This was the holding of the Constitutional Tribunal
under its judgement of 10 July 2012 (Case File No. P
15/12), cancelling—as of the date of its publication
in the Journal of Laws, i.e. 19 July 2012—the second
sentence of Article 76(1) of the Act on Land and
Mortgage Registers of 6 July 1982 (“Mortgage
Act”).
Previously, Article 76(1) of the Mortgage Act was
worded as follows: ‘In the event of subdivision of a
real property, a mortgage encumbering the real
property encumbers all the real properties created as
a result of the subdivision (joint mortgage). A
mortgage over a fraction of a real property
encumbers to the same extent fractions of all real
properties created as a result of the subdivision’.
The judgement of the Constitutional Tribunal
referred to above cancelled the second sentence of
the above provision.
The following example illustrates the meaning of the
original provision. If a building housing ten
dwellings was co-owned by ten individuals and only
two of them contracted a bank loan secured by
mortgage established over the borrowers’ respective
shares in the co-ownership, upon abolition of co-
ownership the mortgage encumbered all fractions in
the real properties created as a result of the
subdivision, that is also those held by individuals
who did not contract the bank loan. The creditor
(bank) could enforce satisfaction of its claims under
the loan granted in full or in part against each of the real properties, against some of them or against all of
them jointly. Consequently, the cancelled provision
could produce liability for debts of another.
One of the district courts developed doubts about the
constitutionality of the second sentence of the above
provision. Thus, a question of law was put to the
Constitutional Tribunal whether the second sentence
of Article 76(1) of the Mortgage Act complies with:
the principle of property right protection laid down
under the Constitution and Protocol 1 to the
Convention for the Protection of Human Rights and
Fundamental
Freedoms
(including
statutory
exceptions to that principle) and the constitutional
principle of equality before the law.
The Constitutional Tribunal held that the provision
in question is contrary to the constitutional principle
of property right protection, however, found it to
comply with the principle of equality before the law,
including without limitation equality with regard to
the protection of the property right laid down under
the Constitution.
In the justification to its judgement, the
Constitutional Tribunal explains that the negative
outcome of the proportionality test provided for
under the Constitution (understood as an evaluation
of three principles: utility, necessity, and undue
interference) supports holding the norm under
review as contrary to the constitutional principle of
property right protection. The Constitutional
Tribunal stated that when introducing the provision
under consideration legislators had to decide which
of the two rights should be granted greater legal
protection, and consequently gave priority to the
protection of the creditor from losing its security.
However, the Constitutional Tribunal held that in the
event of concurrence of norms pertaining to the
property right and a claim secured by mortgage, it is
the property right that above all should be subject to
protection, as the Constitution directly designates it
to be a superior right; it must be pointed out that the
property right includes the right of a co-owner to
request abolition of co-ownership. It is the view of
the Constitutional Tribunal that the effects of
strengthening the protection of claims under the
provision in question are disproportionally
disadvantageous to the owner vis-à-vis the benefits
gained by the creditor.
Since the previous wording of the above provision
often prevented deals from being successfully closed,
the judgement cancelling part of the provision in
question must be seen as a positive development.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
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81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
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Fax +48 22 447-4301
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50-125 Wrocław
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Fax +48 71 337-6701
wroclaw@pl.millercanfield.com
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developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any decision as to a particular course of
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