Merger and Division - A Case Study

Administrative proceedings regarding the approval of a draft property division are governed by the provisions of the Real Estate Management Act. On 22 September 2004, under the provisions of the Act of 28 November 2003 amending the Real Estate Management Act as well as some other acts (Journal of Laws No. 141, item. 1492), the text of the Real Estate Management Act was supplemented with article 98 b, which states that “the owners or perpetual users of the properties shaped in a way that hinders their rational development may submit a joint application on their merger and re-division into parcels of land, if they are entitled to uniform rights to those properties”.

This provision introduces detailed regulations regarding the necessary conditions for a merger and division: a commitment to carry out an exchange procedure in the form of a notarial deed, uniformity of the rights to the property, a conditional decision to approve the merger and division, and the need to convey the rights to the property within the date specified in the decision. Municipalities encourage this type of activity, that is conducting local mergers and divisions, because it does not engage them directly. The municipality does not finance these proceedings and there is no obligation to build the necessary technical infrastructure, as is the case in the event of a merger and division of a property. Problems with the implementation of merger and division procedures contained in the example analyzed in this article prompted the author to a deeper analysis of the regulations of article 98b of the Act on Real Estate Management, which revealed them to be insufficient. The legislature assumed that a property is created as a result of a merger, which will then be divided into plots of land. However, a merger implemented in such a way, at an intermediate stage, results in the emergence of a plot of land labeled as one record parcel, the individual parts of which belong to different entities and are disclosed in different land and mortgage registers. The plot is recorded both in the mortgage register and in the land registry. Based on the analysis of a specific case, practical problems were presented, regarding determining the content of the regulation and the decision issued during administrative proceedings, associated with the formulation of a notarial deed of the obligation to carry out the exchange procedure and the exchange itself as well as the disclosure of the merger and division in land and mortgage registers. Sources of the problems were identified and supplementation of insufficient legal regulations was proposed.