Restitution claims obligation to refuse the return of property

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On 19 October 2020, the Act on Amendment to the Act on Special Rules for the Removal of Legal Consequences of Decisions to Return Real Properties in Warsaw Issued in Violation of the Law, the Commercialization and Certain Employee Rights Act and the Real Properties Management Act (the "Act").

The Act introduces many changes, however, for the purposes of real properties law practice, this Alert will be devoted to the amendments introduced under the Act to the Real Properties Management Act of 21 August 1997 (the "UGN"), as regards the rules of return of real properties to former owners and other persons eligible to claim back property on the basis of the Decree of 26 October 1945 on the Ownership and Use of Real Properties Located in the Area in the Capital City of Warsaw (the "Decree") by, among others, modifying and extending the list of grounds for refusal of the establishment of perpetual usufruct rights over real properties in favor of former real properties owners or their legal successors.

Objective of the Act

According to the statement of reasons for the draft of the Act, the changes were designed to eliminate the legal infringements and their consequences which took place in the course of issuing decisions on the basis of the Decree and thereafter, and to structure and systematize the existing provisions.

Refusal to return a Warsaw property

1. Decree

Originally, under the Decree, former owners could only be refused rights to their real property if it was determined that the use of the real property by its former owner at the time of filing the application (provided additionally that the application was filed before the deadline set out in the Decree) was compatible with the use of the real property according to the master plan, and additionally in the case of legal persons, if it was determined that the intended use of the property under the master plan was not in conflict with the statutory tasks of that legal person or the tasks set out in this legal person’s Articles of Association.

2. Small Restitution Act

Then, to the above mentioned premises on the basis of the so-called Small Restitution Act of 25 June 2015 (effective date: 17 September 2016) (the "Small Restitution Act"), new grounds for refusal were added, i.e. the authorities had the possibility to return the land:

  • if the real property was designated or used for ‘public purposes’ as defined in Article 6 UGN;
  • if the real property was sold or given in perpetual usufruct to third parties;
  • if buildings were developed on the real property after the effective date of the Decree at the expense of the State Treasury or the local government where such expenses considerably exceed the value of the land;
  • in the case reconstruction or renovation of the buildings referred to in Article 5 of the Decree, which were destroyed in more than 66% between 1939 and 1945, was carried out with the use of public funds;
  • if the real property cannot be divided in compliance with applicable legal regulations or spatial order rules.

Notably, the Small Restitution Act merely provided for an optional right to refuse the establishment of perpetual usufruct right in favor of the former owner of the land. Consequently, if the premises outlined above were fulfilled, the authority merely had a discretionary right, but was not obligated to refuse the return of property.

3. The Act

As compared to the Decree and the Small Restitution Act, the Act significantly extends the list of premises for refusal to establish perpetual usufruct rights to eligible claimants by the following cases:

  • if the premises are occupied by a residential tenant;
  • the property has been designated for scientific, educational and/or cultural purposes;
  • the real property is located within the borders of a public leisure or recreational complex or green areas;
  • if rights in rem to the land, building or any parts thereof were established or transferred to third parties, or if the property or any part thereof was given for paid use, in particular on the basis of a residential lease agreement — regardless of the duration of the civil law relationship with a third party;
  • if there are obstacles as a result of which the establishment of perpetual usufruct and ownership rights to the building or other device would run counter to the socio-economic purpose of these rights;
  • if the establishment of such rights cannot be reconciled with the need to properly structure neighborly relations;
  • if the property is designated or used for public purposes.

Additionally, the premise concerning the degree of building destruction in the years 1939-1945 under the Act has been amended by lowering the building destruction percentage from 66% to 50%. In result, this regulation will apply to more buildings destroyed in the years 1939-1945, which were reconstructed or renovated with the use of public funds.

Moreover, the Act stipulates that the same, extended criteria for refusal will also apply to parts of land, buildings or their component parts.

Most importantly, however, the legislator, by explicitly using the expression "shall be refused" in the Act (as opposed to previous regulations in which it used the expression "may be refused", introduced obligatory premises for refusal of establishment perpetual usufruct rights to real property in favor of former owners or their successors in title. If any of the premises expressly indicated in the Act are fulfilled, a decision to refuse usufruct rights must be issued, and the former owners or their legal successors cannot claim the property under the UGN.

Other amendments to UGN

The Act also introduced the following amendments to UGN:

  • if no court letters other than the restitution (return) application have been received in the case within 30 years from the date of filing the application, the proceedings conducted to return the real property on the basis of the Decree shall be discontinued;
  • the applicant and its/his/her successors in title must not be represented by a trustee appointed for the estate of a deceased person or custodian appointed for a person whose place of residence is unknown.

Transitional provisions

As regards the amendments to the UGN, the amended provisions shall apply to those cases and proceedings which were initiated before and not completed by the effective date of the Act.

Consequently, if, on the effective date of the Act, proceedings are pending under the Decree and the premises set out in the UGN as amended by the Act have been fulfilled, the authority conducting the proceedings in the case will be obligated to refuse the return of property to its former owners.

***

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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