Poland is one of the most active real estate markets in Central and Eastern Europe, but international tenants are often surprised to discover that leasing premises can involve considerably more formality than in many other jurisdictions. In particular, landlords frequently require tenants to provide a notarial deed submitting to enforcement proceedings, a uniquely Polish feature that can have significant implications for transaction timetables. Understanding these local requirements at an early stage can make the difference between a smooth completion process and an unexpected delay.
1. Execution
A fixed-term lease agreement for a period exceeding one year must be concluded either in writing (with wet-ink signatures) or using qualified electronic signatures (“QES”). Signing via DocuSign alone is insufficient unless a QES is used.
It is also advisable to ensure that the date of the agreement is officially certified, either by a notary or through the use of a qualified electronic signature with a qualified timestamp. Without a certified date, there is a risk that, if the property is sold during the lease term, the new landlord may be entitled to terminate the lease, even where it was agreed for a fixed term.
2. Security: an essential visit to a Polish notary
In addition to standard financial security, such as a cash deposit or bank guarantee, most lease agreements in Poland require tenants to provide the landlord with additional security in the form of a notarial deed containing the tenant’s declaration of submission to enforcement proceedings. This will typically cover the tenant’s payment obligations and/or the obligation to return the premises at the end of the lease term.
In practical terms, this notarial deed can replace the need for a final court judgment and may be used as the basis for commencing enforcement proceedings through a bailiff.
Client trap: Whilst the cost of obtaining such a deed is generally modest, its preparation can be
challenging. The document must be executed before a Polish notary, which can create difficulties for overseas businesses whose directors are based outside Poland. In such cases, a power of attorney will typically be required. However, that power of attorney must itself either take the form of a notarial deed or contain signatures certified by a notary. For UK companies, signatures should generally be certified by a notary public. This should be factored into transaction timetables, as landlords are unlikely to hand over possession of the premises without the requisite notarial deed.
3. The Polish standard: the “Polish” NNN lease
For commercial properties, including office buildings, shopping centres, logistics facilities and manufacturing premises, the most common model for allocating property costs is the triple net (NNN) lease structure.
Landlords generally expect tenants to reimburse the costs of maintaining and operating the property, with the rent representing the landlord’s net return. As a result, commercial tenants are typically required to pay rent together with additional service charges covering items such as real estate tax, maintenance, cleaning, repairs, security, insurance and property management costs.
When negotiating a lease, tenants should carefully review exactly which costs are recoverable through the service charge provisions. In some cases, even the costs of repairing structural elements of the building may be passed through to tenants.
4. Break options and beyond
Although lease agreements are governed by the Polish Civil Code, the statutory provisions are relatively general and do not provide sufficient detail to regulate the complexities of a long-term landlord and tenant relationship. Consequently, commercial lease agreements in Poland often run to many dozens of pages and contain detailed provisions governing all stages of the tenancy, together with bespoke arrangements relating to liability, termination and operational matters.
Client trap: Certain provisions of the Civil Code cannot be amended or excluded. One notable example concerns break rights. Unlike in many jurisdictions, Polish law does not permit a purely discretionary break option. Instead, the lease must clearly specify the circumstances in which a party is entitled to terminate early. A provision granting an unrestricted right to terminate is likely to be ineffective.
That said, the courts have adopted a degree of flexibility in interpreting these requirements. In practice, break rights can often be incorporated successfully provided that the relevant circumstances and exercise dates are drafted with sufficient precision.
5. Fit-out works
When leasing office premises, agreeing the scope, specification and valuation of fit-out works can often be one of the most time-consuming aspects of the transaction. It is not uncommon for work on space plans and cost estimates to continue long after the commercial terms have otherwise been agreed.
Negotiations can become particularly complex where an international tenant seeks consistency across its global office portfolio and requires the landlord to use specific materials, finishes or design standards.
The final fit-out design must also be approved by a fire safety expert, and there is little room for negotiation where fire safety requirements are concerned. There have been instances where a tenant’s fit-out expectations have increased project costs to such an extent that lease negotiations have ultimately failed.
A visit to a notary is not something that features prominently in every leasing transaction around the world, but in Poland it is often an essential step on the journey to obtaining the keys. From execution formalities and security packages to service charge structures and break rights, leasing in Poland highlights how dramatically market norms can differ between jurisdictions. The earlier those differences are identified, the easier it becomes to turn a signed heads of terms into a successful occupation.
For further information, please contact:
Marcin Swierzewski, Partner, Bird & Bird
marcin.swierzewski@twobirds.com
