Are you buying a premium suite? Before you sign the notarial deed, check not only the view from the window and the standard of finishing, but also… legal status of the land under the building. This “boring” formal issue can cost you tens of thousands of dollars – or save a lot of nerves when reselling. In this article, we explain the difference between perpetual usufruct and land ownership, how much the transformation fee is and what exactly to verify before buying real estate in Warsaw, Krakow or Gdynia.
The most important information to get started
In the premium real estate segment, the difference between perpetual usufruct and land ownership is not only formal, but also financial and investment-related. Many residential buildings have been converted into ownership by law, but owners of premises can still pay the conversion fee for 20 years – unless they have previously paid it in one lump sum.
Key takeaways
- Land ownership is simpler and more transparent than perpetual usufruct, especially in the premium segment.
- Transformation does not always mean no costs – the transformation fee may remain.
- The transformation fee most often corresponds to the former annual fee for perpetual usufruct and is paid for a certain period of time.
- The buyer should check whether the fee has already been paid in one lump sum or passes to the next owner.
- In premium locations (Warsaw, Krakow, Gdynia), the status of the land affects the valuation, sales liquidity and transaction comfort.
- At Signature Estates, we analyze the legal status of the land already at the stage of the initial selection of the property – for premium clients, cost transparency is important.
1. Why land status matters in the premium segment
A luxury apartment is not only a panoramic view and a prestigious address. For a conscious buyer, especially those who treat the purchase as an investment, legal and cost elements are equally important, which translate into long-term security of the transaction.
An important and at the same time often overlooked aspect is the legal status of the land on which the building is located.
In the best locations of Polish cities, historically, many residential investments were built on land given for perpetual usufruct. Today, many owners are already formally co-owners of land under the 2018 Transformation Act, but they may still be subject to the obligation to pay the transformation fee.
At Signature Estates, we look at real estate more broadly than just through the prism of aesthetics. We analyze the legal and cost elements that are important when buying, renting or later reselling an apartment.
2. What is perpetual usufruct?
Perpetual usufruct was a specific legal structure under which an entity could use land belonging to the State Treasury or a local government unit – without having the right of ownership itself.
In accordance with Article 236 § 1 of the Civil Code, perpetual usufruct was established for a period of 40 to 99 years – it was not an indefinite right.
Obligations of the perpetual usufructuary
- payment of an annual fee for the use of land (percentage of the value of the property, with the possibility of updating)
- development of the property in accordance with its purpose
In practice, the owner of an apartment in a prestigious tenement house had the right of ownership of the premises, but the share in the land under the building was covered by the right of use. This separation meant that ownership rights were in a sense limited.
3. What is the difference between ownership and perpetual usufruct?
| Criterion | Perpetual usufruct | Land ownership |
| Legal status | Temporary right (40-99 years) to use someone else’s land | Indefinite and full law |
| Fees | Annual fee with the possibility of updating | No fees after repayment of any transformation fee |
| Cost predictability | Lower, linked to the risk of hikes | Higher, no further burdens |
| Impact on sales | Longer process, need for explanations | Transparency and simpler procedure |
| Importance for the bank | Additional documents and explanations | Standard Credit Procedure |
| Buyer’s comfort | Lower due to a sense of lack of full control | Higher with full ownership |
Ownership is the target and transparent solution. compared to the long-term use of land belonging to the state or local government, although in the legal sense it was not a lease.
4. What actually happened – the final transformation
The main legal act regulating this issue is the Act of 20 July 2018 on the transformation of the right of perpetual usufruct. Article 1(1) provides:
“On 1 January 2019, the right of perpetual usufruct of land developed for residential purposes shall be transformed by operation of law into the right of ownership of such land.”
The transformation took place automatically, without the need to conclude contracts, submit applications or obtain administrative decisions.
An important distinction
The transformation of the right to the land and the repayment of costs are two separate issues. The premises may already be assigned to the ownership land, but the owner may still be obliged to pay the transformation fee.
In accordance with Article 4 of the Act, the competent authority issues ex officio a certificate confirming the fact of transformation – necessary to make entries in the land and mortgage register and for settlement purposes.
Who issues the certificate?
- for land of the State Treasury: starost or president of a city with county rights
- for local government land: the head of the municipality, the mayor or the president of the city
5. Transformation fee: how much and for what the owner pays
The transformation was of a paid nature. Article 7(1) of the Act provides:
“A person who became the owner of the land on 1 January 2019 is obliged to pay the transformation fee for a period of 20 years.”
The amount of the fee corresponds to the previous annual fee for perpetual usufruct that was in force on the date of transformation.
Example
If the owner of an apartment in Warsaw’s premium district has so far paid PLN 2,500 per year, since 2019 he has been paying the same amount for 20 years. In total, this is PLN 50,000 – a small amount in relation to the value of the property, but it is a real cost.
The amount of the fee may be indexed in accordance with the indicators of the Central Statistical Office, if the competent authority makes such a decision.
