What is perpetual usufruct?
Perpetual usufruct is a right to use real estate owned by the state (central or local government) for a fixed time, usually defined as 99 years, in exchange for a fee. The owner often specifies (limits) allowable uses of the land. The usufructuary may during that time encumber the property or even sell their right.
In Poland, where this legal device is often called a relic of the communist times, legislation is enacted from time to time to allow perpetual usufructuaries to acquire full ownership title to their properties.
Businesses will find it easier to acquire full title to properties they hold in perpetual usufruct.
A new law will soon enter into force, allowing all usufructuaries (including businesses) holding perpetual usufruct of any property (including non-residential) to apply for acquiring full title to it. The owner will have to grant the application, which is what makes this solution different from previous enactments of the kind. Under previous law, perpetual usufruct of real estate used by business for non-residential purposes could generally be converted into full title only subject to the owner’s consent.
The relevant law was enacted on 26 May 2023 in the lower chamber of the Parliament, Senate’s revisions were rejected, and the act has now been transmitted for presidential signature.
Time for perpetual usufructuary to apply for acquiring full title
In accordance with the bill, the time to apply for conversion of perpetual usufruct into full title is 12 months from the effective date of the law.
Price for the property
Acquiring full title to the property you hold in perpetual usufruct will require consideration. The law specifies how to determine the sale price and offers certain allowances off the specified price.
Which properties are unavailable for such acquisition
Not all perpetual usufructuaries will be able to use the right to acquire full title. The new law will not apply to properties for which perpetual usufruct was created before 31 Dec 1997, or which are undeveloped or situated in sea ports or marinas, or which constitute land used for the purposes of the family gardens scheme (rodzinne ogródki działkowe). In addition, acquisition will not be available to perpetual usufructuaries who are not in compliance with obligations stated in their perpetual usufruct agreements.
We will regularly monitor the progress of this legislation. It’s worth acting now to prepare for the new law, especially considering that the time to make the decision whether or not to acquire full title will only be 12 months after commencement of the new law.