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The Warsaw Voice » Real Estate » March 4, 2009
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Purchase of Claims for Perpetual Usufruct Rights
March 4, 2009   
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The Polish economy has been affected by an economic crisis, but projections indicate that - unlike other European Union countries - it will not slide into a recession, despite a major slowdown in the global economy.

The Polish market is still attractive to foreign investors, including developers. At present, low real estate prices are a key factor that encourages investment.

Investment in apartments in pre-World War II buildings in downtown Warsaw is particularly attractive. However, due to wartime damage, few such apartments with a clear legal status are being offered on the market. Most of them are owned by the municipality, which rarely decides to sell them. Others find buyers easily, whatever the price asked by the seller.

Warsaw's old residential buildings have for years been the subject of disputes between former owners and their heirs on the one hand and the municipality on the other.

Under a decree issued by Poland's former communist authorities, referred to as the Warsaw Decree, many owners lost their property rights on Nov. 11, 1945. Under the decree, the dispossessed owners could receive perpetual usufruct rights to their properties on condition that they applied by a set deadline. In practice, the applications submitted were either rejected or never dealt with.

In recent years, Polish courts have issued many decisions favorable to those trying to recover their properties. This has taken place in a political climate that seems to promise that the cases in question will be resolved without delay. Meanwhile, financial problems associated with the properties to be recovered, especially the costs of possible court proceedings coupled with legal assistance costs and property management expenses, pose a major obstacle to former owners and their heirs. As a result, they often decide to sell their claims for perpetual usufruct rights.

As they wait to see what course the situation on the development market will take, many investors decide to buy these claims and go to court instead of the former owners. In most cases, the price of the claim accounts for a small fraction of the property's value.

The purchase of claims for perpetual usufruct rights creates an opportunity for the investors to acquire rights to land at a small price accounting for a fraction of its market value. Such processes usually take a lot of time, and the economic downturn allows investors to focus on acquiring property in this way, with a view to developing the newly acquired property once the economy begins to recover.

LENGIEWICZ WROŃSKA BEREZOWSKA & PARTNERS Law Office TEL. +48-22 826 30 33, 828 14 73; e-mail:lwb@lwb.com.pl
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