Eradication of perpetual usufruct in Poland
As of 24 August 2023, new regulations will come into force, enabling perpetual usufructuaries to acquire the right of ownership of real estate held under perpetual usufruct. Following the enfranchisement of land for residential purposes, it is yet another stage of a reform relating to the gradual elimination of the perpetual usufruct right from use.
The Act aims to facilitate the acquisition of the ownership right to real estate which, so far, has not been enfranchised as a result of an administrative decision or by operation of law. This amendment also applies to economic operators, as it provides for the possibility to enfranchise land used for conducting business activities. As a principle, land will not become enfranchised by operation of law as in the case of residential land; rather, the sale of land will be effected on request.
Conversion on request – demanded sale
A perpetual usufructuary may demand that the right of perpetual usufruct be sold to them in the manner and on the special terms provided for in the new regulations. Such a request may be submitted by the perpetual usufructuary within 12 months from the date of entry into force of the provisions (i.e. from 24 August 2024). The owner of the real estate (commune/district/province or the State Treasury) will be obliged to conclude an agreement transferring the ownership of the land.
Determination of the price of real estate
The price of real estate depends on who its owner is.
If the owner is a local government unit (commune, district, province), the price should not be less than the product of 20 (twenty) times the current percentage rate of the fee for perpetual usufruct and the value of the land property determined as at the date of conclusion of the sale agreement. However, this fee cannot exceed the value of the land property determined at the date of conclusion of the sale agreement.
The council or the board of the relevant local government unit is obliged to adopt a resolution on the detailed terms and conditions of sale of land property, or state in its resolution that the implementing body has the duty to individually determine such terms and conditions by way of an order. Such a resolution should be adopted within 4 months from the date the Act enters into force.
In turn, the price of land owned by the State Treasury will be fixed and will amount to:
- in the case of a single payment – 20 (twenty) times the current percentage rate of the annual fee for perpetual usufruct and the value of the land property determined as at the date of conclusion of the sale agreement,
- in the case of payment in instalments – 25 (twenty-five) times the percentage rate of the annual fee for perpetual usufruct and the value of the property.
Exclusion from conversion following a claim of a perpetual usufructuary
The legislator has limited the catalogue of real estate whose sale may be demanded. It will not be possible to request the sale of perpetual usufruct under the special procedure, if:
- the property was let for perpetual usufruct after 31 December 1997;
- the perpetual usufructuary has failed to perform an obligation set forth in the agreement on the perpetual usufruct of land property,
- perpetual usufruct applies to an undeveloped land property,
- perpetual usufruct applies to land within harbours or marinas, or the land is used as a family allotment garden,
- the property is subject to proceedings for the termination of the agreement on perpetual usufruct.
Discounts
The new Act also provides for the possibility to grant discounts on the purchase price of the property. A particularly advantageous discount of 90% of the price will be granted to those perpetual usufructuaries who purchase the property from the State Treasury and:
- are members of a family with many children and are eligible for the Large Family Card, or
- have been declared disabled (to a moderate or significant degree, or were declared disabled before they turned 16), or
- are the legal guardians or the statutory representatives of disabled persons.
Summary
If you are a perpetual usufructuary, check if you can use the new regulations and acquire a property on their basis.
The solutions described above are advantageous insofar as they provide for the possibility to acquire ownership, i.e. the fullest right to a property, which – contrary to perpetual usufruct – is not limited in time. In addition, upon the acquisition of ownership, the duty to pay the annual fee for perpetual usufruct ceases to apply. The user will no longer be bound by the provisions of the agreement on the perpetual usufruct of land.
In view of the fact that perpetual usufructuaries may submit their requests only within 12 months, we believe that it is worth to take the first steps now.
KONTAKT
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E: leszek.rydzewski@pl.Andersen.com
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