Warsaw, September 5th, 2023
CONVERSION OF A RIGHT OF PERPETUAL USUFRUCTUARY INTO FULL OWNERSHIP TO ALSO BE POSSIBLE FOR LAND USED FOR OTHER PURPOSES THAN RESIDENTIAL
Only for the next 12 months, businesses will have an opportunity to request the transfer of ownership rights to land that they currently hold as a perpetual usufructuary. This request will be legally binding on the owner. Given the constraints associated with perpetual usufruct, particularly the annual fee obligation and the limited duration of this right, it is worthwhile considering seizing this opportunity and securing a stronger and lasting right to land.
The right to request a transfer will be available regardless of the land's purpose
The perpetual usufructuary’s right to request the transfer will extend to land of any purpose. This does not mean, however, that there will be no restrictions on when this right can be exercised. Ownership transfer cannot be demanded in particular for real properties:
- granted for perpetual usufruct after December 31, 1997;
- with respect to which the perpetual usufructuary has not fulfilled the obligation of developing them as specified in the agreement or decision regarding the grant of the perpetual usufruct;
- located within the areas of ports and maritime harbours;
- which remain undeveloped.
Furthermore, there will not be an option to demand ownership transfer at the time of proceedings to terminate the perpetual usufruct right. Such proceedings may be initiated if the perpetual usufructuary uses the land in a manner contradicting the terms of the agreement or decision regarding the grant of the land for perpetual usufruct, especially when the property is not developed as required.
…. and will involve a payment of a preferential price
In the case of land owned by the State Treasury, the new regulations provide a clear framework for determining the acquisition price. According to these regulations, for a one-time payment, the price will be twenty times the annual fee rate, whereas for payment in instalments, it will be twenty-five times the annual fee rate.
The criteria for determining the acquisition price of the land owned by local governments are to be specified in resolutions passed by their relevant bodies. However, the price set in this manner can in no case be lower than twenty times the annual fee due from the holder of the right of perpetual usufruct or higher than the value of the land as of the sale agreement date. Local authorities will have four months to adopt these resolutions. Should they fail to do so, the principles for determining prices for State Treasury properties will also apply with respect to the land properties of that specific local authority.
Importantly, the acquisition price will typically be based on the value of the property as of the sale date. Consequently, the annual fee rate used for ownership acquisition purposes will often differ from what the perpetual usufructuary had been paying annually before the acquisition.
Watch out for public aid limits
The transfer of ownership from public entities to perpetual usufructuaries will not be exempt from public aid limitations. Acquiring property below market value is generally considered a form of public aid. Therefore, if a discount resulting from the method of determining the price for the ownership of the land acquired by the perpetual usufructuary would lead to exceeding the de minimis thresholds for public aid, an additional sum equal to the excess over these thresholds will need to be paid on top of the purchase price.
LEGALIO Pietrzak Markowicz Lewandowska Lubaś sp. j., ul. Topiel 23, 00–342 Warszawa, www.legalio.pl
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