Polish Watchdog Says Condo Hotel Promises May Have Hidden the Hardest Part of the Investment

Key Takeaways

• Misleading Returns Alleged: UOKiK has accused Linea Mare and Beskid Resort Properties of misleading consumers by promoting annual investment returns without adequately explaining the assumptions, costs and risks that could materially affect profitability.
• Focus on Long-Term Risk: The regulator says investors were not properly informed about what happens when fixed-term operator agreements expire, including the end of rental payments and the potential transfer of ongoing maintenance costs and investment risks to property owners.
• Contract Clauses Under Scrutiny: Separate proceedings challenge contract terms that allegedly required owners to grant broad powers of attorney to property managers while imposing financial penalties or withholding rental income if owners attempted to exercise their rights.
• Failure to Cooperate Could Bring Additional Penalties: Haveno Estate and Zdrojowa Invest2 are facing separate proceedings for allegedly failing to provide requested information during UOKiK's investigation, with potential penalties of up to 3% of annual turnover.

Deep Dive

The President of the Office of Competition and Consumer Protection (UOKiK) has opened proceedings against several companies involved in condo hotel developments, alleging they misled consumers about investment returns while failing to explain the costs and risks that could emerge long after the brochures had been put away. The investigations also challenge contract terms that, according to the regulator, deprived owners of meaningful control over properties they had purchased and punished those who tried to exercise it.

The operator agreements at the center of these investments are typically signed for a fixed term, often ten years. While they remain in force, the property operator rents out the unit, pays rent to the owner and assumes responsibility for managing the commercial property. The arrangement can appear reassuringly hands-off. But UOKiK argues that many buyers were never adequately told what follows once that agreement expires, or if the operator becomes insolvent before it does.

That is the point where the economics of the investment change. Rental payments stop, but responsibility does not. Ownership remains, together with the obligation to maintain a commercial property whose ongoing costs may include gardens, swimming pools, spa facilities, playgrounds, elevators and other shared spaces. According to the regulator, consumers were not informed whether those expenses would become theirs to bear, much less how large they might be. Without that information, UOKiK argues, they could not realistically evaluate the long-term profitability of the investment they were being asked to make.

The authority has charged Linea Mare, connected to the Linea Mare Pobierowo development, and Beskid Resort Properties, associated with the Mercure Szczyrk Resort development, with misleading consumers about expected returns, investment costs and risks. Advertising for the developments promoted annual returns, including claims of 8% per year, yet UOKiK alleges those figures were presented without calculations that accounted for variables capable of changing the outcome, including taxes and property maintenance costs.

For the regulator, the problem is not simply whether an advertised return eventually proves optimistic. It is whether consumers were given enough information to judge the promise before signing the contract. The proceedings reach beyond marketing material into the contracts themselves.

UOKiK is separately challenging provisions used by Linea Mare Operator, the manager of the commercial units in the Linea Mare Pobierowo development, and by Beskid Resort Properties. According to the authority, purchasers were required to grant the property manager broad powers of attorney allowing it to make decisions on virtually every aspect of property management, including matters extending beyond ordinary administration, such as approving management plans or voting on the manager's remuneration.

On paper, ownership remained with the purchaser. In practice, UOKiK argues, the contracts stripped owners of meaningful participation. Consumers could not attend owners' association meetings, vote on resolutions or influence decisions affecting the property. Those who refused to comply, revoked the power of attorney or challenged the arrangement allegedly faced liquidated damages of PLN 1,000 for every day of non-compliance, the loss of rental payments or even termination of the lease agreement governing their unit.

The regulator says those provisions may amount to unfair contract terms because they pressure consumers into surrendering rights that should remain their own throughout a long-term commercial relationship. The investigation has also widened to companies that never reached the merits of the allegations because, according to UOKiK, they failed to cooperate with the inquiry itself.

Proceedings have been opened against Haveno Estate, connected to the Brzegova Residence development in Mikołajki, and Zdrojowa Invest2, linked to the Zdrojowa Invest development in Dźwirzyno. UOKiK says Haveno Estate ignored repeated requests for information, while Zdrojowa Invest2 submitted responses that were incomplete. The authority had sought copies of standard consumer agreements, lease terms, details about project financing and the marketing claims used to promote the developments. Under Polish law, businesses are required to cooperate with such investigations, and failure to do so can result in penalties of up to 3% of annual turnover.

None of this emerged in isolation. UOKiK has spent years examining investments marketed through condo hotels and aparthotels, warning alongside the Polish Financial Supervision Authority as far back as 2019 that these products carried risks not always reflected in their advertising. Those warnings later became part of a nationwide public awareness campaign telling consumers to "Do the Math – Avoid Costly Miscalculations!" The latest proceedings suggest the authority believes the concerns it raised years ago have not disappeared.

There is a bigger lesson in that persistence. Investments built around guaranteed returns often succeed because they encourage buyers to think about the years when everything works exactly as promised. Regulators, by temperament and necessity, tend to ask a different question. They look for the moment when the contract expires, the operator walks away or the assumptions beneath the marketing no longer hold. UOKiK's latest cases are rooted in that difference. They are less about whether condo hotels can be profitable than about whether investors were given a fair opportunity to understand the investment they were actually buying, rather than the one they imagined.

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