As part of the continuation of the series devoted to the topic of perpetual usufruct, today's article is devoted to the termination and amendment of an agreement on the transfer of land owned by the State Treasury or a local government unit for perpetual usufruct ("agreement on the establishment of perpetual usufruct"), taking into account the purpose of using the land and its actual use.
First, it should be noted that a perpetual usufruct agreement is purposeful , meaning that its content should specify the specific manner of using the land granted for perpetual usufruct. Consequently, the perpetual usufructuary is obligated to use the land in accordance with the purpose for which the right was established.
The above reminder is of significant importance for the issue under discussion, because in accordance with Article 240 of the Civil Code, an agreement establishing perpetual usufruct may be terminated before the expiry of the period specified therein if the perpetual usufructuary uses the land in a manner that is clearly contrary to its intended use specified in the agreement, in particular if, contrary to the agreement, the usufructuary has not erected the buildings or facilities specified therein .
Termination of a perpetual usufruct agreement is a compulsory way of prematurely terminating such an agreement, although it should be noted that, according to the established doctrine, Article 240 of the Civil Code also applies to situations in which the right of perpetual usufruct was established in a manner other than on the basis of an agreement (e.g. by way of an administrative decision or on the basis of a court judgment).
For example, the basis for terminating perpetual usufruct may be the perpetual usufructuary's failure to construct the buildings or facilities specified in the agreement on the land. However, the list of reasons is open-ended. It should be noted, however, that the basis for terminating perpetual usufruct under Article 240 of the Civil Code cannot be a simple violation , but only one that is obvious, manifest, and unjustified , as clearly stated by the Supreme Court (judgment of 18 February 2015, file reference I CSK 129/14).
It is also possible for perpetual usufruct to be established without specifying the intended use of the land. However, this does not exclude the possibility of terminating the perpetual usufruct agreement. In such a case, the basis for assessing whether the land is being used properly will be reference to legal provisions, including the provisions of the local zoning plan applicable to the land.
Another provision that provides a basis for terminating a perpetual usufruct agreement is Article 33, Section 3 of the Real Estate Management Act ("AGM"), pursuant to which the competent authority may request termination of a perpetual usufruct agreement before the expiry of the agreed period pursuant to Article 240 of the Civil Code, if the perpetual usufructuary uses the real estate in a manner inconsistent with that specified in the agreement, and in particular if he or she has failed to develop it within the agreed timeframe.
Termination of a perpetual usufruct agreement before the end of its term results in the obligation to repay the sum of the annual fees paid for the unused period of perpetual usufruct , provided that the maximum amount to be refunded cannot exceed the value of the perpetual usufruct right as of the date of termination. These fees are subject to indexation.
It should be noted that, as a rule, the above-mentioned provisions give the land owner the right to request the termination of the agreement on the establishment of perpetual usufruct by the court, and not to submit a unilateral declaration of will to terminate such a legal relationship .
A generally accepted method of terminating a perpetual usufruct agreement is also the conclusion of an agreement between the owner and the perpetual usufructuary terminating the agreement on granting the land for perpetual usufruct .
Regarding the second issue discussed in today's article, amending the perpetual usufruct agreement, it should be noted that until 2019, this matter remained virtually beyond the legislature's purview, leading to considerable discretion in shaping the terms of such amendments by municipalities and the State Treasury. This created problems for perpetual usufructuaries because, as noted above, using the land in a manner inconsistent with the agreement could even result in its termination. Until then, the only way to amend the agreement was through the provisions of the Civil Code, to which the landowner did not have to consent, and often did not even address the proposed amendments in any way.
However, pursuant to the Act of 13 June 2019 amending the Act on the National Real Estate Resource and certain other acts, the Act on Real Estate Management was amended and a procedure for amending the agreement on granting land for perpetual usufruct and the related fees was introduced .
Pursuant to Article 73, Section 2 of the Land , both the authority and the perpetual usufructuary are authorized to submit an application to change the purpose of perpetual usufruct if, after the land is transferred for perpetual usufruct, there is a permanent change in the manner of use of the property , resulting in a change in the purpose of perpetual usufruct. Furthermore, the perpetual usufructuary is authorized to submit such an application under Article 73, Section 2b, if the proposed change is consistent with:
- with the intended use of the property as established in the applicable local development plan or
- with a decision on a permit to use a building or
- with a construction or reconstruction notification to which the architectural and construction administration body has not raised any objections, or
- with a resolution on determining the location of a residential investment or an accompanying investment undertaken on the basis of the so-called "lex developer";
- with the decision on the conditions of development and land development.
In response to the application, the competent authority should submit a written position within two months of the perpetual usufructuary's submission of the application. If the authority does not agree to the change in the purpose of perpetual usufruct or fails to submit a position within that timeframe, the perpetual usufructuary may file a lawsuit with the common court with jurisdiction over the property's location.
A change in the purpose of perpetual usufruct also involves changing the percentage rate of the annual fee. This percentage is adopted in accordance with the purpose established by a mutual declaration of the parties or a court ruling. The new fee rate is effective from 1 January of the year following the year in which it was established. It is worth noting that if the rate is reduced as a result of the change in purpose, the parties may establish a one-time fee for the owner, no higher than twice the current annual fee for perpetual usufruct .
In summary, as the above discussion indicates, a perpetual usufruct agreement may be terminated if the perpetual usufructuary uses it in a manner inconsistent with its intended purpose. However, pursuant to the provisions of the Real Estate Management Act, in such cases the usufructuary should submit an application to amend the agreement so that the purpose of perpetual usufruct complies with the specified rate. In such a case, the authorities will have no basis for terminating the perpetual usufruct agreement.
Today we invite you to read another article in which we will discuss the recent amendment to the Code of Administrative Procedure regarding the invalidation of administrative decisions.
This alert is for informational purposes only and does not constitute legal advice.
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