Polish Developer Insolvency: What It Means for Property Buyers

You've found out that the developer you're buying a flat from in Poland has filed for insolvency, or a court has already declared it — and the first thought is: what happens to my money? That worry is entirely understandable, but Polish law has provided for exactly this scenario for years. Your payments generally don't go straight to the developer; they sit in a dedicated escrow account, and there's an additional safety net in the form of the Deweloperski Fundusz Gwarancyjny (Developer Guarantee Fund, "DFG"). Developer insolvency triggers a formal procedure — with a court-appointed trustee, a meeting of buyers, and specific deadlines — in which you have defined rights and concrete steps to take. This guide explains what happens to the money you've paid in, what role the trustee and the DFG play, how to file your claim, and what to realistically expect, including if you live abroad.

This guide is general legal information, not legal advice. How the rules apply depends on your individual circumstances, the stage of the insolvency proceedings, and the wording of your contract and documents. Where advice or representation is needed, the matter should be assessed by a qualified Polish lawyer. Twoja Sprawa helps you organise the documents for that assessment.

Key points

• Your money doesn't automatically disappear the moment a developer's insolvency is declared — it's protected by the residential escrow account (mieszkaniowy rachunek powierniczy) and the Developer Guarantee Fund (DFG), which are designed to operate independently of the developer's financial health.
• Insolvency proceedings against developers follow special provisions of Polish insolvency law (Prawo upadłościowe) — including a separate insolvency estate for each development project.
• As a buyer, you're a creditor in the proceedings and must file your claim with the supervising judge (sędzia komisarz) within the deadline set out in the insolvency order — missing it usually doesn't shut the door completely, but it comes with extra costs.
• It's the meeting of buyers (creditors) that decides, by resolution, whether the trustee should aim to finish the building and transfer ownership of the units, or liquidate the estate and distribute the proceeds.
• There's no single predictable timeline and no guarantee of getting all your money — or the flat — back. These proceedings can run for years, and the outcome depends on the developer's assets and the stage the project had reached.
• Filing a claim is a formal legal document with its own requirements — mistakes can weaken it, which is why some buyers, particularly those living abroad, use a representative.

What developer insolvency is and who deals with it

Developer insolvency is declared by an insolvency court (the commercial division of the district court, sąd rejonowy), usually on the application of the developer itself or one of its creditors, once the company has permanently lost the ability to meet its due obligations. From the date insolvency is declared, management of the assets passes to a court-appointed trustee (syndyk masy upadłości), with the process supervised by a judge-commissioner (sędzia komisarz).

Developers carrying out residential projects are also subject to special provisions of Polish insolvency law (the Insolvency Law Act of 28 February 2003, consolidated text). These provide, among other things, for a separate insolvency estate for each development project and specific rights for buyers of units. In practice, this means the assets tied to a specific project — say, a single building or estate — are, to some extent, ring-fenced from the developer's other assets and debts, which is meant to protect the buyers in that particular scheme.

Developer insolvency and your deposit — the role of the escrow account

Since 1 July 2022, every developer selling flats in Poland has been required to hold a residential escrow account (mieszkaniowy rachunek powierniczy) at a bank for each project — your payments go into that account, not straight to the developer. How much of that money has already been released to the developer by the time insolvency is declared depends on the type of account:

Since 1 July 2022, an open escrow account must carry an additional layer of protection — a bank guarantee, an insurance guarantee, or DFG cover. You can check which type of account your developer uses in your development agreement and in the information prospectus (prospekt informacyjny).

If you bought your flat before July 2022, or under an earlier version of the contract, the rules may have been different — your situation will then need a separate assessment.

The Developer Guarantee Fund (DFG) and insolvency

The Developer Guarantee Fund (DFG) is an additional safeguard introduced by the Polish developer act (the Act of 20 May 2021 on the protection of rights of buyers of a residential unit or single-family house and on the Developer Guarantee Fund, Journal of Laws 2021, item 1177), administered by the Ubezpieczeniowy Fundusz Gwarancyjny (UFG), Poland's Insurance Guarantee Fund. Developers pay compulsory contributions into it on every payment a buyer makes into the escrow account.

The DFG is designed to pay out to buyers, among other trigger events, precisely when a developer's insolvency is declared — to the extent that the money paid in isn't returned via the escrow account or recovered through the insolvency proceedings. This is an important distinction: the DFG doesn't replace the insolvency proceedings or the need to file a claim — it operates alongside them, as an extra safety net, typically once it's established that a given amount won't be recovered any other way.

Applications for a DFG payout go to the UFG. It's worth keeping an eye on the official notices relating to your specific project, as it's usually the trustee or the court that informs buyers about the availability and procedure for such an application.

