An administrative authority should take into account a right that is not entered in the land and mortgage register but follows from entries of other rights in the register
In determining the parties to administrative proceedings, the authority is bound by the entry of rights in the land and mortgage register. It is presumed that a right disclosed in the land and mortgage register is entered in accordance with the actual legal status. It is also presumed that a cancelled right does not exist. The practice shows that invoking a undisclosed right usually will not rebut these presumptions. But the situation is different with an undisclosed right whose existence can be inferred from other entries in the land and mortgage register.
In any administrative proceeding in Poland, a basic step by the administrative authority is to determine the parties to the proceeding in accordance with Art. 28 of the Administrative Procedure Code. When the administrative proceeding concerns real estate, the basis for determining the parties to the proceedings—and thus the entities with a legal interest in the outcome—is first and foremost the entry in the land and mortgage register. Depending on the nature of the proceeding, the parties may vary. For example, in cases seeking compensation pursuant to Art. 98 of the Real Estate Management Act of 21 August 1997 for property partitioned for use as public roads, the parties to the proceeding are the owners or perpetual usufructuaries of the real estate entered in the land and mortgage register.
Authority bound by an entry in the land and mortgage register
Based on the principle of substantive disclosure defined in Art. 3 of the Mortgages Act (Act on Land and Mortgage Registers and Mortgages of 6 July 1982), an entry disclosed in the land and mortgage register is presumed to be consistent with the actual legal status; it is also presumed that a cancelled right does not exist. This presumption consists in recognition that as long as “John Doe” is entered as the owner of the real estate in section II of the land and mortgage register, he is considered to be the owner, even though he may not actually be.
Within the meaning of Arti. 6266 §6 of the Civil Procedure Code, an entry in the land and mortgage register is first and foremost a ruling of a civil court, the content of which, in accordance with Art. 365 §1, is binding not only on the parties and the court that issued it, but also on other courts, other state bodies, and public administrative authorities. For this reason, during the course of the proceedings pending before it, an administrative authority is not entitled to make legal determinations different from those resulting from final court rulings, including entries in the land and mortgage register. In principle, this is the generally accepted view of administrative courts and administrative authorities in Poland, derived from the jurisdictional separateness of common courts from the administrative courts.
For administrative authorities, it is common practice to rely on the presumption from Art. 3 of the Mortgages Act and refuse to grant party status in administrative proceedings to entities whose rights are demonstrated on the basis of other documents, including official documents, but not an entry in the land and mortgage register. This happens even in situations where the legal status of such persons is obvious and does not raise any doubt. Administrative authorities reflexively direct the participants to pursue civil proceedings (e.g. to reconcile the land and mortgage register entries pursuant to Art. 10 of the Mortgages Act), which can be moot, as for example when it concerns entries that are outdated, while the reconciliation of the land and mortgage register should bring its entries up to date to reflect the current legal status. The administrative authorities and administrative courts recognise that Art. 3 of the Mortgages Act precludes any review in the course of administrative proceedings of entries of rights in the land and mortgage registers.
But the presumption under Art. 3 of the Mortgages Act can be rebutted, as indicated by the Constitutional Tribunal in its judgment of 21 July 2004 (case no. SK 57/2003), both in proceedings for reconciliation of the land and mortgage register with the actual legal status and in any other proceedings where assessment of the correctness of the entry is relevant for decision of the case. In the resolution of a seven-judge panel of the Supreme Court of Poland of 18 May 2010 (case no. III CZP 134/09), it was held that undermining these presumptions is possible in proceedings where the actual legal status of the real estate is grounds for the claims made or defended against, but then the effects of rebuttal of the presumption are limited to those proceedings and their parties, and do not constitute grounds for changing the entries in the register itself. The presumption under Art. 3 of the Mortgages Act may be rebutted in any proceedings conducted by a body statutorily authorised to resolve matters and rule on disputes, and not only in land and mortgage register proceedings or proceedings to reconcile the land and mortgage register with the actual legal state (Marta Romańska, “Comment on the Supreme Administrative Court judgment of 19 November 2015, case no. I OSK 493/14”).
Fortunately, there are reasonable, pro-civic views expressed by the administrative courts to the effect that administrative authorities have the power to conduct proceedings seeking to rebut the presumption from Art. 3 of the Mortgages Act, when aimed not at a binding determination of the legal status between entities conducting a dispute reserved for the civil track, but only at establishing a prerequisite enabling the party to obtain an administrative-law ruling affecting the legal, rather than factual, situation of an entity (e.g. judgment of the Province Administrative Court in Rzeszów of 24 April 2014, case no. II SA/Rz 251/14).
