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Holding a general meeting of a housing cooperative in a stationary form during the COVID-19 epidemic

According to the current legislation, the obligatory body of a housing cooperative is, among others, the general meeting. By virtue of the Act of 2 March 2020 on special solutions related to preventing, counteracting and combating COVID-19, other infectious diseases and crisis situations caused by them, the deadline for holding general meetings in housing cooperatives was postponed, which, as a rule, were supposed to be  held by 30 June each year (Article 90 of the above-mentioned Act). Pursuant to the cited regulation, general meetings should be held within 6 weeks from the date of cancellation of an epidemic emergency or a state of epidemics. The changes introduced have led to a situation where some management boards of cooperatives interpret the provisions in such a way that they do not hold a general meeting because they comply with Article 90, which postpones the date of holding a general meeting. In other words, the boards believe that the general meeting should only be held once the state of the epidemic has ended.

The above view is not justified under the current legislation. Participation in a general meeting is a right of every member of a cooperative and a state of epidemics should not justify restricting this right.

There are two solutions for the legal holding of a general meeting. Firstly, during a state of emergency or epidemic the management board or supervisory board may order that a specific resolution be adopted by the general meeting either in writing or by means of direct remote communication. However, the main obstacle to holding general meetings in this form  are  worries of some of members of cooperatives about validity of meetings in such form  . Not without significance is also the lack of regulation in the current statutes or regulations concerning the course of meetings held in the remote format.

In such a case, the managers of cooperatives have the option of holding them in a traditional formula. When organising a general meeting, however, one should bear in mind the applicable epidemiological restrictions resulting primarily from the provisions of the Regulation of the Council of Ministers of 6 May 2021 on establishing certain restrictions, orders and prohibitions in connection with the occurrence of an epidemic (Journal of Laws of 2021, item 861). By introducing limits on the participants of meetings or assemblies, the legislator has restricted the possibility to hold meetings or assemblies in a traditional form. These restrictions also apply to general meetings of cooperatives.

The provisions of the Ordinance on the establishment of certain restrictions, orders and prohibitions in connection with the outbreak of an epidemic in § 26(15) indicate that:

– Until 31 August 2021, it is prohibited to organize and participate in assemblies other than those specified in paragraph 1 and paragraph 1a, including events, meetings and gatherings of any kind, except:

1) business and professional meetings or gatherings;

2) events and meetings of up to 25 persons which take place on the premises or in the building indicated as the address of the residence or stay of the person who organizes the event or meeting; the limit of persons does not include the person organizing the event or meeting and persons cohabiting or managing with him;

3) events and meetings of up to 150 persons which are held in the open air or on the premises or in a separate catering area of a sales hall, referred to in § 9(15)(2)

[§ 9(15)(2) concerning the conduct by entrepreneurs within the meaning of the provisions of the Act of 6 March 2018. – Entrepreneurs’ Law and by other entities the activity consisting in the preparation and serving of meals and beverages to guests seated at tables or to guests making their own choice of dishes from the displayed menu, consumed on the spot (included in the Polish Classification of Activities in subclass 56.10.A) and related to the consumption and serving of beverages (included in the Polish Classification of Activities in subclass 56.30.Z)];

4) gatherings, meetings or meetings related to the performance of tasks aimed at combating or preventing the spread of contagious animal diseases, including free-living (wild) animals.

It should be stated that in the period until 31 August 2021 it is possible to hold a general meeting provided that no more than 150 persons participate, it is held in the open air or in premises or a separate catering area belonging to an entrepreneur conducting food service activities. In addition, all participants should comply with the obligation to cover their mouths and noses.

The legislation in force as of the date of this information (16 August 2021) does not set limits for participants in assemblies or meetings held after 31 August 2021.

However, it cannot be ruled out that the legislator will decide to introduce new limits or maintain current limits also after this date. For this reason, it is essential to familiarize yourself with the current epidemiological restrictions each time before deciding to convene a general meeting.

