Energy Performance Certificates were introduced at the beginning of 2010. They are important for legal actions relating to real estate trade, but, as they have existed for only a short time, they are still not widely known about. It is therefore worth having a look at the impact of this amendment to the Construction Law.

What is an Energy Performance Certificate?

It is a document that specifies the amount of energy required to satisfy the various needs connected with building maintenance and also indicates possible improvements to the energy efficiency of a building. It is usually issued for new investments and also when a given building is planned for sale or lease. The certificate provides information on the energy demand of a building, which helps determine the cost of its maintenance. However, it does not state straightforwardly whether a given building is energy-efficient or not, but it indirectly helps forecast the share of future costs of energy in building maintenance.

Energy Performance Certificate in Real Estate Trade

Under the amended Construction Law, if a building is sold, the seller has to provide the purchaser with an energy performance certificate, under which the subject of the agreement will be transferred. In the case of a lease agreement, the lessor has to provide the lessee with an energy performance certificate. In both cases the document cannot be issued by the owner of the building or premises.

Consequences of breaching regulations for energy performance certificates

First, we must conclude that in both the above cases the amended Construction Law does not leave an option but imposes the obligation to provide or make available the energy performance certificate.

Although failure to do so will mean breaching the law, the amended Construction Law does not provide for any sanctions for such breach. If the content of the legal action, i.e. the purchase or lease agreement, is made correctly and in the proper form (notarial deed for transferring the title to the property and the owner’s title to premises (spółdzielcze prawo do lokalu)), then there will be no grounds to claim that the lack of an energy performance certificate makes the agreement contradict the law and – pursuant to the provisions of the civil code – invalid. The consequence of breaching the law by failing to provide or make available the energy performance certificate is unclear in the light of applicable regulations.

If an energy performance certificate was provided upon the sale or lease of a building or premises but contained false information regarding the amount of energy, it will be a physical defect under the provisions of the civil code regarding statutory warranty for faults.

An energy performance certificate which provides false information on the amount of energy required to satisfy the various needs relating to building maintenance means that the subject of the agreement lacks the characteristics that the seller or lessor guaranteed to their contractor, which – pursuant to the civil code – may constitute a physical defect of the sold object or may be deemed a defect of the leased object.

Therefore, in the case of sale, the purchaser will be entitled to rescind the agreement or to claim a price reduction in a proportion equal to that in which the value of the building or premises was falsely given in the energy performance certificate compared to the value calculated including the existing defects. In the case of a lease of a building or premises, the lessee will be entitled to rescind the lease agreement or to claim an appropriate lease rent reduction.

In order to preserve and execute the rights under the statutory warranty for physical defects, it is necessary that the purchaser or lessee notify the seller or the lessor about the defect within one month of its disclosure and, in the event that the examination of a given object is a common practice for a given type of relation, within a month after the lapse of the period during which – with all due diligence – such defect could have been disclosed. Failure to perform those acts of diligence translates into losing the rights under statutory warranty.

In the case of a sale transaction between commercial entities/sole traders, the purchaser may lose the rights under statutory warranty if it failed to examine the property at a proper time and in a proper manner and also failed to immediately notify the seller about the disclosed defect. If a defect was disclosed later the purchaser may lose the rights under statutory warranty if it failed to notify the seller immediately after discovering it. Similar rules apply to the rights of the lessee towards the lessor of a building or premises.

Regardless of the right to rescind the agreement or to claim a price reduction, the purchaser and the lessee may also claim redress of damage suffered due to the defect.

The rights under the statutory warranty for physical defects expire after one year, and, as regards the defects of building, counting from the date when the object was handed over to the purchaser.

Therefore, the rights of a purchaser or lessee of premises expire one year after handing over the premises and the rights of a purchaser or lessee of a building expire three years after handing over the building.

Conclusion

It seems that both parties to sale or lease transactions of buildings or premises should remember the energy performance certificate and its importance for real estate trade. Purchasers and lessees may demand to see the certificate and check its reliability, and if it provides false information, they may claim a reduction of the sale price or lease rent, or even rescind the agreement and claim compensation.