Poland amends law allowing perpetual usufructuaries to gain ownership of real property

On 31 August 2023, Poland’s amendment to the Act of 21 August 1997 on real estate management will enter into force, allowing perpetual usufructuaries to acquire ownership of real properties held under the right of perpetual usufruct (in Polish, prawo użytkowania wieczystego). What conditions must perpetual usufructuaries meet in order to transform the title to real property?

Who can benefit from the transformation of perpetual usufruct into ownership and how?

Unlike in the case of residential land, the acquisition of ownership of commercial land will not happen by operation of law, but at the request of the perpetual usufructuary addressed to the owner of the property (i.e. the State Treasury or a local government authority).

The request must be made within 12 months of the entry into force of the Amendment.

The possibility of requesting the acquisition of the ownership of the real property is available to all perpetual usufructuaries of the real property with the exception of perpetual usufructuaries for the following:

• of real property for which the perpetual usufruct was established after 31 December 1997;
• of undeveloped land;
• an individual who has not fulfilled obligations of the agreement on establishment of the right of perpetual usufruct;
• of real property located on the territory of ports and marinas;
• of real property used for family allotment gardens (in Polish: rodzinne ogródki działkowe);
• of real property owned by the Polish State Treasury and entrusted to the management of: National Agricultural Support Centre, Military Property Agency, State Forests, National Parks, Polish Waterways;
• of real property subject to pending proceedings for termination of the perpetual usufruct agreement.

The detailed conditions of the sale of real properties owned by local government entities to their perpetual usufructuaries are to be specified by the Councils or Voivodship Assemblies by resolution, or these bodies will oblige the executive body of the respective local government entity to specify these conditions individually by decree. In the event of failure to adopt the above resolutions, the terms and conditions for the sale of real property owned by the State Treasury will apply, as set out in the Amendment.

How much will it cost to transform perpetual usufruct into ownership?

The price for the real property will depend on: the owner of the real property (the State Treasury or a local government entity), the amount of the annual percentage fee for perpetual usufruct and the value of the real property (determined by a valuation survey), and will be determined as follows:

In relation to real property owned by the State Treasury:

• in case of payment in one lump sum: 20 times the amount being the product of the current percentage rate of the annual fee and the value of the real property determined as of the date of conclusion of the sale agreement;
• in the case of payment in instalments: 25 times the amount being the product of the existing percentage rate of the annual fee and the value of the real property determined as of the date of conclusion of the sale agreement.

In relation to real property owned by local government entities, the price of the real property is set at an amount not lower than 20 times the amount constituting the product of the existing percentage rate of the annual fee and the value of the real property determined as of the date of conclusion of the sale agreement, but not higher than the value of the real property determined as of the date of conclusion of the sale agreement.

For more information on this amendment and real estate law in Poland, contact your CMS client partner or these local CMS experts.