Poland's Law Discriminates Against Cooperative Apartment Owners. Will Government Close the Gap?

A legal loophole in Poland prevents seniors living in cooperative apartments from utilizing life annuity contracts, a common arrangement where property is transferred in exchange for lifelong care and maintenance. This situation affects over 1.8 million cooperative apartments, many of which are occupied by the country's rapidly aging population.

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As notaries, we often encounter people who would like to enter into a life annuity contract, but because they have cooperative ownership rights to the premises, they cannot do so.

The civil code, specifically Article 908, stipulates that properties involved in life annuity contracts must be separate ownership. Cooperative ownership rights, while transferable and inheritable, are not considered separate ownership under this interpretation, blocking access to this form of agreement. This contrasts with other property rights that can be used for such contracts.

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Cooperative ownership right to a premises is a transferable right, subject to inheritance, execution, and can be collateral for a mortgage loan.

Legal experts, like Dr. Piotr Pałka, note that the law's intent may have been to apply to family farms, but demographic shifts have made life annuity contracts increasingly relevant for urban dwellers. The National Council of Notaries has publicly raised concerns, pointing out that notaries frequently encounter individuals with cooperative ownership rights who wish to enter life annuity agreements but are unable to do so.

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It is difficult to find a rational justification for the lack of possibility to enter into a classic life annuity contract in exchange for transferring cooperative ownership right to the premises.

Despite cooperative ownership rights being marketable, subject to inheritance, seizure, and even used as collateral for mortgages, the law's restriction on life annuity contracts appears irrational to many. The National Council of Notaries argues there is no sound reason to deny these agreements for cooperative property, especially given the growing need among the elderly population for such arrangements.

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Cooperative ownership right to a premises is a frequent subject of market turnover. According to the Civil Code, it is a limited real right. It is not separate ownership, and Article 908 of the Civil Code states that buildings or premises that are the subject of a life annuity contract must be separate ownership.