Pursuant to Article 232 § 1 of the Civil Code, land
owned by the State Treasury and located within the
administrative boundaries of cities and land owned
by the State Treasury located outside those
boundaries but included in the city’s master plan and
allocated for performance of the tasks of its
economy, as well as land owned by local
government units or their associations may be given
in perpetual usufruct to natural and legal persons.
The manner of use of the land and any potential
obligations relating to its development are laid down
under an agreement or decision on giving land in
perpetual usufruct (see also Article 62 of the Act on
Real Property Management of 21 August 1997). The
above obligations apply also to the purchaser of a
real property who, though not a party to the original
perpetual usufruct agreement, becomes the legal
successor to such party.
Should the land be used contrary to its purpose, the
usufructuary may be faced with serious
consequences. Pursuant to Article 240 of the Civil
Code, the agreement on giving in perpetual usufruct
land owned by the State Treasury or by local
government units or their associations may be
terminated before the expiry of its term if the
perpetual usufructuary uses the land in a manner that
is obviously contrary to its purpose as set forth under
the agreement, including without limitation if, in
violation of the agreement, the perpetual
usufructuary fails to erect buildings or installations
specified thereunder. The authority giving land in
perpetual usufruct does not have to exercise its
ultimate entitlement right away. It may exercise
other rights vested in it under the Act on Real
Property Management of 21 August 1997.
Specifically, if the deadlines for the development of
or erection on the land given in perpetual usufruct
are not met, the relevant authority may impose
additional annual charges on the perpetual
usufructuary, in addition to the regular perpetual
usufruct charge. However, before imposing
additional annual charges, the authority may
prescribe a period for the perpetual usufructuary in
which to meet the obligations arising under the
agreement or decision. It must be noted that
imposition of the above charges does not correspond to the extent of the perpetual usufructuary’s fault.
The additional charge referred to above is imposed
under an administrative decision. Pursuant to the
statutory regulations, it amounts to 10 percent of the
value of the real property assessed for the first year
after the expiry of the development deadline without
effect. With each subsequent year, the charge is
increased by a further 10 percent increment of the
real property value. In the case of agreements for
giving real property in perpetual usufruct concluded
back in the 1990s, terms and conditions of
development or the dates for commencement and
completion of construction were often not provided.
These perpetual usufructuaries enjoy a privileged
position.
In order to avoid the consequences of breaching the
agreement, the perpetual usufructuary should take
measures ahead of time to amend the terms of the
agreement on giving real property in perpetual
usufruct. Unfortunately, the relevant authorities are
not obligated to amend or extend the real property
development deadline, which is often purely
discretionary, meaning that the authority cannot be
forced in any way to make any such amendments.
Any amendments to the agreement require to be
made as a notarial deed.
The perpetual usufructuary may also argue that its
failure to meet the development deadlines its due to
the relevant authority’s failure to have provided the
requisite technical infrastructure, the absence of
which prevents the use of the installations or
facilities the perpetual usufructuary had agreed to
erect. However, courts adopt a very narrow
interpretation of that option holding that the
obligation to provide the technical infrastructure
requires to be included in the agreement or in
another document which expressly describes such
obligation.
The authority is not required to institute the
proceedings for imposition of the additional charge
right after the expiry of the real property
development deadline; it may just as well do it in the
future. It is also worth bearing in mind that
successful completion of a development provided for
under the agreement after the agreed deadline does
not protect the perpetual usufructuary, as the
additional charge can be imposed for an earlier period.
In the light of the above, in order to avoid the
negative ramification, it may be well worth taking
the required measures prior to the expiry of the
deadlines set forth under the agreement on giving
real property in perpetual usufruct.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Św. Mikołaja 7
50-125 Wrocław
Tel. +48 71 337-6700
Fax +48 71 337-6701
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of certain recent legal
developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any decision as to a particular course of
action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases. The services of a competent professional adviser
should be obtained in each instance so that the applicability of the relevant legislation or other legal development to the particular facts can be verified.