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The Warsaw Voice » Real Estate » May 20, 2009
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When Can You Count on Clause 777?
May 20, 2009   
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Anyone who has bought real estate knows what has to be determined in the sale agreement. However, not everyone remembers that other elements can also be added, including an execution clause regarding payment of all or part of the price or delivery of the real estate.

In an execution clause, the purchaser or seller submits himself to execution subject to the terms and conditions set forth therein. As a result, an executable title (tytu³ egzekucyjny) is created and makes it easier to seek fulfillment of obligations under the agreement without lengthy court proceedings. The court verifies if the executable title is in accordance with the law and, if it is, the judge confirms it with an enforceable title (tytu³ wykonawczy) and execution can begin.

All requirements regarding executable titles are described in Art. 777 of the Civil Procedure Code. Points 4 and 5 describe different situations when the debtor's submission to execution is possible in a notarial deed. Under point 4 an executable title can be created where the debtor is obliged to pay a specific amount or to deliver a specific kind or individual object, such as real estate, subject to terms determined in a deed. Under point 5 an executable title can be created when the final amount is not yet determined, where only a limit is provided for or such amount is described with a valuation clause. In such cases, conditions for execution of all or part of the claim and the time period must be precisely determined.

Although the provisions regarding an execution clause seem clear, there are often problems in obtaining an enforceable title. Above all, it should be borne in mind that an execution clause constitutes a separate part of a notarial deed and must comply with unconditionally binding Art. 777. Otherwise, the clause shall be null and void and the court will refuse to grant the enforceable title. A common mistake is when parties don't describe all details in the execution clause and only refer to the other provisions of a deed or when they fail to stipulate an amount up to which the execution can be performed and instead provide that the obligation covers the return of a sum plus interest.

The 777 clause was intended as another kind of transactional security, making it easier to seek fulfillment of obligations under a sale agreement. Unfortunately, it often turns out to be an unenforceable tool even though its purpose is precisely the opposite.
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