Property sale agreements that violate the rights of the expropriated are valid
Resolution of 7 judges of the Supreme Court ("SC") of 15 September 2015 (case no. III CZP 107/14) cleared up the existing case law doubts about the effects of the sale of real estate that has become unnecessary for the purposes of expropriation that took place before the entry into force of the Real Estate Management Act dated 21 August 1997 ("REMA") for the benefit of a third party.
Resolution of 7 judges of the Supreme Court ("SC") of 15 September 2015 (case no. III CZP 107/14) cleared up the existing case law doubts about the effects of the sale of real estate that has become unnecessary for the purposes of expropriation that took place before the entry into force of the Real Estate Management Act dated 21 August 1997 ("REMA") for the benefit of a third party.
The resolution was passed as a result of examination of the Human Rights Defender’s application ("Human Rights Defender"), who turned to the Supreme Court with a question: "Can the civil court annul a property sale agreement (an agreement establishing the perpetual usufruct) concluded before 1 January 1998 on the sole ground that it violates the former owner’s right to the return of expropriated property which has become unnecessary for public purposes?".
The legal issue presented by the Human Rights Defender was aimed at explaining concerns about frequently occurring situations when the municipality sold a property in the course of administrative proceedings for the return of these properties. The legislator only partially regulates this issue in Article 229 of REMA stating that the right to claim for the return of expropriated property does not apply, if before the date of entry into force of REMA (i.e. 1 January 1998), the property was sold or the right of perpetual usufruct was established for the benefit of a third party and this right has been revealed in The Land and Mortgage Register. This regulation does not rule out the possibility of annulment of this type of agreement before a civil court.
Responding to this issue, the Supreme Court found that the sale agreement of expropriated property and perpetual usufruct agreement for such property are not invalid by reason of their conclusion in breach of Article 69, paragraph 1 and Article 47, paragraph 4 of the Use of Land and the Expropriation Property Act of 29 April 1985 (consolidated text, Journal of Laws of 1991, No. 30, Item 127, as amended) (the "Act"). Provisions indicated in the thesis of the resolution provide for a prohibition of the use of expropriated property for purposes other than those specified in the decision on expropriation (Article 47, paragraph 4 of the Act), and for the right to request the return of such property to the previous owner or his successor in title (Article 69, paragraph 1 of the Act).
Resolution of the SC will hinder the implementation of statutory rights of expropriated people. Civil courts will not be able to annul agreements for the sale of property or establishing perpetual usufruct that were concluded with violation of the rights of the expropriated. Thus, in case of sale of the property that has become unnecessary for the purpose of expropriation, without prior notice to the person expropriated, that person will be entitled only to a claim for compensation without the possibility of return of property ownership in nature.
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