Discounts – an opportunity depending on the region
| Soil type | Bonificata |
| State Treasury | Discounts on the one-off fee were specified by law and depended on the moment of payment of the fee and the situation of the owner. In some cases, they could be as high as 99%. |
| Local government land | The amount of discounts depended on the resolutions of the councils of communes and cities, so it could differ significantly between locations. |
The earlier the owner decided to settle the receivables once, the higher the discount he could obtain. Many owners have taken advantage of this opportunity, but not all – and this is an important issue for people buying premium apartments in 2026.
6. Who pays the fee after the sale of the apartment
The obligation to pay the transformation fee lies with the current owner of the property. When selling, the buyer assumes this obligation because the fee is related to the property and not to the person.
Two scenarios
- Fee paid in one lump sum – there is no charge in the land and mortgage register, which makes the transaction much easier.
- Unpaid or partially paid fee – a claim may appear in Section III of the Land and Mortgage Register. The buyer should determine how many installments are left, what their annual amount is, and whether the seller is in arrears. It is worth taking this cost into account when negotiating the price.
Recommendation
The simplest solution is to pay the fee before the sale: pay the remaining amount, obtain a certificate of repayment of the receivables (expungement of the claim) and submit an application for deletion of the entry from section III.
7. How to check if an apartment is already owned by the land
Before making an offer, it’s a good idea to use the checklist below:
- check the land and mortgage register of the premises – in section II there should be an entry “ownership”
- verify Section III in terms of claims concerning the transformation fee
- request a certificate of conversion issued by the competent authority
- check if the fee has been paid in one lump sum (as confirmed by the certificate of expungement of the claim)
- get information from the city hall about the status of the payment
- determine whether the property was covered by the discount and under what conditions
- verify the purpose of the premises – is it a residential, commercial or investment apartment?
⚠️ Note to the list above:
The transformation covered only land developed for residential purposes – i.e. buildings in which at least half of the premises are residential. Apartments in mixed-use buildings, aparthotels or investment facilities may not be subject to transformation.
8. Warsaw, Krakow, Gdynia – why location matters
The basic regulations are uniform throughout the country, but local regulations vary significantly.
Warsaw
Many attractive addresses, from Śródmieście to Mokotów and from Praga-Północ to Wilanów, operated on land given for perpetual usufruct. The capital city of Warsaw has adopted resolutions providing for discounts of up to 98% in a single repayment. In practice, this meant that instead of PLN 20,000, the owner paid only PLN 400.
Owners who have not used this opportunity on time still pay an annual fee. With prices per square meter significantly above the market average, buyers in the premium segment expect full financial transparency.
Krakow
Krakow’s premium real estate market is a specific mix of historic buildings and modern apartment projects. The legal status of land here can vary – some properties in the center have a complicated legal history dating back to pre-war times.
In 2026, the topic of perpetual usufruct is returning in premium transactions – not as a legal obstacle, but as an element of cost analysis affecting valuation and liquidity on the secondary market.
Gdynia
Gdynia is a market where the status of land is of great importance for the image and finances. Attractive plots of land in the coastal belt, in Orłów or Kamienna Góra, have often been the subject of administrative decisions.
Local regulations and practice of the office may differ from those in Warsaw or Krakow. When buying real estate in Gdynia, it is not enough to know the general national regulations – you should check the specific address, the land and mortgage register and the guidelines of the competent authority.
9. The Impact of Land Status on the Value of a Premium Apartment
Premium properties are purchased with the security of capital, prestige and comfort of life in mind. Buyers, both Polish and foreign, attach great importance to the simplicity and transparency of the legal status.
What can make your offer less attractive:
- unregulated or unclear formal issues
- No certificate of transformation
- unsettled entries in section III of the land and mortgage register
- unclear history of discounts granted
The transformation fee, even small in relation to the value of the apartment, is an element of pre-purchase analysis (due diligence). For a person investing several million zlotys, any cost uncertainty can be a warning signal.
In the premium segment, properties with a regulated legal status have an advantage. It is not a matter of preferences, but of the market value of the offer.
10. What the buyer should check before signing the contract
List of questions to ask before proceeding with a notarial deed:
- Does the apartment have a residential, utility or other legal qualification?
- Has the land under the building been converted into ownership?
- Does the seller have a certificate of transformation?
- Has the transformation fee been paid in one lump sum or is it still being paid?
- How many years of fees are left until the end of the 20-year period?
- Is there a claim for a transformation fee in the land and mortgage register?
- Has the seller provided confirmation of the payment of the existing installments?
- Does the housing association have information about the status of the land?
- Does the offer price take into account any other charges?
- Has the notary taken this issue into account in the draft notarial deed?
These questions do not result from mistrust, but are an expression of a reliable and professional approach to transactions.
