Escrow account and DFG guarantee fund in Poland: how your money is protected
Author: Tacjana MasiukiewiczLaw and contracts~9 min read
When you buy a flat that is still under construction, you pay the developer large sums before you become the owner. That is why the Polish Developer Act introduces two protection mechanisms: a residential escrow account (mieszkaniowy rachunek powierniczy) that receives your payments, and the Developer Guarantee Fund (Deweloperski Fundusz Gwarancyjny, DFG), which refunds your money in specific situations, including the developer's insolvency. Below we explain how they work, how an open account differs from a closed one and what to look for in your contract.
Key facts
- The developer must provide the buyer with an open or closed residential escrow account – your payments go there, not directly to the company's own account.
- From an open account the bank pays the developer in stages, after checking the progress of the construction; from a closed account – in one go, after ownership has been transferred to the buyer.
- The costs of running the account are borne by the developer; the buyer's payments cannot be reduced by them.
- The DFG is a separate account at the Insurance Guarantee Fund (Ubezpieczeniowy Fundusz Gwarancyjny), financed by developers' contributions: 0,45% of payments for an open account and 0,1% for a closed one.
- The DFG refunds payments, among other cases, when the developer goes bankrupt and when the developer fails to return your money after a lawful withdrawal from the contract.
What is a residential escrow account?
It is a bank account held for one specific development (or a separate stage of it – an "investment task") into which buyers pay money in line with the developer agreement (umowa deweloperska). Although the account belongs to the developer, the developer cannot dispose of the funds freely. The bank decides on withdrawals according to the rules set out in the Act. The bank keeps a separate record of payments and withdrawals for each buyer and, at your request, will give you the dates and amounts of payments and withdrawals.
You pay after each successive construction stage specified in the schedule is completed. The schedule must have at least four stages, and the cost of each one is 10% to 25% of the total cost of the project (Art. 24 of the Act). The developer informs you in writing or on another durable medium when a stage has been completed.
Open vs closed escrow account – the differences
| Feature | Open escrow account | Closed escrow account |
|---|---|---|
| When the developer gets the money | in stages, after each successive construction stage is completed | in one go, after ownership is transferred to the buyer |
| Bank control | before every payout – including construction progress, rights to the plot, tax and social-security arrears | payout after receipt of the extract of the deed transferring ownership |
| Earliest payout | no earlier than 30 days after the developer agreement is signed | after the deed transferring ownership |
| DFG contribution | 0,45% of the payment | 0,1% of the payment |
| Risk to the buyer | low – additionally protected by the DFG | very low – the money waits at the bank until the end |
In practice the open account is more common, because it lets the developer finance construction from clients' payments. A closed account means the developer funds the build from its own money or a loan and receives the buyers' money only at the very end – for the buyer this is the safest solution.
Example: how you pay with an open account
Suppose the development's schedule has five stages and you are buying a flat for 700 000 zł. The split below is purely illustrative – you will find the actual stages and percentages in the schedule in your contract.
| Stage (example) | Share of costs | Your payment |
|---|---|---|
| 1. Ground works, foundations | 15% | 105 000 zł |
| 2. Building structure | 25% | 175 000 zł |
| 3. Roof, windows, installations | 25% | 175 000 zł |
| 4. Plastering, screeds, façade | 20% | 140 000 zł |
| 5. Finishing and occupancy permit | 15% | 105 000 zł |
You pay each instalment only after the given stage is completed, and the bank passes the money to the developer after its check. The amount for the last stage goes to the developer after the deed transferring ownership is signed.
What does the bank check before a payout from an open account?
Before the bank passes the developer the money for the next stage, it carries out a check (Art. 17). Among other things, it verifies whether:
- the developer has the right to the property and a building permit,
- no bankruptcy or restructuring proceedings have been opened against the developer,
- the money is being spent on this development,
- the developer is not in arrears with taxes and ZUS social-security contributions or with payments to contractors,
- the DFG contribution has been paid,
- the stage has actually been completed – this is assessed by a person with construction qualifications appointed by the bank.
A negative result of the check suspends the payout until the irregularities are removed. The amount for the last stage goes to the developer only after ownership has been transferred to the buyer.
The Developer Guarantee Fund – what is it?