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Extension of the term of office of housing cooperative’s governing bodies during the epidemic period

Pursuant to the Act on Housing Cooperatives, by default the management board should convene a general meeting at least once a year within 6 months after the end of the financial year. In practice this means that a general meeting of members should be held no later than June 30th each year. The date of holding a general meeting is often of significance for the moment when the term of office of members of the cooperative’s governing bodies, especially supervisory boards, ends. Often the statutes link the term of office with the moment the general meeting is held.

The provisions of the “Covidowa” Law (Law on Amendments to the Law on Special Arrangements for Preventing, Counteracting and Combating COVID-19) due to the state of epidemic extended the term of office of housing cooperative’s governing bodies. According to Article 90 of the cited Act, the deadline for convening a general meeting of a cooperative that falls during a state of epidemic or epidemic threat is extended. Therefore, the management board may postpone the convening of a general meeting for up to 6 weeks after the state is revoked.

In connection with the foregoing, the legislature also extended the term of office of members of housing cooperative’s governing bodies by enacting the provision of Article 90a according to which, “If the term of office of a cooperative’s supervisory board or board of directors expires during a state of epidemic emergency or a state of epidemic which is in effect on the day this Act comes into force or which is declared to be in effect immediately after the period in effect on the day this Act comes into force, it shall be extended until the date on which the first general meeting of the cooperative is convened within the period referred to in Article 90.”

A legal norm has been adopted that by law extends the term of office of the supervisory board or management board if the term of office has expired or will expire during a state of epidemic emergency or a state of epidemic. Some practitioners indicate that, as a result of this norm, the term of office of the members of the bodies has been extended until the expiration of the period indicated in Article 90 (i.e., 6 weeks after the cancellation of the epidemic state).

The above view is incorrect and does not deserve to be accepted.

It should be noted that the Act on Housing Cooperatives and analogously the “Covidava” Act set the maximum, limiting deadline for the management board to convene a general meeting which may also be held prior to this date.

There is no provision that would prohibit holding a general meeting during the state of an epidemic (only sanitary-epidemiological restrictions apply which may make it difficult or impossible to hold a meeting during such period).

Article 90a extends the term of office of supervisory boards, but only until the first general meeting is convened during the extended period (“the period referred to in Article 90”) in which a general meeting should be held. Thus, if the managemet board calls a general meeting of its members during the epidemic or up to six weeks after its cancellation, the term of office of the members of the governing bodies will be extended, but only until the general meeting is held. Article 90a does not provide that the term of office is extended until the end of the period referred to in Article 90, but only until the first general meeting is held during that period.

The same position was expressed by the Polish Revision Association of Housing Cooperatives  (“on the statutory extension of the term of office of the governing bodies of housing cooperatives and the possibility to convene a general meeting in a stationary format”).

In the opinion of the Association, the notion of convening the first general meeting within the deadline referred to in Article 90 should be understood as the first general meeting in a stationary format convened between the period from the entry into force of the Act of 19 June 2020 on interest subsidies for bank loans granted to entrepreneurs affected by the consequences of COVID-19 and on simplified proceedings for approval of the arrangement in connection with the occurrence of COVID-19, i.e. from 24 June 2020 to 6 weeks from the date of cessation of the state of epidemic threat or the state of epidemics. Thus, this term does not include the adoption of resolutions by the general meeting in writing or by means of direct remote communication.

In the opinion expressed by the Revision Association it was also pointed out that “if the first general meeting is convened within the deadline referred to in Article 90, the term of office of statutory bodies shall expire on the date of holding this general meeting, and consequently, members of the governing bodies of a new term of office should be elected at this general meeting.” The above regulation does not limit housing cooperatives in convening general meetings in a stationary format if the sanitary regime regulations concerning e.g. the limit of persons during meetings allow for it. To sum up, when convening a general meeting during an epidemic, one should remember to appoint members of the supervisory board if the statute binds the expiry of their term of office to holding a general meeting.  

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Possibility for private owners to influence spatial planning

I.

At the outset, it should be emphasised that local spatial development plans shape the way in which the ownership right to real estate is exercised. Planning acts directly or indirectly affect the rights of individual owners by specifying the way in which land covered by the plan is to be used. In this way, by their actions in the sphere of public law, authorised local government bodies affect the rights of private owners. It is of utmost importance to ensure that the interests of the entities affected by the spatial development plan can be protected.

