• Change in apartment surface area, reduced fines for delays, authorization regarding the use of common parts of premises.
• These are provisions applied by the company 3DOM in standard contracts provided to potential buyers of apartments at the Strzeszyn Park housing estate in Poznań.
• UOKiK found them illegal and imposed a fine amounting to almost PLN 160,000 on the developer.

In October 2018, the Office of Competition and Consumer Protection initiated proceedings against the Poznań company 3DOM. The developer constructed the Strzeszyn Park housing estate at ul. Fieldorf in Poznań. However, the provisions of a standard contract presented to clients raised doubts.

We found four clauses illegal. The developer used its position to impose unfavourable conditions on consumers. For example, the company wanted to reduce fines for delay in transferring ownership rights and releasing premises to a maximum of 5% of an apartment price. This means that the developer would suffer the same consequences regardless of whether it would be 100 days or two years late, says Marek Niechciał, the President of UOKiK.

Examples of clauses questioned by the Office

• Change in apartment surface area. The developer reserved that if the final surface area of an apartment differs from the contractual surface area up to 2%, such changes will not affect the price settlement. This means that if the surface area turned out to be smaller, the consumer would still have to pay a higher price that does not correspond to the actual size of his/her apartment.
• Fines for delay. According to the contract template, if the developer fails to meet deadline for (i) establishing a separate ownership of the premises, (ii) transferring ownership or (iii) releasing an apartment, it will pay a fine in the amount of 0.05% gross of an apartment price for each day of delay, but not more than 5% in total. Thus, the company will suffer the consequences only for a delay not exceeding approx. 100 days. With the upper limit of the contractual penalty defined, 3DOM may fail to comply with the deadline for performing the contract for a long time without exposing itself to adverse financial consequences. Consumers have no measures to put pressure on the company as they would have if the amount of fine for delay had no limits.
• Authorization. UOKiK also questioned the provision according to which the buyer grants the developer an authorization to vote and take all measures related to the use of common property, or the combining and the dividing of premises. As a result, 3DOM may decide on many important matters, e.g. it may change the intended use of apartments or their appertaining premises. Such decisions may not always have to be in the best  interest of a given consumer. The provision was worded imprecisely as it is not exactly known what specific measures the company may take and in what matters it may act on behalf of the client. In addition, it was one of many provisions in the contract that the buyer could easily overlook and thus remain unaware of its consequences. Furthermore, it was impossible to sign the contract without this clause, whereas provisions regarding authorization should form a separate document and be phrased precisely and unambiguously.

Effects of the UOKiK decision

UOKiK imposed a fine amounting in total to PLN 157,506 on the company 3DOM for using prohibited provisions. The developer must also send registered letters to all clients to inform them that the questioned clauses are ineffective. An illegal provision should be treated as if it has never been mentioned in the contract at all. One does not have to prove it in court, explains Marek Niechciał, the President of UOKiK.

The decision is not final. 3DOM may appeal to the court within a month of its delivery.

Protection of consumer rights

This year UOKiK has already received over 40 complaints about developers. Most often, they concerned contractual provisions and a failure to transfer ownership of the property to the buyer. Currently, UOKiK has levelled charges and conducts proceedings against four developers. Investigation procedures are pending in 22 other cases.

The Office is seeking greater protection for consumers buying apartments. That is why
a bill to amend the so-called “Developer Act” was drafted. We want the Development Guarantee Fund to be established. Therefore, in critical situations, for instance when a developer goes bankrupt, apartment buyers will get back all the money they have paid. A similar solution has already been proven in tourism, says Marek Niechciał, the President of UOKiK. Currently, the draft is analysed by the Standing Committee of the Council of Ministers.

Consumer service:
Phone: 801 440 220 or 22 290 89 16 – consumer helpline
E-mail: porady@dlakonsumentow.pl
Consumers’ Ombudsmen – in your town or district
Regional Consumer Centres: 22 299 60 90 – Dlakonsumenta.pl

Additional information for the media:
UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL