To protect the right of ownership of immovable property acquired from a non-owner

The former owner of the land subsequently died and now his heir claims that the sale of the land to the developer did not take place because the purchase agreement between the (former) owner of the land and the developer is supposed to be invalid, as the signature of the (former) owner of the land on the purchase agreement was forged; the heir is now to claim ownership of the land transferred to the developer in court for himself. The current owners of the plots of land with houses (the developer's customers) are now in uncertainty about what will happen to their houses and are worried about having to move out of their houses.

So let us briefly explain the situation described above from the perspective of the applicable law. The situation of the current owners of land with family houses (for simplicity we will hereafter refer only to houses, although with exceptions the land is the thing in the legal sense, not the house, when the house is considered to be part of the land) may not be as hopeless as it might seem at first sight.

The first question is whether or not the developer actually became the owner of the land in question, and whether or not the purchase agreement between the then owner of the land and the developer is valid. For the purposes of this text, we will (hypothetically) assume that the purchase agreement is not valid and that the developer has not become the owner of the land in question; otherwise, the developer would be the proper owner of the land and its subsequent transfer to the homeowners would not be in any way jeopardized by the current actions of the heir of the original landowner.

If we assume that the developer was duly registered in the Land Registry as the owner of the land at the time of the conclusion of the purchase contracts for the land in question with its customers (the current owners of the houses), and that there was no notice of disputability regarding the ownership of the developer registered in the Land Registry (according to information in the media, this was the case), then the principle of material publicity of the registration in the Land Registry resulting from the applicable legislation, in particular from the Civil Code, is in favour of the current owners of the houses. This principle means that the ownership right to an immovable property (land is an immovable property) registered in the Land Registry is deemed to be registered in accordance with the actual legal status and if the status registered in the Land Registry is not in accordance with the actual legal status, the registered status is testified in favour of the person who acquired the ownership right for a consideration in good faith from the person entitled to it according to the registered status.

In other words, if the homeowners bought the houses from the developer in a situation where the developer was duly registered as the owner in the land register (and there was no notice of disputability regarding the developer's ownership in the land register), and they were in good faith in this registration, then they became the proper owners of the house, even if the developer was not in fact the owner of the house. Confidence in the correctness of the registration of rights in rem (ownership is a right in rem) in the land register takes precedence over the protection of the real beneficiary, whose ownership is not ascertainable from the land register.

As regards the aforementioned good faith of the owners of the houses, it is assessed at the time of the application for registration of their ownership right in the Land Register.

Therefore, if the current owners of the houses did not have and could not have had any doubts as to the correctness of the developer's registration of the ownership of the houses at the time of the application for registration of their ownership of the houses in the Land Registry, then they became the actual owners of the houses and their ownership should not be compromised in any way by the efforts of the heir of the original owner of the land.

In this context, it can be added that before 2014, when the current Civil Code (the so-called New Civil Code) came into force, the legal regulation in this respect was different, however, the Constitutional Court reached similar conclusions in its decision-making practice, which provided protection to purchasers who acquired immovable property from a person who was not its actual owner, but was (incorrectly) registered as its owner in the Land Registry, provided that such purchasers were in good faith in the correctness of such registration in the Land Registry.  

However, the situation will be quite different for land that would be sold by the developer now. Now that the dispute over the ownership of the land is publicly known and (according to media reports) the land has been registered in the Land Registry with a note of disputability of ownership, the present purchasers would no longer be in good faith in the correctness of the registration in the Land Registry and would therefore not be protected by the principle of material publicity of the registration in the Land Registry.

It can be concluded that the ownership right to the houses of the owners who filed a petition for the registration of their ownership right to the house in the Land Registry at the time when they did not know and could not have known about the disputability of the developer's ownership right to the land in question and based on the correctness of the registration of the developer's ownership right to the land in the Land Registry, should remain unaffected even if it turned out that the developer was not the owner of the land (that the original owner was). It cannot be ruled out that the heir of the original owner of the land will not litigate with the current owners of the houses over their ownership, but such potential litigation should, as a rule, be successful for the owners of the houses who were in good faith as mentioned above. It should be added, however, that the court considers each individual lawsuit individually on the basis of the specific facts and thus cannot predict the outcome of each individual lawsuit.