In the Act on spatial planning and development, the legislator ensured the possibility of active participation of the public in the work on the adoption or amendment of local spatial development plans. Ensuring broad participation of residents in the planning procedures is to foster a proper diagnosis of the needs and expectations of the residents, and a balancing of the interests of various entities. Openness and transparency of planning procedures should also serve this purpose. Article 1(3) of the Act on spatial planning and development directly implies the obligation to balance the public interest with the private interest when determining the purpose or manner of development and use of land. It should be noted that none of them is superior. In case law it is even indicated that the public interest has not been given primacy over the interest of an individual (II OSK 791/19 – judgment of the Supreme Administrative Court (NSA) of 25-11-2020).

Therefore, property owners have the opportunity to influence planning acts in principle at each stage of their adoption. Protection of their interests requires active participation in the planning procedure. The discussion of particular rights vested in the interested persons requires a brief introduction to the planning procedure.

II.

The procedure begins with adoption of a resolution by the municipal council on commencing the preparation of a plan. A draft resolution is prepared by the mayor of a municipality. In order to determine the purpose of the land and specify the manner of its management and development, the municipality council first adopts a resolution on the accession to the preparation of a local spatial development plan. First, however, the head of commune, the mayor or president of the city performs analyses concerning, inter alia, the legitimacy of the plan’s accession to preparation, prepares geodetic materials for preparation of the plan and determines the necessary scope of the planning works. Following the adoption of the aforementioned resolution by the municipal council, the executive body of the municipality (the head of the commune, the mayor or the president of the city) is obliged to undertake activities facilitating public participation in the planning procedure. To this end, it announces in the local press, by way of a notice and in the Public Information Bulletin, as well as in the customary manner adopted in the given municipality, about the adoption of the resolution to proceed with the preparation of the plan, specifying the form, place and deadline for the submission of applications to the plan, which should not be shorter than 21 days from the date of the announcement. The authority does not send to private owners the information about the commencement of the local plan procedure, therefore it is necessary to follow the announcements referred to in the previous sentence. Proposals to the plan within the specified deadline may be submitted by practically anyone, the Act does not contain any subjective restrictions in this respect. Therefore, any owner may, in any form, submit to the executive body their proposals concerning the plan under procedure.

The head of the commune, mayor (city president) is obliged to consider all applications to the plan. The Act does not require the reviewing authority to specify the manner in which the applications are to be incorporated into the plan, nor to provide justification for the rejection of the applications.  Each designation in the local spatial development plan of additional limitations on the exercise of the ownership right must be adequately justified in detail, professionally and credibly, therefore the lack of adequate justification for disregarding the applications or comments may constitute grounds for challenging the resolution adopting the local plan.

The next stage of the planning procedure is preparation of the draft local  plan by the mayor. At the stage of preparing the draft, the authority considers the applications received earlier. The draft plan contains both text and graphics and therefore a town planner is involved in its preparation.

The opportunity to influence the content of the local plan is given to the local community in the course of a public discussion on the solutions adopted in the draft plan, which should take place during the public examination of the draft. The Act does not contain a definition or further specification of the rules of holding a “public discussion”. Based on the literal wording of the provision of Art. 17 item 9 of the Act, it may be assumed that:

1) the discussion is organised by the head of commune, mayor (city president);

2) it takes place during the public inspection of the draft;

3) the subject of the discussion are to a large extent the solutions adopted in the draft local plan;

4) there are no restrictions as to the entities that may participate in the discussion (thus, the discussion may be attended by both the municipality inhabitants and non-residents, representatives of the communities, legal entities through their representatives, and public administration bodies and organisational units without legal personality through their representatives).

Legal and natural persons as well as organisational units without legal personality are entitled to submit comments on the draft local plan within the deadline specified in the announcement on public disclosure of the draft local plan. The mayor is obliged to consider the comments and may take them into account by amending the draft plan. The decision of the head of commune, mayor (city president) not to consider the applications to the local plan, as well as the comments on the draft plan, are not subject to appeal to the administrative court. If the municipal council finds it necessary to amend the draft local plan submitted for adoption, including as a result of taking into account the comments on the draft plan, it is obliged to partially repeat the procedure of preparing the plan.

