Analysis

Adjustment of the annual fee 

The adjustment procedure can also be undertaken based on the perpetual usufructuary’s request

Legal alert (13/2014)

It often happens at the year-end that the competent authorities acting in the name of the State Treasury or the local government unit provide the perpetual usufructuary with cancellation of the previous annual fee amount and declaration of a new fee on account of the rise in the real property value. In some situations this may cause that the annual fee for perpetual usufruct is multiplied.

It often happens at the year-end that the competent authorities acting in the name of the State Treasury or the local government unit provide the perpetual usufructuary with cancellation of the previous annual fee amount and declaration of a new fee on account of the rise in the real property value. In some situations this may cause that the annual fee for perpetual usufruct is multiplied.

However, the adjustment procedure will not always be initiated ex officio. The provisions of the Act on real property management of 21 August 1997 provide for the possibility to start adjustment procedure also at the request of the perpetual usufructuary. From the viewpoint of the perpetual usufructuary, filing an application for adjustment of the annual fee may prove beneficial if the value of the real estate has decreased significantly.

Application filed by the perpetual usufructuary 

The perpetual usufructuary may request that the competent authority adjust (decrease) the annual fee for the right of perpetual usufruct of land, if the value of the land has changed and the authorities have not made any adjustments in that respect. Nonetheless, one needs to keep in mind that the adjustment cannot be made when the value of the land as at the annual fee adjustment date is lower than the real estate price established in the tendering process at the date of placing the property under perpetual usufruct.

The perpetual usufructuary should submit a written application for annual fee adjustment to the competent authorities acting in the name of the real property’s owner - the State Treasury or a local government unit - by 31 December of the year preceding the year beginning form which the adjustment should be effective. The provisions of the Act on real estate management do not specify what elements need to be included in the said application.

However, it must be taken into account that the perpetual usufructuary shoulders the burden of proof regarding the fact that the value of the real estate has changed (decreased). As a result, the perpetual usufructuary may use all available measures to prove the point. In practical terms, it is usually most beneficial to produce an appraisal report indicating the value of land.

Refusal to adjust the fee and leaving the perpetual usufructuary’s request unresolved

A refusal to adjust the annual fee or leaving the perpetual usufructuary’s request unresolved for 30 days does not bring the adjustment procedure to an end. Within a predefined deadline the perpetual usufructuary is entitled to submit the matter to the Local Appeals Board for consideration, and if the decision of the Local Appeals Board proves unfavourable, the case can be taken to court.

New fee amount 

The new fee amount determined by the competent authority in connection with the request filed by the perpetual usufructuary or established based on a final decision of the Local Appeals Board or the common court or based on an amicable agreement made before the Board or the court is effective from 1 January of the year following the year in which the perpetual usufructuary requested the previous fee amount to be adjusted.

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