Purchase of agricultural land in Romania
Romanian legislation regarding the sale and purchase of agricultural land located outside the city limits (extra vilan) has been significantly amended by Law no. 175/2020 (law) and by the subsequent enabling law.
The law established new conditions for the purchase of this type of agricultural land for all buyers and established a new order of people with pre-emptive rights over agricultural land. As a result, now on the sale and purchase of agricultural land located outside the city limits, the parties must respect the pre-emptive rights granted by law before proceeding with the finalization of the transaction.
The law introduced new categories of persons benefiting from a right of pre-emption and their rank. Under the law, the persons who have the legal right of first refusal have the right to buy the land at the same price and under the same conditions as those negotiated between the seller and the buyer.
The law increased the number of categories of persons who can exercise the right of first refusal from four to seven categories.
The seven categories of persons benefiting from the right of pre-emption and their order are as follows:
- Rank I: the co-owners, as well as the parents of the first degree, the spouses, the parents and the parents-in-law up to the third degree inclusive.
- Rank II: tenants, as well as owners of agricultural investments for the cultivation of trees, vines, hops and exclusively private irrigations.
- Rank III: owners and tenants of agricultural land adjacent to the land sold.
- Rank IV: young farmers.
- Rank V: The Academy of Agronomic and Forestry Sciences “Gheorghe Ionescu-Sisesti” and research and development units in the fields of agriculture, forestry and food industry, as well as agricultural educational establishments.
- Rank VI: natural persons having their domicile / residence located in the locality where the land is located or in neighboring administrative-territorial units.
- Rank VII: the Romanian State, through the State Domains Agency.
It should be noted that the legislation specifies the conditions that each of the categories of holders of pre-emptive rights must fulfill in order to exercise their pre-emptive right when purchasing the agricultural land in question.
It should be further noted that if a person with a right of pre-emption does not express his intention to purchase the land within 45 working days from the date of publication of the offer to sell, the land may be sold to the original purchaser on the original terms and conditions. For the purposes of exercising the right of pre-emption, the classification is cumulative.
Regarding the new category of person titled viz., Rank IV – young farmers. The special conditions for young farmers provided by law are that they must carry out agricultural activities and have the domicile / residence established in Romania for a period of at least one year before the registration of the purchase offer. preferential.
The government has also introduced new restrictions on the use of agricultural land which apply to all agricultural land in Romania. By law, the landowner has an obligation to use agricultural land exclusively for the activities for which it was used at the time of purchase. If there are investments on the land such as trees, vines, hops and exclusive private irrigation, the destination of agricultural land should be retained. The legislation also provides that the Romanian Ministry of Agriculture must keep a national register concerning the movement and ownership of agricultural land located outside the city limits.
The new law also imposes a new condition regarding the transfer of agricultural land within eight years from the date of its purchase by any party. Under the new law, if farmland is sold within eight years from the date of purchase, this can only be done if the seller pays a tax of eighty percent (80%) of the difference between the current sale price and the initial purchase price, based on the notaries’ valuation grids for this period. After eight years from the date of purchase, this tax will no longer apply or will no longer be due. Finally, it should be noted that in order to sell agricultural land, it is now necessary to obtain a soil quality certificate.
The Law has now clarified the situation concerning the removal of the seller’s option between the various people regardless of their rank who have the right of first refusal. Before the new law, the seller had the right to choose between the buyers if during the pre-emption period several people with a right of pre-emption but with different ranks expressed their intention to buy the agricultural land at the same price and under the same conditions. conditions. Under the new regulations, the seller must respect the rank and order of the beneficiaries as provided for by law. However, in the event of competition between beneficiaries of the same rank, the seller can always choose to whom he wishes to sell the land.
The law introduced additional penalties and increased the amount of fines for non-compliance with its provisions. The amount of fines has been increased from 50,000 lei – 100,000 lei to 100,000 lei – 200,000 lei.
The law also introduced a new sanction for non-compliance with its provision, namely the nullity of the transaction. This sanction will occur if the seller of the land does not respect the order of preference of the preemptor; the conditions imposed on the beneficiaries; the conditions of transfer to other persons who have not benefited from the right of pre-emption or payment of the additional tax on the transfer of agricultural land within eight years from its purchase.
It is important to understand that changes must be seen as part of a larger European context and similar provisions have been introduced in many countries of the European Union. The aforementioned legislative changes can be considered favorable to those who intend to invest for a long period in the agricultural sector in Romania, taking advantage of the stability of land ownership brought about by these changes in the law. .
Ana-Maria Onuța (Author of this article – in the opening photo)
Ana-Maria is an experienced Romanian lawyer with experience in both dispute resolution and advisory matters in various areas of law. She mainly deals with inheritance issues, intellectual property and copyright, data protection and real estate.
She has experience in advising and representing clients in the area of dispute resolution on matters relating to civil law. She has assisted clients in the negotiation of contractual clauses as well as in commercial transactions and represented them before the authorities and third parties. She also assisted clients in criminal matters.
She obtained her bachelor’s and master’s degrees in law with specialization in criminal law from the Faculty of Law of the University of Bucharest.
This is native content supported by Hammond Partnership.