Tax & Legal Highlights for Real Estate – August 2021
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1. Planned amendment to the act dated 21 August 1997 on real estate management, enabling the transformation of perpetual usufruct right into the ownership right of real properties used for purposes other than residential
On 22 July 2021 the Ministry of Development announced the planned amendment to the Real Estate Management Act. Assumed changes anticipate transformation of the right of perpetual usufruct to real properties used for purposes other than residential purposes into the ownership right. This transformation is to take place by virtue of law upon remuneration.
These changes are to result in the expiry of the perpetual usufruct right. They would also eliminate the uncertainty of entrepreneurs both with regard to the issue of extending the perpetual usufruct term, as well as the increase in fees for perpetual usufruct, which are the subject of numerous court disputes.
2. Amendment of the act dated 14 June 1960 – Code of Administrative Proceedings on the possibility of declaring an administrative decision invalid
On 14 August 2021 the President of the Republic of Poland signed the controversial Act of 11 August 2021 (“Act“) amending the Code on Administrative Proceedings (“CPA“). The Act assumes that after the lapse of 30 years from the delivery or announcement of an administrative decision, authorities are not be able to initiate proceedings on declaring the administrative decision invalid. Undoubtedly, the amendment will ensure stability of legal transactions and reduce the state of uncertainty surrounding, in particular, proceedings to ascertain the invalidity of administrative acts issued during the People’s Republic of Poland, since it will eliminate the likelihood that decisions issued several years earlier will be challenged. On the other hand, the amendment in question might deprive parties of the right to eliminate defective administrative decisions from legal circulation, even if their effects are still present today.
Furthermore, the Act unifies the application of provisions excluding the possibility to find a decision invalid due to lapse of 10 years. Until the adoption of the Act, the authority as a rule could not declare the decision invalid, if 10 years had elapsed from the date of announcement or delivery of the decision, except if:
- the decision was issued without a legal basis or with gross violation of law;
- the decision was unenforceable on the day of its issuance and the unenforceability has been permanent;
- execution of the the decision would cause an offence punishable by penalty.
As a consequence of the enactment and entry of the Act into force, irrespective of what prerequisite was the basis for initiating proceedings for declaring the decision invalid, it is not possible to declare such invalidity if 10 years have lapsed from the date of issuance or delivery of the decision.
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