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Flats for sale. Developers under the scrutiny of UOKiK, explanatory proceedings have been initiated

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The President of the Office of Competition and Consumer Protection, Tomasz Chróstny, has launched a market study on the application of the so-called valorization clauses in the property development industry. 87 entrepreneurs received requests to provide information and necessary documents, and explanatory proceedings are already pending against one of them, the Office informed.

UOKiK announced in a Wednesday communiqué that it will check whether there are clauses indexing real estate prices in standard development contracts. “Current economic conditions, and in particular high inflation make entrepreneurs take actions that may have a negative financial impact on consumers.

The President of UOKiK checks developers

The President of UOKiK, President Tomasz Chróstny, stressed that “agreements should be formulated unambiguously and regulate relations between the parties in an understandable way”. “Consumers have the right to know what obligations they incur, what specific conditions they agree to. The developer’s rights to change the price may not lead to the abuse of its position by disproportionately burdening consumers with the effects of changes in economic conditions on the market” – said Chróstny, quoted in the release.

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According to the President of UOKiK, although the Developer Act does not prohibit the use of indexation clauses, such provisions in contracts should be approached very carefully.

“Market volatility and price fluctuations are characteristic of the real estate industry. In the face of high inflation, costs of construction materials and workmanship, and the related possible delays, developers may try to seek protection against the loss of investment profitability. However, this should not be at the expense of consumers, by shifting the negative effects of the complex economic situation onto them.

“We will each time examine the contractual provisions regarding indexation clauses in terms of their abusiveness, and we advise consumers to analyze the signed documents very carefully” – added Chróstny.

Main photo source: Shutterstock

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