More Obstacles in the Purchase of Non-urban Agricultural Plots in Romania

A change in law made the sale, respectively the purchase of agricultural plots in outer city areas beginning with the 13^th of October 2020, significantly more difficult especially for foreign citizens.

The purpose for this change in law was, among others, to prevent speculative transactions with agricultural plots located in non- urban areas.

The preemption right

The law grants a preemption right to seven categories of persons such as tenants of neighboring properties and all other physical persons residing in the areas where the land is situated or even in the neighboring areas.

Such persons having a preemption right will be informed directly regarding the sale offer.

The tenancy agreements for tenants interested in the purchase of the plots of land have to be registered a year prior to the sale offer. Furthermore, additional conditions are to be met, such as:

• individuals and legal entities shall have their headquarters/ residency in Romania for the past 5 years,
• legal entities controlled by other legal entities must prove that their shareholders had their headquarters in Romania for the past 5 years.

The persons holding the preemption right shall exercise it within 45 working days.

Non-exercise of the preemption right

In certain cases, the plots of land can be sold to other potential purchasers, if the preemption right was not exercised in due time. Such purchasers have to meet certain conditions such as: 

• Romanian residency for the past 5 years and performance of agricultural activity for individuals;
• established main or secondary office in Romania in the past 5 years and agricultural activity for the past 5 years for legal entities, generating 75% of the entity revenues in the past 5 years from agriculture.

The sale to any individual or legal entity also to a EU citizen under the conditions of this law is allowed if no person exercised the preemption right and no potential purchaser meets the conditions mentioned above.

Subsequent sale

Within 8 years following the purchase of agricultural plots of land, a tax of 80% of the difference between the initial purchase price and the current sale price shall apply to a subsequent sale. The price is based on the tables of the notaries public. Such tax also applies when a majority of shares in a company is sold, while more than 25% of its assets being agricultural land.

Sanctions

A purchase agreement not observing the legal provisions on the sale of agricultural plots located in non- urban areas is absolutely null and void.

Conclusion

This change in law not only affects foreign citizens and Romanian companies with foreign shareholders in the agricultural sector; but also energy and renewable energy companies, which face new problems for securing the property.

The compliance with European regulations of this change in law is still to be reviewed.

For more details, please check our website:

https://stalfort.ro/wp-content/uploads/2020/09/20200925__OS_The_sale_of_non-urban_agricultural_plot_-became_significantly_more_difficult.pdf