11. What should a premium apartment seller prepare
Well-prepared documentation includes:
- Certificate of transformation issued by the competent authority
- confirmation of payment of the one-off fee (if paid)
- information on the amount of the annual fee (if still paid)
- Current copy of the land and mortgage register
- documentation from the housing association (settlement statuses, resolutions concerning land)
- information on any rebates that have been used
- Clarification of whether the conversion costs are passed on to the buyer
Complete documentation increases the credibility of the offer and allows you to shorten the transaction process. In the premium segment, document deficiencies are quickly identified and can lead to buyers trying to lower the price.
12. The most common mistakes of owners and buyers
- Equating transformation with no costs is a common misunderstanding. The transformation did not abolish fees, but changed their form and nature.
- Skipping the verification of the land and mortgage register – this is like buying a car without checking its service history.
- Failure to take the fee into account in negotiations – the amount of several tens of thousands of zlotys is a real transaction cost.
- Confusing the purpose of the premises – apartments of an investment nature (e.g. commercial premises) may not have been covered by the Transformation Act.
- The assumption that the rules of discounts are identical everywhere – the resolutions of different local governments differ significantly from each other.
- Explaining the status of the land too late – postponing it until a visit to a notary reduces the time for price negotiations.
13. The role of the premium advisor in the analysis of legal status
A premium market client expects a careful selection of offers – precise and based on an in-depth market and legal analysis.
A professional premium real estate advisor helps you verify important aspects of the transaction, including:
- legal status of the land under the building
- Balance of transformation fees
- entries in section III of the land and mortgage register
At Signature Estates, we support clients at every stage: from the selection of real estate, through document analysis, negotiations, to preparation for a notarial deed in cooperation with a notary’s office.
An advisor is not a substitute for legal aid, but it does help you identify issues that require additional verification before making a decision. When the value of the transaction reaches millions of zlotys, such an approach becomes a necessary step to secure capital.
Buying a premium apartment is a financial, image and strategic decision. That is why we look at each property holistically: we analyze the location, standard, investment potential and formal and legal status.
14. Summary
The status of the land is not only a formal detail, but a real factor affecting the value of premium real estate. Many of the land under the residential buildings was converted into ownership by operation of law as of 1 January 2019, but this did not in every case mean the immediate termination of the payment.
What should you keep in mind?
- Check the status of the land before submitting the offer, and not only when signing the deed with a notary.
- Complete documentation increases the buyer’s safety and increases the seller’s credibility.
- In Warsaw, Krakow and Gdynia, analyze the local rules for granting discounts.
- The premium real estate market in 2026 puts a lot of emphasis on legal and financial security – an attractive view from the window alone is not enough today.
A regulated land status and a transparent land and mortgage register are among the most important elements of transaction security.
FAQ
Can the apartment be owned and the land is still in perpetual usufruct?
Historically, this has been the case. However, in the case of most of the land under residential buildings, it was transformed into ownership on 1 January 2019.
Do I still have to pay after the transformation?
Yes – in many cases, the owner pays a transformation fee spread over 20 years, unless it was paid in one lump sum (which often allowed to take advantage of the discount).
Is the transformation fee passed on to the buyer?
This obligation rests with the current owner of the property. When buying, you should check whether the fee has been paid and whether there is a claim in the land and mortgage register of the premises.
Where to check the amount of the transformation fee?
In the certificate of transformation and in the relevant city or district office.
Is it possible to repay the fee in one lump sum?
In most cases, yes. The conditions, deadlines and the amount of possible discounts depend on the type of land (State Treasury or local government) and local resolutions.
Does perpetual usufruct reduce the value of a premium apartment?
It does not always reduce it directly, but it can affect the risk assessment, the course of negotiations and the buyer’s comfort. In this segment, properties with a simple and transparent legal status are valued higher.
Does the bank pay attention to the transformation fee?
Yes. Financial institutions analyze the legal status of the property and possible encumbrances. Entries in Section III may require additional explanations or documents before the loan can be disbursed.
What is the most important thing when buying a premium apartment?
Verification of whether the land under the building is already owned, whether the transformation fee has been fully paid and whether the property has complete legal documentation. Cost transparency is the basis for a safe purchase.
Does Signature Estates help in analyzing such issues?
Yes – we support clients in the analysis of premium real estate, paying attention to both the performance parameters and the formal and legal aspects that affect the security of the transaction.
Sources:
- Act of 20 July 2018 – Dz.U. 2018, item 1716
- Transformation of perpetual usufruct – gov.pl (development-technology)
- Transformation of the right of perpetual usufruct – KOWR
- Transformation in m.st. Warsaw
- Information about the transformation – BIP Kraków
- Transformation of municipal land – BIP Gdynia
- Act – Journal of Laws 2023, item 1463
- Perpetual usufruct and property rights – Codziennik Prawny
- Transformation of perpetual usufruct – Transaction24h
- Ownership and perpetual usufruct – Activ Investment
- Dz.U. 2024 poz. 170 – InforLex
Anna Awłasewicz