III.

Persons whose comments on the project have not been taken into account in the course of the planning procedure may use another instrument, i.e. they may challenge the resolution adopting the local plan. Following the public discussion and consideration of comments on the project, the council of the municipality adopts by way of resolution the local plan or amends it. Based on the provision of Article 101 of the Act on Municipal Self-Government, “Anyone whose legal interest or right has been violated by a resolution or order made by a municipal body in a matter of public administration may challenge the resolution or order to an administrative court.” Thus, the above provision gives a legitimacy to persons whose requests and comments were not taken into account at the stage of the plan procedure to challenge the resolution adopting the local plan. Importantly, it does not follow from the provisions of the Act on Planning and Spatial Development that the inactivity of the owner of the real property covered by the draft plan and his failure to submit comments on the draft plan deprives him of the possibility to demonstrate that his legal interest has been violated by the plan’s provisions and to demonstrate that the violation occurred in excess of the planning authority. In other words, anyone whose legal interest was violated by a resolution adopting a local plan may challenge such resolution, regardless of whether they participated in the earlier stages of adopting the plan by submitting motions to the plan or by filing comments.

A condition for challenging a resolution on adopting or amending a local spatial development plan is that it violates an individual interest of a citizen. The judicature indicates that a complaint may only be filled by an entity that demonstrates its ownership right. Thus, in order to fill a complaint effectively, it is necessary for a party to demonstrate that as a result of adoption of a contested resolution, its specific legal interest or entitlement has been violated by limitation or deprivation of rights arising from its right. In other words, it is necessary to demonstrate that as a result of the adoption of the appealed resolution, a specific and current individual interest has been violated and to indicate the violation by a municipal body of a specific provision of substantive law, having a negative impact on the legal situation of the complainant.

IV.

Irrespective of challenging the resolution adopting the local spatial development plan and the possibility to make motions and comments in the course of the planning procedure, another legal remedy available to the owner whose interest has been violated by the adoption of or changes to the plan is the possibility to pursue claims for compensation for damage resulting from the adoption or changes to the local plan. In order to assert such claims it is necessary to meet strict conditions described below. Pursuing claims does not constitute a stage of the planning procedure, however their emergence is connected with the solutions adopted in the plan, and it is up to the interested party to decide whether to pursue such claims.

The issue of the financial effects of adopting or amending the local plan is regulated by Art. 36 par. 1 of the Act, under which if, in connection with the adoption of a local plan or its amendment, it has become impossible or substantially restricted for the owner or the perpetual usufructuary of the property to use the property or a part thereof in the manner or for its intended purpose, the owner or the perpetual usufructuary of the property may demand from the municipality

1) compensation for the actual damage incurred, or

2) to purchase the real estate or a part thereof.

The above claims may also be executed by way of the municipality offering the owner or perpetual usufructuary a substitute real estate (Article 36, paragraph 2).

Accordingly, if, in connection with the adoption of a local master plan or its amendment, it has become impossible or substantially restricted for the owner (perpetual usufructuary) to use the real property or a part thereof in the manner or for the purposes previously intended, the owner (perpetual usufructuary) is entitled to file a claim against the municipality for compensation or purchase of the real property. The municipality is obliged to execute the claim indicated by the entitled person. If he chooses compensation, he may effectively claim it for the damage he actually suffered (damnum emergens) and not for lost profits (lucrum cessans).

Claims for lack of possibility (limitation) of using a real estate in the same way as before, due to the adoption of a local plan or its change, are time-barred pursuant to the general rules under the Civil Code (see Article 118 of the Civil Code).