The insolvency trustee — what they actually do

From the date insolvency is declared, the trustee takes over management of the developer's assets and represents the insolvency estate. In practice, for buyers this means:

• the trustee keeps a list of claims based on filings from buyers and other creditors,
• the trustee convenes or services the creditors' (buyers') meeting and implements the decisions it takes about the project's future,
• the trustee may — if that's what has been decided — continue the development project, including commissioning completion of the building, or liquidate the estate (selling the property, land, rights) and distribute the proceeds among creditors in the statutory order of priority,
• the trustee is responsible for ongoing communication with buyers — usually via court notices (published through the Krajowy Rejestr Zadłużonych, Poland's National Debtors' Register) and correspondence sent directly to creditors.

The trustee is not your representative — they act in the interest of the entire insolvency estate and all creditors, not just you. That's an additional reason to keep track of deadlines and protect your own rights yourself, or through your own lawyer, rather than waiting for information to come to you.

Filing a claim against the developer's insolvency estate — how and by when

Once insolvency is declared, the court's order sets a deadline for filing claims with the judge-commissioner. As a buyer, you file a claim (wierzytelność) — depending on your circumstances, this might be a claim for transfer of ownership of the unit, a monetary claim for the return of amounts paid, or both as alternative claims.

Filing a claim is a formal legal submission and should include, among other things:

• identification of the creditor (your details) and the developer (company details, insolvency case reference number),
• the basis and amount of the claim — sums paid in, with dates and transfer confirmations,
• any claim for transfer of ownership of the unit in its unfinished state, if you're pursuing that,
• supporting evidence: the development agreement, proof of payments, correspondence.

What if you miss the deadline? A late filing is usually still possible, but it comes with additional costs of the proceedings borne by the person filing late. It's far better to file on time — which is why the very first step after hearing about the insolvency should be to pin down the exact deadline from the wording of the court's order.

Finishing the build or getting your money back — two paths

What happens if the developer goes under before construction is finished? This is where the special provisions on developer insolvency give, in practice, several possible answers — and it's exactly what sets developer insolvency apart from an "ordinary" company insolvency.

1. Continuing the project. The buyers' (creditors') meeting can pass a resolution for the trustee to finish the building and transfer ownership of the units to buyers — sometimes on condition of additional payments from buyers to cover the completion costs. This route is realistic particularly for advanced-stage projects, where finishing the build is often cheaper than liquidating and paying compensation.

2. Liquidating the estate. If continuing isn't viable or worthwhile — for example, a very early stage of construction, insufficient funds, or a dispute over the land — the trustee sells the assets forming part of the estate, and the proceeds are distributed among creditors in the statutory order of priority. In this scenario, your claim is for the return of your money rather than the flat itself.

3. An individual buyer option. In some situations, a buyer may apply individually for transfer of ownership of their unit in its unfinished state — giving up any further monetary claims relating to that property. This route can make sense when you want the flat itself and are prepared to finish it yourself.

Which option applies in your case depends on the stage of the project, the state of the developer's assets, and the decision of the creditors' meeting. It's an area worth discussing with a lawyer before filing your claim, so your claims are framed correctly — particularly if you're torn between keeping the unit and getting your money back.

How long it takes and how much you can realistically recover

It's hard to make promises here, and any reputable adviser will be cautious with forecasts:

• Insolvency proceedings — especially where continuing construction or a dispute over the order of creditor priority is involved — can run for years.
• How much you actually recover depends on how many assets are genuinely in the estate, how many other creditors — banks financing the construction, subcontractors — are competing for the same funds, and whether and to what extent the DFG steps in.
• The escrow account and the DFG system have significantly improved the chances of recovering your payments compared with the situation before these mechanisms existed, but they don't guarantee a full refund or any particular timeline.
• Your position is usually stronger if you have a complete set of documents — the contract, payment confirmations, correspondence — and filed your claim on time.

Be wary of anyone promising a "guaranteed" refund or a "certain" completion date at this stage of proceedings — no one can honestly give you that assurance.

The role of a lawyer or representative in filing a claim

Filing a claim, taking part in the creditors' meeting, and any application for transfer of ownership of an unfinished unit are all steps with specific formal requirements, where a mistake — a missing element in the claim, missing the deadline, vaguely worded demands — can cost you time or money. A lawyer or representative can:

• check what stage the proceedings are at and which deadline applies to your case,
• prepare and file a properly worded claim together with the supporting evidence,
• represent you at the creditors' meeting if you can't attend in person,
• monitor court notices and correspondence from the trustee, so you don't miss further deadlines,
• help you assess whether, in your situation, it's more realistic to aim for transfer of the unit or for a refund, including via the DFG.

"Wait and see" isn't a safe strategy here — deadlines in insolvency proceedings run regardless of whether you're keeping track of them.

