Selling a flat with a mortgage in Poland: payoff, bank consent and deleting the mortgage

You can sell a flat in Poland that still has a mortgage on it. In practice, part of the buyer's money goes straight to your bank to repay the loan, the bank then confirms the debt is paid and consents to removing the mortgage, and the mortgage entry is deleted from the land and mortgage register (księga wieczysta). The details are arranged between you, the buyer, your bank and the notary.

This note sets out the usual sequence, the costs to expect, and the questions to ask your bank. Much of it rests on market practice rather than a single legal text, so confirm each step with your bank and notary. It is information, not legal advice.

Why the mortgage matters to the buyer

A mortgage (hipoteka) is registered in section IV of the flat's land register and stays attached to the flat until it is deleted. No careful buyer, and no buyer's bank, will pay the full price without a clear plan for removing it. Your job as seller is to make that plan simple and verifiable.

The usual sequence

1. Ask your bank for a payoff figure. Request a statement of the amount needed to repay the loan in full on a given date, and the bank's conditions for issuing consent to delete the mortgage. Ask how long the statement is valid and to which account the repayment must go.
2. Check your loan agreement for early-repayment terms. You can repay a mortgage early. Whether the bank can charge a fee for it, and how much, depends on your agreement and the mortgage-credit act; ask the bank to state it in writing.
3. Agree the payment split with the buyer. The preliminary or final sale agreement should say that part of the price, matching the payoff figure, is paid directly to your bank's account, and the rest to you.
4. Coordinate with the buyer's bank if they are borrowing. The buyer's bank sets its own conditions, which may include paying your bank directly and seeing proof of how your mortgage will be removed.
5. Sign the sale deed at a notary. The deed records the existing mortgage and the agreed way of paying it off. The buyer may accept that the mortgage is deleted after the sale, on the basis of the payment plan.
6. Repayment and bank consent. Once your bank receives the money, it issues a declaration consenting to deletion of the mortgage.
7. Delete the mortgage from the land register. A motion to delete is filed with the land-register court, usually through the notary. The court fee for deleting an entry is half the fee for making it; for a mortgage entered at 200 zł, that is 100 zł.

Watch out: the payoff amount changes daily as interest accrues. Make sure the figure in the sale agreement covers the repayment date, or provide a mechanism for small differences, so that a few złoty of shortfall do not delay the bank's consent.

Costs to plan for

Item	Who usually pays	Notes
Early-repayment fee	Seller	Only if your agreement and the law allow one; ask your bank
Court fee for deleting the mortgage	Usually the seller, by agreement	Half the entry fee; 100 zł for a mortgage
Notary fees for the sale deed	By agreement	Capped by the notary-fee regulation; VAT added
Income tax on the gain	Seller	Only if sold within the five-year window
PCC on the purchase	Buyer	2% on a private second-hand sale

Ask your bank, or the Financial Ombudsman (Rzecznik Finansowy), whether part of any upfront costs such as commission or insurance can be refunded after early repayment. Keep a record of what you paid when the loan started.

Tax still applies

A mortgage does not change how a sale is taxed. If you sell before the end of the fifth calendar year after the year of the transfer deed, the gain is taxed at 19% unless you spend the proceeds on your own housing within three years. Repaying the old mortgage from the sale price is not automatically such an expense; check with a tax adviser which items count. Details are in selling a flat: tax and the 5-year rule.

Selling a flat that is not finished yet

If the building is still under construction, you do not own the flat yet; you hold rights under the developer agreement, which may be partly financed with a mortgage paid out in tranches. You can assign those rights only by notarial deed and within the limits set by the developer act, which include a restriction to one flat and no other such assignment in the previous three years, with exceptions for close family. Your bank, the buyer's bank and the developer will all need to agree on how the tranches already paid are settled. This is more complex than a normal sale, so involve a lawyer.

If you are a foreign seller

The same steps apply. Two extra points:

• Plan for currency conversion if the proceeds will leave Poland. A złoty loan is repaid in złoty, and sending the rest abroad may involve conversion costs.
• If you are not a Polish tax resident, a gain on a Polish flat is still Polish-source income. See taxes when buying and owning a flat.

Check before you list the flat

• What is the current payoff amount, and how quickly does your bank issue consent to delete the mortgage?
• Does your agreement provide for an early-repayment fee?
• Is your transfer deed date inside or outside the five-year window?
• Does the land register show anything else in sections III or IV besides your mortgage?
• Will the buyer need a mortgage, and has their bank agreed the payment sequence?

For more on the investor side, see investing and renting: questions and answers.