The second situation in which the owner has a claim against the municipality is when, following the adoption of the local plan or its change, the use of the property or its part in the existing manner (consistent with the existing purpose) is possible, but the value of the property is diminished. If, in connection with the enactment of the local plan or its amendment, the value of the real property is diminished and at the same time the owner (perpetual usufructuary) has not availed himself of the possibilities referred to in Article 36 (1) and (2) of the Act (i.e. it is possible to use the real property in the existing manner), the owner (perpetual usufructuary) may request from the municipality to pay compensation equal to the diminished value of the real property. Such compensation becomes payable as of the date of sale of the real property (date of conclusion of the sales agreement). Therefore, if the value of the real property is diminished as a result of enactment of the plan or plan amendment, but the owner (perpetual usufructor) does not sell the real property, the claim in question does not arise at all.

In such cases it is essential to obtain an opinion of a real estate valuation expert who will assess whether and in what amount compensation is due.

The following articles will be devoted to detailed discussion of, in turn:

1. principles, form and deadline for submitting applications and comments at the stage of plan procedure;

2. the premises and procedure of appealing against resolutions adopting or amending local plans;

3. pursuing claims for damages by owners related to change of the designation of real property.

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Is the obligation to pay the zoning fee inheritable?

According to Art. 60.7 of the Act on Public Finance of August 27, 2009 , public funds constituting non-tax budgetary receivables of a public law nature are included in the income collected by state and local government budgetary units on the basis of separate acts. The zoning fee is such a budgetary receivable.

Let us remind you what a zoning fee is. According to Art. 36.4 of the Act on  Planning and Spacial Development of 27 March 2003 , if in connection with the adoption of the local zoning plan or its amendment, the value of the real property increases and the owner or perpetual usufructuary sells the real property, the head of the commune, mayor or president of the city collects a one-off fee established in this plan, determined as a percentage of the increase in the value of the real property. This fee is the municipality’s own revenue. The  fee may not exceed 30% of the increase in the value of the subject property.

What then happens in the course of the proceedings on imposition of the zoning fee if the party to the proceedings dies?  This issue has in the past been quite a challenge for the authorities. However, it can be concluded that recently the position of administrative courts on this issue has become more uniform.

Therefore, below I indicate three judgments that consistently represent the latest jurisprudence position. Interestingly, this issue has appeared relatively few times  in the jurisprudence of administrative courts.

Thus: in the Judgment of the  Voivodship Administrative Court in Łódź of November 8, 2017 (file reference: II SA / Łd 689/17),  it was indicated (following the resolution of seven judges of the Supreme Administrative Court of December 10, 2009, file ref. II OPS 3/09), that: The complainant did, admittedly, indicate that he had acquired the real estate on the basis of an inheritance division agreement and an agreement of annulment regarding  joint ownership, and that he had acquired the plot in question when the current zoning plan was already in force. In his opinion, in such a situation, the imposition of the zoning fee was unjustified, because the purchase and sale of the plot took place when the same local zoning plan was in force – but as indicated above, the Voivodship l Administrative Court pointed out that the mere fact of acquiring real estate by inheritance does not exempt from the obligation to pay the fee. Only here the party purchased the property before the proceedings for calculation of the fee were initiated.

Unlike in the second case, which we are considering, where the death of the party took place in the course of the fee determination procedure. The judgment indicated that the zoning fee, which was not charged before the testator’s death (despite the fact that the proceedings were pending), cannot be charged (judgment of October 7, 2016 of the Voivodship  Administrative Court in Glwice, file ref. II SA / Gl 272/15).

The third case involves the situation when the zoning fee has already been calculated and the administrative decision conerning this issue becomes final. This is where the  Voivodship Administrative Court in Poznań comes to our aid, which in its judgment of March 14, 2013, file ref.  II SA / Po 60/13, unequivocally ruled that “only the zoning fee concretisedin the final administrative decision may be considered an equivalent to a tax liability, and thus only in the case  when such a decision is issued with respect to the seller of the real property and becomes final during the seller’s lifetime, that the provisions of the Tax Ordinance may apply accordingly to the obligation to pay zoning fee in a certain amount resulting from this decision”.

To sum up:

we calculate the planning fee when: the seller acquired the property by inheritance and then sold it within 5 years from the date of entry into force of the development plan, and also if the death of the party occured after the decision on the zoning fee became final and legally binding – then we charge the heirs with the fee.

However, we cannot charge the fee if the death of the party occurred in the course of the proceedings regarding the determination of the zoning fee but before its completion.