Leszek Zatyka

Perpetual usufruct and public reliance on land and mortgage registers

Polish Supreme Court: “The warranty of public reliance on land and mortgage registers protects an acquirer of perpetual usufruct in the event of defective entry in the land and mortgage register of the State Treasury or territorial governmental unit as the owner of real estate.”

Resolution of 7-judge panel of the Polish Supreme Court dated 15 February 2011, Case No. III CZP 90/10

The Supreme Court issued this resolution in a case presenting a certified question on issues where there has been a split of authority in the case law of the common courts and the administrative courts, as well as in the legal scholarship. The Supreme Administrative Court had held that it was proper for public administrative bodies to apply regulations concerning public reliance on land and mortgage registers in instances of third parties acquiring the right of perpetual usufruct of land. Until now, the position of the Supreme Court on this issue has generally been different. The Supreme Court had taken the view that the acquirer would not prevail on the basis of the information in the land and mortgage when the register did not reflect the actual legal status of the land and there was a conflict between the principle of public reliance on land and mortgage registers and the principle that perpetual usufruct may be established only on state-owned land (Civil Code Art. 232).

This resolution, although significant, represents just one more voice on the controversy in the jurisprudence with respect to the scope of application of the principle of public reliance on land and mortgage registers in the context of perpetual usufruct, as the Supreme Court did not decide to give the resolution the force of binding law. This means that the resolution is binding only in the case in which it was issued, and not in other cases presenting the same issue. The resolution should thus have an influence on the rulings of the common courts, because of the general authority of the Supreme Court, and should help unify the case law.

Ultimate clarification by the Supreme Court of the issue of protection of the right of perpetual usufruct in the context of the warranty of public reliance on land and mortgage registers would be of great importance for the security of real estate transactions in Poland. Holders of perpetual usufruct themselves, as well as the former owners of real estate nationalised after World War II through unlawful administrative actions who now seek restoration of their properties, both look forward to an authoritative ruling on these issues.

Leszek Zatyka, Reprivatisation team, Wardyński & Partners