The DFG is a separate account within the Insurance Guarantee Fund (UFG). The fund's money comes mainly from contributions that developers pay on every buyer's payment into the escrow account. The rates are set by a regulation: 0,45% for an open account and 0,1% for a closed one (the statutory maximums are 1% and 0,1% respectively). The developer calculates and pays the contribution, and the rate is fixed as at the date sales of the given development begin.
When does the DFG refund money?
Under Art. 48 of the Act, the fund's resources are used to refund payments made into an open escrow account, among other cases, in the event of:
- the developer's bankruptcy where the project will not be continued (for example, the supervisory judge does not agree to the trustee continuing the development, or issues no decision within 3 months of the bankruptcy being declared),
- withdrawal from the contract by the trustee or the administrator in restructuring proceedings,
- withdrawal from the contract by the buyer on statutory grounds, where the developer does not return the money within 30 days,
- withdrawal by the buyer where the trustee demanded performance of the contract.
In addition, if the bank holding the escrow account fails, the DFG covers the part of the payments that is not covered by the guarantee of the Bank Guarantee Fund.
How to check your protection before signing
- In the information prospectus, check the type of escrow account and the name of the bank. How to verify the developer itself (KRS, land and mortgage register, KRZ) is described in the article How to check a developer.
- The draft developer agreement must include: the bank's name, the account number, the rules for disposing of the funds, the account costs and information on DFG contributions (Art. 35(1)(10)).
- Pay only into the escrow account named in the contract – never into the developer's or an intermediary's ordinary account.
- The reservation fee, once the developer agreement is signed, must also go to the escrow account – within 7 days. More: Reservation agreement with a developer.
- If the development started before 1 July 2022, ask which rules apply to your contract – the Act contains transitional provisions.
What if the developer changes the bank?
The bank can terminate the account agreement only for important reasons, with 60 days' notice. The developer must then sign an agreement with another bank, and the funds move to the new account. The developer must inform you of the change within 10 days – until then you may withhold further payments. If the developer does not sign a new account agreement on time, the bank returns the money to the buyers, and you can withdraw from the developer agreement.
Frequently asked questions
Does the escrow account cost the buyer anything?
No. The costs, fees and commissions for running the residential escrow account are borne by the developer, and your payments cannot be reduced by them (Art. 14 of the Act).
Which is safer – an open or a closed escrow account?
The closed one, because the buyers' money reaches the developer only after ownership has been transferred. The open account is also safe, though, thanks to the bank's check before every payout and DFG protection.
Who pays the Developer Guarantee Fund contribution?
The developer. The developer calculates it on every buyer's payment and pays it to the bank holding the escrow account, and the bank passes it on to the fund. The contribution is non-refundable.
Does the DFG protect a deposit or payments made outside the escrow account?
DFG protection covers payments made into the residential escrow account in connection with a contract covered by the Act. That is why you should pay only into the account named in the developer agreement.
Where do I apply for a DFG payout?
Payouts are made by the Insurance Guarantee Fund (UFG). Information for buyers, including the procedure, is published by the UFG on its DFG Zone website (Strefa DFG, in Polish).
Summary
The escrow account means your money does not go straight to the developer, and the Developer Guarantee Fund is an additional safety net in case of insolvency. Before signing, check the type of account, the bank and the DFG provisions, and make payments only to the named escrow account. How these elements look in a contract is described in the article Polish developer agreement (umowa deweloperska), and the whole buying process in the guide How to buy a new-build apartment in Poland.
Looking for a flat from a developer? For buyers on the primary market our help usually comes with no commission – the fee is typically paid by the developer. We will help you choose a safe development, and if you are buying with a mortgage – we will plan the financing in instalments.
Legal status as of September 2026. This article is for information only and does not constitute legal advice.
Sources
- Act on the protection of the rights of a purchaser of a residential unit or a single-family house and on the Developer Guarantee Fund (in Polish) – consolidated text, Dz.U. 2026 item 880 (Art. 5–19, 24, 35, 46–49).
- Regulation of the Minister of Development and Technology of 21 June 2022 on the percentage rates of the DFG contribution (in Polish) – Dz.U. 2022 item 1341.
- Insurance Guarantee Fund – DFG Zone, information for the buyer (in Polish).