And what about a right not entered but inferred from other entries in the land and mortgage register?
The situation is slightly different when a given right is not entered in the land and mortgage register, but existence of this right to real estate can be inferred based on other entries in the land and mortgage register.
In one case before the province administrative court, the subject of the complaint was the decision of the province governor upholding the decision of the county executive (starosta) refusing to award compensation for taking land for a road under Art. 98 of the Real Estate Management Act. The administrative authorities unanimously refused to pay compensation, asserting the presumption under Art. 3 of the Mortgages Act. One owner was entered in section II of the land and mortgage register for the property, part of which was taken for the purpose of a road in 1999, but in an agreement with the commune, that owner had waived a demand for compensation for the taken property, and in exchange the commune undertook not to charge a betterment fee for the increase in value of the real estate after the partition was carried out (an analysis of the validity of such an agreement is beyond the scope of this article).
Subsequently, in 2005, the children of the registered owner applied for compensation for the real estate, claiming that in 1999, i.e. on the date the property was divided and part of it was taken for the purpose of a road, they were actually co-owners of the real estate, but not entered in the land and mortgage register. The children derived their title of co-ownership to the property from succession from their mother (who died in 1979), i.e. the late wife of the man entered in section II of the land and mortgage register as the sole owner. Their mother had been a co-owner of the property as part of the statutory joint marital property regime. Despite this, she had never been entered in section II of the land and mortgage register. After her death, the entry of her rights was also not made by her children as her heirs. In 1999, after the property was already divided and part of it taken for the purpose of a road, the owner entered in the land and mortgage register and his children concluded a notarial agreement concerning the division of the decedent’s estate (his wife, the children’s mother), abolishing co-ownership of the property, a gift agreement, and settlement of expenditures made on the property. Pursuant to this agreement, the father/widower and children were entered as owners in several separate land and mortgage registers established for the various portions of the former large property created after the division. The basis for the entry in section II of each of these persons was the foregoing agreement, but primarily the court’s decision determining acquisition of the deceased wife/mother’s estate, and the marriage certificate.
As part of the accumulated evidence, prior to issuing administrative decisions, the administrative authorities were in possession of documents confirming that the property was part of the statutory joint marital property regime, as well as complete excerpts from the land and mortgage registers indicating the foregoing documents as the basis for entry of the father and children as owners of the respective properties. The evidence confirmed that, along with their father, the children had been co-owners of the property since their mother’s death in 1979, and derived their title from succession.
In a final judgment vacating both defective decisions by the administrative authorities, the province administrative court stressed the importance of the presumption from Art. 3 of the Mortgages Act, and that the administrative authority is bound by entries in the land and mortgage register. However, the court found that in this case the administrative authorities had failed to determine whether the children were co-owners of the property as heirs on the historical date, in 1999. The court emphasised the importance of the basis of the entry in the land and mortgage register in the form of the decision on succession, the marriage certificate, and the agreement of 1999. According to the administrative court, this confirmed that on the key date for the administrative proceedings for compensation, the owner of the property was not only the father entered in section II of the land and mortgage register, but also his children as co-owners.
In its judgment, the province administrative court underlined that the administrative authority cannot make determinations different from those resulting from the entries in the land and mortgage register, but neither should it overlook the existence of other entries (e.g. in the form of the basis for the entries of rights in the land and mortgage register). In the facts of this case, the wife and children were never explicitly listed as co-owners of the property in section II of the land and mortgage register. However, the existence of their co-ownership could be established based on a careful analysis of the land and mortgage register, with regard to the grounds for entries and the other official documents attached to the land and mortgage register and collected in the administrative proceedings. The children should also be recognised as parties to the administrative proceeding for compensation, even though they were not disclosed in the land and mortgage register on the key date for examining the grounds for receiving compensation.
Conclusion
Administrative authorities in Poland routinely refuse to grant party status in administrative proceedings seeking compensation, and other proceedings where a legal interest is derived from title to real estate. But the administrative authorities have a duty to thoroughly examine every matter, and to conduct the proceedings in a manner inspiring confidence in the authority among the participants.
Persons with a legal interest in participating in administrative proceedings should not be held hostage to the erroneous and heartless practice of administrative authorities hiding behind the presumption from Art. 3 of the Mortgages Act—even though it is a rebuttable presumption. Primarily, this applies to cases seeking compensation for property taken under various provisions in connection with public road projects. Such individuals had their property rights taken away very quickly, but may have been waiting 20 years or more for compensation.
Leszek Zatyka, attorney-at-law, State Claims practice, Wardyński & Partners
