One word in the contract can determine tens of thousands of zlotys. You pay 40,000 zlotys with a preliminary contract for an apartment – if it is a deposit, and the seller changes their mind, you get back 80,000 zlotys. If it is an advance – you get your 40,000 zlotys back and… nothing more: no compensation for three months of searching, costs of the appraiser, and opportunities that were lost during that time. This guide explains the difference based on regulations (art. 394 of the Civil Code), shows when each solution makes sense – not only in real estate – and how to correctly write a deposit in a contract to truly protect yourself.
In short: a deposit disciplines both parties – whoever withdraws from the contract pays (by losing the payment or receiving double the return). An advance is just a regular prepayment towards the price: if the contract does not come to fruition, it simply returns, with no consequences for the one withdrawing. The distinction is also confirmed by UOKiK in its consumer guide.
How a Deposit Works (art. 394 CC)
| What Happens | Deposit | Advance |
|---|---|---|
| The contract is withdrawn by the party who paid (e.g., the buyer) | It is forfeited – the other party can withdraw from the contract without setting an additional deadline and keeps the payment | Full refund |
| The contract is withdrawn by the party who accepted (e.g., the seller) | Refund in double amount | Refund in single amount |
| The contract is executed | The payment counts towards the price – here both institutions operate the same way | |
| Termination of the contract by mutual agreement or circumstances for which no one is responsible (or both parties are responsible) | Refund in single amount, without doubling (art. 394 § 3 CC) | Refund |
| Legal basis | art. 394 CC | No separate regulation – general provisions on obligations (upon withdrawal from a mutual contract, the return of benefits is mandated by art. 494 CC) |
Important: the provision on deposits is dispositive – it operates "in the absence of a different contractual stipulation or custom." Therefore, the parties can modify its rules in the contract, e.g., by adding situations in which the deposit returns in a single amount. This is a loophole worth using consciously (about the credit clause below).
How Much Deposit and in What Contracts
The law does not impose a specific amount – in real estate, it is customary to pay about 5–10% of the price, while for services and custom orders, 10–20% of the order value is common. Art. 394 CC applies to every contract, not just the purchase of an apartment:
| Situation | What to Choose | Why |
|---|---|---|
| Buying/selling real estate | Deposit | With hundreds of thousands of zlotys, the withdrawal of the other party must have a cost; details of the contract structure – in our guide on the preliminary contract |
| Renovation, construction team | Deposit | The team reserves the date and materials, you risk downtime – consequences should work both ways; we discuss contracts with contractors in our guide on renovations |
| Custom furniture, windows, doors | Deposit | The manufacturer incurs production costs before delivering the goods |
| Reservation of an apartment before signing a lease agreement | Deposit (reservation) | Secures the conclusion of the contract itself; this is not the same as a security deposit, which secures damages during the lease and is not subject to art. 394 CC |
| Small reservations, low amounts | Advance | When withdrawing from the transaction does not really hurt anyone, simplicity wins |
Trap No. 1: Loan Refusal Without a Clause
Buying on credit? Without a credit clause, you risk losing the entire deposit. Whether the bank's refusal is an "event for which neither party is responsible" (and the deposit returns), or rather an event on the buyer's side (and it is forfeited) – courts assess this on a case-by-case basis, and there are no official guidelines. Don't leave this to chance: explicitly state in the contract that a refusal to grant credit, confirmed by a written decision from the bank, resolves the contract, and the deposit returns in a single amount within a specified period. Also clarify the timeframe in which the buyer submits the application (and to how many banks) – this protects the seller from a buyer who is not actually trying for credit.
Trap No. 2: Naming and Timing of Payment
- Name it correctly. The contract must include the word "deposit" with the amount, payment deadline, and account. Phrases like "prepayment," "reservation fee," or "advance for materials" do not automatically trigger the mechanism from art. 394 CC – in a dispute over the nature of the payment, the content of the contract decides, and ambiguity works against the one who hoped for a double return.
- "Upon conclusion of the contract." The law states that the deposit is "given upon conclusion of the contract" – it is safest to pay it on the day of signing. A later payment date is permissible if the contract explicitly states so.
- Only by bank transfer, with confirmation. Cash "in hand" without a receipt invites evidentiary disputes.
- Changing an advance to a deposit (and vice versa) is possible via an annex with the consent of both parties – in writing, with a clear definition of the nature of the payment.
- Tax? The payment of a deposit with a preliminary contract does not incur PCC – the tax (2% for the secondary market, with a 0% relief for the first apartment) is collected by the notary from the full price only at the time of the sale deed.
A Deposit Does Not Close the Door to Compensation – But Choose Wisely
Retaining the deposit (or demanding its double amount) is a lump-sum solution: quick, without proving damage. Alternatively, the aggrieved party can – instead of using the deposit mechanism – seek compensation under general principles (upon withdrawal from a mutual contract, art. 494 CC allows for the return of benefits and compensation for damages from non-performance of the obligation). This makes sense when the documented damage clearly exceeds the deposit – but it requires a process and evidence. For most transactions, a well-calibrated deposit is simply more practical.
Numerical Example: Why This is Not an Academic Difference
| Apartment 450,000 zlotys, payment 45,000 zlotys | Recorded as "deposit" | Recorded as "advance" |
|---|---|---|
| The seller received a better offer and withdraws from the contract | Returns 90,000 zlotys – your 45,000 zlotys + another 45,000 zlotys in compensation | Returns 45,000 zlotys – you end up with nothing minus costs and lost time |
| You changed your mind without cause | You lose 45,000 zlotys | You recover 45,000 zlotys |
This symmetry is the essence: an advance is "safe" for the one paying – but that is precisely why it secures nothing. In serious transactions, both parties should want a deposit: a fair contractor is not afraid of the consequences, and an unfair one is filtered out at the start.
Are you living abroad and buying/selling in Poland? The deposit works the same way, and make the payment from a foreign account via transfer with a description ("deposit – preliminary contract dated..."). A proxy will sign the contract with the deposit on your behalf – how to organize this is described in the guide on selling an inherited apartment from abroad.
Sources
| Source | Type | Status/Reliability |
|---|---|---|
| Civil Code (consolidated text, Journal of Laws 2026, item 795) – art. 394, 494 | Law (act) | Verified 07.2026 (full text) |
| UOKiK: deposit vs advance – consumer guide | Office (UOKiK) | Verified 07.2026 |
| PCC Act (consolidated text, Journal of Laws 2026, item 191) – moment of tax collection | Law (act) | Verified 07.2026 |
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