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The Warsaw Voice » Real Estate » July 30, 2012
The Real Estate Voice
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Reprivatization Claims and How to Acquire Attractive Real Estate in Warsaw
July 30, 2012   
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Poland’s political and legal system underwent a radical change after the end of World War II, particularly with regard to ownership relations. The communist regime nationalized nearly all land, forests and industrial property. Real estate within the former boundaries of Warsaw was treated in a special way: all land in the city was taken over under the so-called Warsaw decree. However, former owners could seek the right of temporary ownership, now known as perpetual usufruct.

The right to establish perpetual usufruct could be refused on the basis of administrative decisions, most of which, however, were issued in gross breach of the law in force at the time. This presently constitutes a basis to challenge the validity of such decisions and, as a consequence, even to reclaim property. However, only property owned by the State Treasury or a local government can be reclaimed. Former owners cannot reclaim property sold to third parties.

Property restitution rests on the establishment of perpetual usufruct of land and a return of the right of ownership of buildings located on this land, but this only applies to those buildings which were constructed prior to the Warsaw decree taking effect, which means before 1945. Former owners must pay the market value of buildings constructed after this date.

A series of proceedings are currently pending in Warsaw with regard to rights to highly attractive real estate, including undeveloped land. For example, such proceedings concern land on which the National Stadium was built for the Euro 2012 soccer championships.

It cannot be excluded that the entire property together with the stadium will be reclaimed if the claims of the former owners’ heirs cover the entire area on which the stadium was built.

There are numerous examples of highly attractive real estate in the city center. This explains why former owners and their heirs have drawn the interest of real estate investors. Investors frequently search for heirs of former owners and offer to buy their rights and claims to specific properties, thereby assuming all costs related to administrative and court proceedings, as well as the entire risk involved.

Real estate can be recovered even more than a decade after the claim is purchased. Investors undertake such risk because the price of claims is much lower than the present market value of the real estate. However, the price of claims grows as property restitution proceedings get under way. The purchase of claims to real estate at the stage of recovery is also highly attractive because the right of perpetual usufruct established through reprivatization proceedings requires the payment of a symbolic annual fee. The right of perpetual usufruct can be transformed into the right of property ownership free of charge as part of reprivatization proceedings.

Krzysztof Wiktor and Leszek Zatyka legal counselors at Wardyński i Wspólnicy law firm
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