyers or financial institutions analysing the legal status of the property.
Under the old centralised economy, the issue of maintaining documents concerning construction was often treated lightly. As a consequence, during the post-communist transformation the new owners found gaps in the documentation due to the neglect of the prior owners, and often were not in a position to enforce or recreate the documentation.
It should be stressed that maintaining construction documentation is not just a sign of good stewardship, but also was and is required by law.
This can be demonstrated by tracing the regulations back over time. Art. 63 of the current Construction Law, from 1994, imposes on the owner of a building the obligation to maintain a broad range of construction documentation for the entire period of existence of the building, including decisions and other documents concerning the building. Violation of this obligation is punishable by a fine (Art. 93(9)). These rules are clearly stated and do not raise doubts concerning the scope of the obligation.
Art. 56 of the prior Construction Law, from 1974, required an investor, owner or manager of a building to provide to the competent state administrative authority documents connected with construction work, delivery of the building for occupancy, or maintenance of the building, as required by the authority in performance of its statutory duties. Violation of the obligation to provide such documents was punishable by arrest up to 3 months or a fine (Art. 59(12)). I have no doubt that this provision created an obligation to maintain the documentation, the best proof of which is the criminal sanction for failure to provide the documentation to the administrative authority. The 1974 Construction Law was in force for almost 20 years, and during that time many industrial facilities were built which are now the subject of transactions and analysis.
Before that, Art. 61 of the Construction Law from 1961 provided that state construction supervision authorities had the right to demand from an investor, owner or manager of a building, or from the contractor, documents connected with the conduct of the construction work, delivery of the building for occupancy, or maintenance of the building. Failure to present the documents when requested was punishable by arrest up to 3 months or a fine (Art. 78).
In the context of the duty to maintain documentation under the 1974 Construction Law, the judgment of the Province Administrative Court in Wrocław of 9 April 2008 (Case No. II SA/Wr 45/08) should be cited. That case held that the provisions of the 1974 Construction Law did not impose on the owner of a building an obligation to archive the documentation connected with construction of the building, as is required by the current Construction Law from 1994. This ruling—which I believe is incorrect—could give owners of a building a false sense of security because it could absolve them of criminal liability. But criminal liability one way or the other is not the real issue.
A different consequence of the lack of documentation is much more serious. This was pointed out by the Wrocław court in the same judgment. While the court held that destruction or loss of the documentation connected with a specific structure does not render the structure unlawful, the court added that this is the case only if in reality the structure was erected on the basis of a legally final decision on issuance of a building permit.
This means that, contrary to the belief of certain owners, there cannot be said to be a presumption under which it can be inferred from the fact that a building was erected that the legality of its construction cannot be questioned—even if the documentation has been mislaid in the intervening years. The lack of documentation makes it entirely justified to question the legality of the construction. And it is obvious that when this issue is raised in connection with the sale of real estate, it will have an important impact on the course of the transaction, the financing and the price.
There is a glimmer of hope for the owner of a building when the documentation has been lost. The owner may still be able to prove the legality of the construction using other available evidence. We will discuss this approach in a future edition of the Litigation Portal.
Tomasz Zasacki, Real Estate & Construction Practice, Wardyński & Partners