Live abroad? Filing a claim without travelling to Poland

Many buyers of flats from Polish developers live in the UK, Ireland or Germany — and news of a developer's insolvency often reaches them late, or incompletely. A few practical pointers:

• You can usually file your claim by post or through a representative in Poland — you don't need to be physically present at the court.
• If you want someone to act on your behalf — for example, at the creditors' meeting — you'll need a power of attorney drawn up before a Polish consul or a local notariusz (a civil-law notary, not the same as a UK notary public), with the appropriate certification (apostille) and a certified translation where required.
• Keep an eye on the Krajowy Rejestr Zadłużonych (National Debtors' Register) — key information about the proceedings, including deadlines, is published there.
• Plan ahead — distance and the time difference don't extend the statutory deadlines.

Documents worth gathering

Common mistakes

• Doing nothing after hearing about the insolvency. Waiting for "someone to get in touch" instead of finding out the claim deadline yourself.
• Relying purely on informal information from other buyers or social media groups instead of checking official notices and court orders.
• Missing documents, especially payment confirmations, which makes it harder to prove the exact amount of your claim.
• Filing late without good reason — this simply generates unnecessary extra costs.
• Ignoring court or trustee correspondence sent to your Polish address while you're living abroad.
• Believing informal promises about a completion date or the level of refund before the creditors' meeting has taken any formal decision.

Step-by-step

1. Verify the developer's status — check the KRS (National Court Register) and the Krajowy Rejestr Zadłużonych to confirm that insolvency really has been declared and find the case reference number.
2. Pin down the claim deadline from the wording of the court's insolvency order.
3. Gather the documents from the table above, particularly the contract and payment confirmations.
4. Speak to a lawyer, especially if you're considering a claim for transfer of ownership of an unfinished unit rather than a refund.
5. Prepare and file your claim with the judge-commissioner, on time and in the correct form.
6. Keep track of notices and correspondence relating to the creditors' meeting and the decision on continuation or liquidation of the project.
7. Consider an application to the DFG if it turns out part of your payments won't be recovered from the estate.
8. If you live abroad — arrange power of attorney well in advance, before further deadlines pass.

Deadlines to keep in mind

• The claim-filing deadline is set out in the court's insolvency order itself — it takes precedence over general limitation periods.
• A late filing generally remains possible, but comes with additional costs.
• Claims outside the claim-filing process in the insolvency proceedings may be subject to separate general limitation periods — generally 6 years, running to the end of a calendar year (Article 118 of the Polish Civil Code).

Don't sit on this — in insolvency proceedings, it's the calendar, not the trustee's goodwill, that determines whether you make it in time.

Frequently asked questions

Will I lose all the money I've paid if the developer goes bankrupt? Not necessarily. The escrow account system and the Developer Guarantee Fund are designed to prevent a total loss of your payments, and filing a claim gives you a formal stake in the proceedings. That said, there's no guarantee of recovering everything in every case — it depends on the specific project.

What is the Developer Guarantee Fund and when can I use it? It's a fund financed by compulsory contributions from developers, which can pay out to a buyer amounts not otherwise recovered, including in the event of developer insolvency. Applications go to the UFG, usually once it's been established that a given sum won't be recovered from the escrow account or the insolvency estate.

Do I have to travel to Poland to file my claim? No — you can usually do this by post or through a representative. It's worth arranging a power of attorney well in advance, allowing time for it to be certified abroad.

What happens to my flat if the building is never finished? It depends on the decision of the buyers' meeting and the state of the project. Possible outcomes include the trustee continuing construction, liquidation of the estate with funds paid out to creditors, or — in some situations — transfer of ownership of the unfinished unit to you.

How long does developer insolvency take? There's no single timeframe — anywhere from a little over a year to several years, depending on the scale of the project, the number of creditors, and whether a decision is made to continue construction. Treat any assurance that the matter will "definitely wrap up quickly" with caution.

Is it worth hiring a lawyer to file the claim? In many cases, yes — particularly where the claim amount is significant, you're weighing up a claim for transfer of the unit instead of a refund, or you live abroad and need someone to monitor the case day-to-day.

Related guides

• Withdrawing from a development agreement — when it's possible and how to do it
• Contractual penalties against a developer — when they apply and how to claim them
• Buying a flat in Poland while living in the UK — what to bear in mind
• Disputing a developer — how we can help (in Polish)
• All guides on disputes with companies — the full knowledge base

Has your developer gone insolvent and you're not sure where to start? Send us your development agreement and details of the payments you've made so far — we'll help you organise the documents for further assessment before you file your claim. Submitting the form doesn't create a contract, and the initial review is free. Tell us about your situation with an insolvent developer