The Developer Guarantee Fund (DFG) is a new solution introduced by the Act on the Protection of the Rights of the Purchaser of a Residential Unit or a Single-Family House and the Developer Guarantee Fund of 20 May 2021. This solution protects buyers, and what consequences does it have for developers?
Obligation to pay
First of all, it should be noted that the full protection of the DFG applies to investments whose sale began after July 1, 2024. The transitional provisions to the new act indicated that if sales began before 1 July 2022 and at least one developer agreement was concluded before that date, then the previous provisions could be applied within 2 years from the date of entry into force of the new developer act.
After 1 July 2024, the obligation to pay the contribution to the DFG arises at the time of payment by the buyer (or, in exceptional cases, by the developer) to the residential escrow account, and not at the time of concluding the agreement. Therefore, it does not arise at the time of conclusion of a specific contract, but is dependent on a purely factual transaction. However, the obligation to pay the premium itself rests strictly with the developer, regardless of the entity making the payment to the residential escrow account. Importantly, the developer should pay the amount of the contribution to the account of the bank (or credit union) maintaining the residential escrow account within 7 days from the date of the prior payment to the residential escrow account by the buyer. Then the bank or credit union pays this premium to the Insurance Guarantee Fund (UFG), which is an entity dealing with the ongoing service of DFG. The deadlines described above are important because UFG is entitled to demand payment of statutory interest from the developer for any delay in payment of the premium.
Amount of the premium
The amount of the premium depends on two factors. First of all, the value of the amount paid by the buyer to the housing trust fund in connection with the conclusion of a development agreement or other binding agreement is taken into account for its calculation. The amount is then multiplied by the percentage rate, which depends on the type of residential trust (closed-end or open-ended). The developer is obliged to calculate the correct amount of the premium, or it may commission the bank maintaining the housing escrow account to perform these activities.
Classification ofcontributions
Importantly for developers, the contribution to the DFG is non-refundable and non-reciprocal. Therefore, the structure of this benefit can be compared to a tax. The developer has no grounds to demand a refund of the premium in any case. Even the expiry of the obligation resulting from the conclusion of the development agreement due to the invalidity of the agreement itself, or in connection with the performance of a legal act by one of the parties, e.g. the exercise of the right to withdraw from the agreement or termination of the agreement by the parties, does not provide grounds for the refund of the DFG contribution. The developer may also not demand a refund of the premium or part of the premium paid to DFG in the event of a change (reduction) in the price of the subject of the contract.
It is also worth noting that the funds paid into the DFG are not assigned to a specific subject of the agreement (a residential unit or a family house) or to the purchaser. Therefore, if the development agreement expires for any reason, and then a new development agreement is signed with another buyer in relation to the same unit, the developer will be obliged to pay the DFG contribution again.
For further information, contact:
Agnieszka Durczyńska, Lawyer
Gorazda, Świstuń, Wątroba i Partnerzy adwokaci i radcowie prawni, Kraków
e:lp.moc.wsg@aksnyzcrud.akzseinga
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