• Acquisition of the Right of Perpetual Usufruct in the Event That the State Treasury Loses Its Right of Ownership of a Real Property
  • February 28, 2014
  • Law Firm: BSJP Brockhuis Jurczak Prusak Sp.k. - Warsaw Office
  • The right hitherto held by the right holder, who was not however disclosed in the land and mortgage register, expires at the moment of acquisition of the right under the principle of reliability of land and mortgage registers. The aim of the principle of reliability of land and mortgage registers is to protect the entity acquiring the right in the event of a discrepancy between the legal status of a real property disclosed in the land and mortgage register and the actual legal status.

    Both the prevailing views of legal academics and commentators, as well as the set trend in judicial practice seem to essentially accept that the principle of reliability of land and mortgage registers protects acquisition from an unentitled person, however only as far as valid acquisitions are concerned. Recently, however, there have been interpretive differences as regards the protection under the principle of reliability of land and mortgage registers additionally covering the right of perpetual usufruct of a real property in the event that the State Treasury or a local government unit disclosed in the land and mortgage register as the owner of the real property loses its right of ownership of the real property. This follows, among others, from the fact that, pursuant to Art. 232 § 2 of the civil code, the right of perpetual usufruct can only be established on land owned by the State Treasury or a local government unit. In the event that the State Treasury (local government unit) loses the legal title to the real property in favour of, for example, a natural person, the real property, pursuant to Art. 232 § 3 of the civil code, loses its attribute of a real property in respect of which the right of perpetual usufruct can be established at all. Application of the provision on the principle of reliability of land and mortgage registers on the one hand, and Art. 232 § 3 of the civil code on the other hand, leads to an inconsistency as a result of which dominance has to be given to one of the above regulations over the other one.

    For a long while now, attempts have been made in judicial practice, as well as among legal academics and commentators, to resolve the above issue. Initially, the prevailing trend was such that due to the peremptory nature of Art. 232 § 3 of the civil code, the principle of reliability of land and mortgage registers could not protect acquisition of the right of perpetual usufruct in the event of defectiveness of the entry of the State Treasury or a local government unit in the land and mortgage register. Subsequently, convincing arguments were presented to the effect that the principle of reliability of land and mortgage registers additionally covered the right of perpetual usufruct. Due to the differences between the prevailing views in respect of the issue, the Supreme Court also presented its opinion (among others under its resolution dated 15th February 2011 (III CZP 90/10)), where it consented to additionally cover the entity acquiring the right of perpetual usufruct with legal protection under the principle of reliability of land and mortgage registers in the event of defectiveness of the entries relating to the right of ownership. At the same time, the granting of legal protection to a perpetual usufructuary meant that the issue of ownership of the real property had to be resolved. Therefore, the scenario of occurrence in this situation of two primary legal consequences of application of the principle of reliability of land and mortgage registers was assumed, i.e. acquisition of the right of perpetual usufruct from an unentitled person (basic consequence), as well as acquisition of the right of ownership of the real property by the State Treasury (local government unit) (secondary consequence). Thus, acquisition of ownership by the State Treasury constitutes a secondary and derivative consequence serving to ensure the greatest possible protection for the perpetual usufructuary acting in reliance on the veracity of entries in the land and mortgage registers. The concept presented gives dominance to the principle of protection of third parties acting in good faith, as well as the principle of certainty of legal transactions, over the constitutional principle of protection of the right of ownership.

    The view expressed in the resolution of the Supreme Court was subjected to criticism in, among others, the decision of the Court of Appeal in &Lstroke;ódź dated 17th July 2013, where an opinion was presented that the invalidity caused by violation of the act is not remedied by the principle of reliability of land and mortgage registers, and therefore application of the principle of reliability of land and mortgage registers cannot lead to acquisition of a right that cannot be established in a given form. Consequently, if it is not possible to establish the right of perpetual usufruct on land other than specified in Art. 232 of the civil code, then the right of perpetual usufruct will not be established at all. In particular, the absence in the case considered by the Court of Appeal of distinctive circumstances (social or legal perturbations), which had constituted an argument for the Supreme Court to adopt that and not another resolution, was invoked in the statement of reasons for the decision.

    The issue under consideration is and in the future will probably continue to be resolved in a non-uniform manner, as the decisions made by the Supreme Court are not binding for common courts adjudicating in other cases. The independence awarded to common courts means that there is no obligation to issue decisions that are in line with resolutions of the Supreme Court, even when they are deemed to constitute legal rules. Only the legislator can conclusively resolve the issue under consideration.