A fresh start for Poland's land registry system

Regulations are currently being drafted which will pave the way for an electronic title and mortgage registration system. Wojciech Langowski from the Law Offices of Miller Canfield looks at how a system could develop and highlights the benefits such a development would bring to Poland's property market.

It is widely recognised that a reliable and efficient title and mortgage registration system is the foundation of safe property business and banking, but in Poland title or mortgage registration proceedings in large cities (especially in Warsaw, Krakow and Szczecin) can take years. As owner registration in the Land and Mortgage Book (LMB) is usually a condition for purchase of property, these delays slow down property sales. Moreover, courts around the country often use different legal formulas, and data in LMB's often differs to that in land registries. Such a situation seriously obstructs the development of the property market in Poland.
The unsatisfactory situation in the title and mortgage registration system is caused both by a chronic deficiency of staff in the courts and an obsolete system of LMB keeping based on hand-written entries. The Ministry of Justice has been preparing a fundamental reform for a few years now with the main objective being to implement a modern electronic system of real property information, similar to those in Germany, Austria and Norway. The implementation of the project would include a series of coherent legislative steps as well as re-organisation of the courts and the computer system.
The recently introduced New Art. 251 of the Land and Mortgage Book Act 1982 has paved the way by enabling LMBs to be established and kept not only in the traditional paper way but also in an electronic system. According to the Ministry of Justice the relevant regulations are now being drafted.
The new LMB system will consist of local databases (in the regional courts) where property information will be entered and updated, and a central database where the information will be processed and synchronised with data from other public registers including the National Court Register, REGON (registration of business entities) and PESEL (registration of citizens). Eventually this electronic LMB system will form part of a broader state integrated property information system also comprising a future land cadastre (an official register of the ownership, extent and value of real property in a given area, used as a basis of taxation) and outline planning information from local master plans.
Limited, payable and monitored access to the central database via Internet for entities such as banks or solicitors is also being considered. The digital LMB will be much the same as the traditional one as far as the legal aspect is concerned but it is not clear whether the documents attached to LMBs - e.g. land purchase agreements - (accessible only to authorised parties) will also be digitalised and included in the system or will remain available only at regional courts.
Within the next few years the new LMB system is due to be implemented in 24 LMB courts chosen by the Ministry, then in the remaining 301 courts. The so called ,migration" of data from traditional to electronic LMBs will constitute the most time-consuming part of implementation of the system. Establishment of a central database and a central information office is the next step. The implementation of the whole system and its full integration with the land cadastre and other public registers and databases is scheduled to take around 10 years.
It is worth emphasizing that similar property information systems are now being introduced in other countries in Central Europe. The system being implemented in Romania, for example, seems to be much like the planned Polish system, and Poland could gain valuable insights from their experience. The Romanian project has been commissioned by the central government and is being implemented by Stewart Title Company in co-operation with local IBM companies. Stewart Title Company has also recently assisted local authorities in Slovakia in creation of electronic land registry systems in several towns.
The new system should dramatically cut the time taken to register title or mortgage, thus making the market safer and accelerating property transactions. Investors and creditors will have basic property data available from the central information office without needing to obtain them from local courts. As changes will be entered promptly, the contents of electronic LMBs will be more up to date and reliable than now.
Considering the possible benefits, a new system will be one of the most important factors influencing the positive future development of the property market in Poland.