The bank asked me to sign a notarial declaration about voluntary submission to the enforcement procedure. Bankers explain that this is a new way of securing the repayment of a liability incurred, in place of a bank enforcement title (BET), which no longer applies. “I wonder whether I should proceed in line with the creditor’s wishes,” writes Katarzyna. “I should add that I signed a credit agreement at a time when banks were still able to use a BET, and I am repaying the liability regularly. It’s not my fault that the BET regulations have ceased to apply”.
A BET was a particular right of banks. It had the form of a declaration which the client signed when incurring liabilities. In effect, if the client was in arrears with repayment of a debt, the bank could, on the basis of a BET, carry out enforcement from the borrower’s assets. It was sufficient for a bank to go to court to have an enforcement clause appended to the BET. Banks were privileged in that a court, when appending such a clause to a BET, did not examine whether the bank was justified in pursuing its claims, as normally happens when enforcing debts in a civil law case.
On 27 November 2015, as a result of the Constitutional Tribunal’s ruling and the amendment of regulations, banks lost the possibility of using a BET. From that moment, clients’ declarations signed at the time of incurring liabilities lost their force, and do not therefore produce any legal effects in the future. In other words: financial institutions are not only unable to issue a BET with regard to clients with whom they concluded an agreement after 27 November 2015, but also with regard to borrowers who incurred a liability before that date. Banks can therefore only pursue their claims along general principles. What does this mean in practice?
Banks, like every creditor, can require – as security for a loan or credit provided – a debtor to prepare a notarial declaration of voluntary submission to enforcement. This is a general solution which any creditor can use – not just banks. After the debtor signs the declaration in the presence of a notary – it has the form of a notarial deed – it will constitute an enforcement title if the need arises for the creditor to pursue claims. By appending an enforcement clause to such a title, the court does not examine the fact of the debt’s existence or the justification for it. In practice, a notarial declaration and a BET produce the same effects for the debtor. The difference is that it costs money to prepare a declaration in the form of a notarial deed.
The question that remains is the stage at which the bank has the right to demand that the client sign the notarial declaration. This can undoubtedly take place as a condition of granting credit, i.e. at the moment of signing the credit agreement. If anybody does not agree to that, he will not receive the money. However, with regard to credit granted before 27 November 2015 which is still active – this is the case described by Katarzyna – everything depends on the content of the credit agreement concluded with the bank and its provisions on securing the repayment of liabilities (see expert opinion). ©?
Legal basis
Article 1 pt. 4, Article 11 of the Act Amending the Banking Law and Some Other Laws of 25 September 2015 (Journal of Laws of 2015, item 1854). Article 93 of the Banking Law of 29 August 1997 (consolidated text: Journal of Laws of 2015, item 128 as amended). Article 777 par. 1 pt. 4 and 5 of the Code of Civil Procedure of 17 November 1964 (consolidated text: Journal of Laws of 2014, item 101 as amended).
EXPERT OPINION
Dr. Aleksandra Pokropek, attorney-at-law at FKA Furtek Komosa Aleksandrowicz
The loss of the possibility of making use of a BET means that there is a need for banks to seek alternative forms of security. In such a situation, security can, for example, be the borrower’s declaration to submit to enforcement in a notarial deed prepared according to the procedure of Article 777 pt. 4 and 5 of the Code of Civil Procedure. However, the possibility that the bank will demand that the borrower make such a declaration at a notary’s office depends on the content of the credit agreement, particularly on the general terms and conditions of agreements (the GTC, usually an appendix to the credit agreement). This is because it is most frequently in the GTC that general principles are found concerning security established for a bank. In principle, the GTC thus formulated are generally fairly broad and entitle banks to demand the establishment of “appropriate” security for the duration of the credit agreement, or such security which the banks consider proper, which opens up a wide field of interpretation. However, if the GTC were to be formulated in such a way that they only refer to security established at the stage of concluding the credit agreement, the demand for additional security for the duration of the agreement can be excluded.
An additional issue connected with the borrower’s declaration under the procedure of Article 777 of the Code of Civil Procedure is that of costs. While a declaration on submission to enforcement under a BET did not generate any costs for the client, the fee paid for a declaration submitted under Article 777 of the Code of Civil Procedure will depend on the amount of the notarial fee which in turn depends on the value of the act in law. In connection with the fact that the GTC most frequently state that costs connected with establishing security are borne by the borrower, it is the borrower who will be obliged to pay the notarial fee.