According to Art. 238 of the Law of April 23, 1964. Civil Code[1] the perpetual user shall pay an annual fee for the duration of his right. Annual fees for perpetual usufruct are compensation for the perpetual user’s ability to use land owned by the State Treasury or a local government unit. The regulation on the collection of the annual fee has been clarified, among other things. In Art. 67 – 81 of the Law of August 21, 1997. On Real Estate Management[2] (“UGN”).

Types of fees

There are two types of fees in real estate usufruct cases:

1. The first fee – collected for the transfer of land property for perpetual usufruct;
2. Annual fees – for perpetual use of landed property.

It is worth noting that the amount of the annual fee is not fixed. This is a particularly important issue for perpetual usufructuaries, as it can increase dramatically due to the update procedure. In accordance with Art. 77 paragraph. 1 UGN:

The literature indicates that the provision cited above:

“(…) imposes an obligation to update these fees when the value of the land changes, but at the same time limits the execution of this obligation. First, it stipulates that an update cannot occur more often than every 3 years (regardless of whether the value of the property has changed during that time and how much it has changed). Secondly (by reference to paragraph 2), it does not allow to update the annual fee if the value of the real estate as of the date of updating the annual fee was to be lower than the value of this real estate determined by tender (if the real estate was given in perpetual usufruct by tender). Third (by reference to paragraph 2a), it does not allow the collection of excessive amounts for the first 2 years after the annual fees are updated, in case the updated annual fee exceeds at least twice the amount of the previous annual fee.“[3] [wyróżnienie własne].

Factors affecting annual fees

The factors affecting the annual fee are:

• The value of the property (calculated according to the value of ownership of the land). The valuation is done by an appraiser in an appraisal report;
• percentage rate applied. According to Art. 72 par. 3 of the UGN, the amount of percentage rates of annual fees for perpetual usufruct depends on the purpose for which the land was given in the contract.

Updating the annual fee for perpetual usufruct

Zgodnie z przepisami UGN aktualizacja opłaty rocznej może zostać dokonana:

• By the competent authority ex officio. According to the provision of Art. 78 par. UGN, the authority intending to update the annual fee for perpetual usufruct should give written notice of the amount of the existing fee by December 31 of the preceding year, at the same time sending an offer to accept the new annual fee;
• At the request of the perpetual user in accordance with the procedure set forth in Art. 81 UGN.

Appeal procedure

The perpetual usufructuary in a situation in which he receives a notice of termination of the existing annual fee (update of the fee by the authority), may, within the time limit 30 days from the date of receipt of the termination notice, file an application with the local government board of appeals, having jurisdiction over the location of the property, for a determination that the update of the annual fee is unjustified or is justified in a different amount. The competent authority or the perpetual usufructuary may file an objection to the college’s ruling within 14 days from the date of delivery of the ruling.

The proceedings in question are unique (administrative-civil) in nature. Until a ruling is issued by the local government appeals college, the proceedings are proceeding administratively. Then, after an objection is filed, the case goes to a general court. The objection is of momentous importance for the annual fee for perpetual usufruct proceedings. The Constitutional Court in its May 6, 2008 judgment[4] explained that:

The role of the appraisal report in the process of updating perpetual usufruct fees

Based on the previous experience of the Law Firm’s team Jabłoński Koźmiński i Wspólnicy , it can be concluded that one of the key factors taken into account by the court when issuing a judgment in cases of updating fees for perpetual usufruct is the appraisal report. In many cases, the appraisal report prepared by the appraiser may contain a number of deficiencies. A flawed appraisal report can drastically overestimate the value of the appraised property, resulting in an increase in the perpetual usufruct fee. For this reason, it is advisable to seek professional legal assistance and prepare an appropriate argumentation to avoid an increase in the update fee. Lawyers of the Law Firm Jabłoński Koźmiński i Wspólnicy have extensive experience in conducting proceedings related to updating perpetual usufruct fees. All interested parties are welcome to contact us.

[1] Dz. U. of 2023. pos. 1610, as amended. zm.

[2] OJ. U. of 2023. pos. 344, as amended. zm.

[3] E. Bończak-Kucharczyk [w:] Real Estate Management Law. Commentary updated, commentary on art. 77, LEX. 2024.

[4] Wyrok Trybunału Konstytucyjnego z dnia 6 maja 2008 r., SK 49/04, OTK-A 2008, nr 4, poz. 55