Conversion of the right of perpetual usufruct into ownership upon request

25 July 2023 | Knowledge, News, The Right Focus

On 25 July, the President signed the amendment to the Act on Real Estate Management and Certain Other which will make it significantly easier for existing perpetual usufructuaries to acquire ownership of these properties. Under the reform, usufructuaries of commercial land and business entities will also have the right to request the sale of a real property. This is a further stage of the elimination of perpetual usufruct from the Polish legal system.

Amendment to the Act on Real Estate Management: New rules for the purchase of land

The general rule is that land may not be sold to its perpetual usufructuary before the expiry of 10 years from the date of the agreement to grant perpetual usufruct.

The bill provides for enfranchisement upon request and not by operation of law, as was the case with residential land.

Within 12 months from the date of entry into force of the Act, a perpetual usufructuary will be entitled to request the sale of the property to them from the State Treasury or local government bodies.

If the perpetual usufructuary submits the request within the prescribed deadline, the public authorities may not refuse to sell the land to them. If the sale is refused, despite the usufructuary’s fulfilment of all the conditions under the Act, the usufructuary will be entitled to bring an action to court for a so-called substitute declaration of intent to sell.

Currently, the decision to sell the property is made at the discretion of the owner.

Properties excluded from the request for sale

Perpetual usufructuaries will not be allowed to make a request for sale in respect of a property:

  • Let for perpetual usufruct after 31 December 1997
  • In relation to which the perpetual usufructuary failed to perform a contractual obligation
  • Used as a family allotment garden
  • Located within harbours and marinas
  • In respect of which proceedings are pending for the termination of the agreement to let it for perpetual usufruct

In addition, undeveloped land will be available for purchase with the consent of the provincial governor (wojewoda), local government or head of the district (starosta), provided, of course, that the perpetual usufruct agreement has continued for a minimum of 10 years.

The claim will also not be applicable to land owned by the National Agricultural Support Centre (Krajowy Ośrodek Wsparcia Rolnictwa), the Military Property Agency (Agencja Mienia Wojskowego), the State Forests, national parks, and the State Water Management Authority ‘Polish Waters’ (Wody Polskie) – due to the vital importance of such land for the state economy.

High costs of purchasing property under perpetual usufruct

The amendment provides for the following payment schemes:

  • Single payment: 20 times the existing annual perpetual usufruct fee; or
  • Payment in instalments: 25 times the existing annual perpetual usufruct fee

Local governments will be able to either adopt the above payment rules or determine them themselves and may also grant discounts, e.g. due to the duration of perpetual usufruct or no arrears in payment of perpetual usufruct fees.

As a result, a perpetual usufructuary who pays an annual fee of 3% will have to pay 60% of the value of the land to own it. The remaining 40% should be covered under the de minimis aid limit (permitted state aid), regulated by EU law. However, taking into account the rather low aid limits and high property prices, businesses will often need to pay more if the value of the land does not fall within the applicable limit, and consequently pay more than 60% of the market value of the property.

Too short a time limit for the purchase

The bill provides for a 12-month deadline for the perpetual usufructuary to request the sale of the property, starting from the Act’s entry into force. An amendment in this respect was tabled by the Senate, which proposed a three-year deadline, however, was not passed by the Sejm.

According to the explanatory memorandum to the bill, the request procedure is intended to allow perpetual usufructuaries to take a decision on land purchase taking into account their current financial condition and investment plans.

However, according to experts and representatives of businesses, the deadline proposed by the lawmaker is too short to make such a decision and verify whether one meets the relevant conditions. Especially considering that public aid must be settled within three years.

Questions? Contact us

Weronika Duda

Malwina Jagiełło

Latest Knowledge

How to structure a family foundation wisely

One of the key advantages of a family foundation is the flexibility to shape its internal structure as required. The legislature has granted the founders considerable freedom in this respect, enabling the foundation to be adapted to specific financial, family and business needs.

New rules for employing foreigners

The long-awaited Act on the Conditions for the Admissibility of Entrusting Work to Foreigners in the Republic of Poland came into force on 1 June 2025, replacing the previous legislation on employment promotion and labour market institutions.

The UDER2 draft: (theoretically) strengthened principle in dubio pro tributario

This principle, which states that doubts should be resolved in favour of the taxpayer, is set out in Article 2a of the General Tax Code and applies only in cases involving vague regulations. In practice, this leaves the tax authorities with considerable leeway for arbitrary application in proceedings where factual findings are crucial.

The Polish Deposit and Return System: a guide to the legal and tax rules

The Polish Deposit and Return System launches on 1 October. This is a real revolution for businesses, whether they are producers, importers, distributors or traders. Indeed, its implementation brings with it a number of challenges, including, perhaps less obviously, concerning VAT. Here is a brief guide to the most important issues relating to the Polish Deposit and Return System.

Act Amending the Labour Code or Poland’s response to the Equal Pay Directive

On 3 April 2025, a new draft Act Amending the Labour Code appeared on the website of the Sejm. Prepared by the Extraordinary Committee for Codification Amendments, it differs significantly from the original parliamentary draft implementing the Directive (print no. 934), the first reading of which took place on 6 February 2025. On 9 May 2025, the Sejm adopted the bill without amendments.

Contact us:

Weronika Duda

Weronika Duda

Attorney-at-law / Counsel / Real Estate / Head of the German Desk

+48 888 736 561

w.duda@kochanski.pl

Malwina Jagiełło

Malwina Jagiełło

Advocate / Counsel / Real Estate

+48 882 680 921

m.jagiello@kochanski.pl