Continuing the series on agricultural land, today we are discussing the right of pre-emption and the right of redemption arising from the Act of 11 April 2003 on shaping the agricultural system (" UKUR ").
First, it's worth recalling what these terms mean. The right of first refusal means that if a property is to be sold, the agreement must be concluded on the condition that the holder of the right of first refusal does not wish to exercise their right. Acquisition through the exercise of the right of first refusal occurs under the terms agreed upon by the seller and buyer, meaning the holder cannot change the terms and must decide to exercise this right within 30 days of receiving the notification. Importantly, in the case of the right of first refusal, which we are discussing today, omitting it will invalidate the sale of the property . In turn, the right of first refusal , in the case of the UKUR, gives the State Treasury – represented by the KOWR – the right to acquire the property from the buyer in the event of a sale under a legal basis other than a sales agreement.
In UKUR, we deal the right of pre-emption two cases .
Firstly, if the agricultural real estate is jointly: (i) the subject of a lease agreement (ii) concluded in writing with a certain date, (iii) has been performed for at least 3 years from that date and (iv) is part of the lessee's family farm, then the lessee will have the right of pre-emption to such land by operation of law .
Secondly, if there is no lessee entitled to the right of pre-emption or he fails to exercise this right, the right of pre-emption is vested by operation of law in the KOWR in favour of the State Treasury .
In practice, this means that any sale of agricultural land that is permitted under UKUR regulations will consist of two stages:
stage 1: conclusion of a conditional agreement,
and only in the event of failure to exercise the pre-emptive right by KOWR,
stage 2. concluding a dispositive agreement – transferring the ownership of agricultural land to the buyer.
Of course, there are exceptions . The provisions regarding pre-emption do not apply if the purchaser of the property is, among others, a local government unit, the State Treasury, a person related to the seller, or if the purchase of the property is made with the consent of the Director General of the National Support Center (KOWR).
The KOWR is also not entitled to the right of pre-emption if, as a result of purchasing agricultural real estate, the family farm is enlarged, but not to an area exceeding 300 hectares, and the purchased agricultural real estate is located in the commune where the purchaser resides or in a commune bordering on that commune.
It's also important to remember that the KOWR also has the right of first refusal for shares in a company that owns or holds perpetual usufruct over an agricultural property with an area of at least 5 hectares, or agricultural properties with a total area of at least 5 hectares. This means that when purchasing shares in companies, it's worth verifying whether the company owns agricultural land, and if so, what its area is.
The UKUR also grants the State Treasury the right to purchase agricultural land . In cases where the acquisition of agricultural real estate results from an agreement other than a sales agreement, a unilateral legal act, a ruling by a court, a public administration body, or an enforcement authority, the KOWR acting on behalf of the State Treasury may submit a declaration of acquisition of such agricultural land in exchange for payment of the price for the property. The provisions on pre-emption apply accordingly, provided that the notification of the intended sale is submitted by: the purchaser (in the case of acquisition of real estate under an agreement other than a sales agreement or a unilateral legal act), the court, a public administration body, or an enforcement authority, the purchaser of the agricultural real estate (in the case of acquisition of agricultural real estate based on adverse possession, inheritance, or a bequest for vindication involving agricultural real estate or a farm), or the company acquiring the agricultural real estate (in the case of a division, transformation, or merger of commercial law companies). An extract from the land and building register concerning the agricultural real estate being acquired must be attached to the notification.
If the price is not specified in a legal act, a court or public administration ruling, or a ruling of an enforcement authority, the KOWR determines the market value of the agricultural property using the methods for determining the property's value provided for in real estate management regulations. In such a case, within one month of receiving the KOWR's declaration of acquisition, the KOWR may apply to the court to establish a price corresponding to the market value of the property being acquired.
In practice, this means that when purchasing agricultural land on the basis of an act other than a contract, there is a suspension period of 30 days during which KOWR may exercise its right of purchase.
To summarize the importance of the regulations described above, we reiterate that the acquisition of ownership of agricultural real estate , a share in co-ownership of agricultural real estate, perpetual usufruct, or shares in a commercial company owning agricultural real estate with an area of at least 5 hectares or agricultural real estate with a total area of 5 hectares, if not carried out in accordance with the provisions of the Act on Shaping the Agricultural System, is invalid . In addition to individuals with a legal interest, the National Agricultural Support Center (KOWR) may also bring an action seeking a declaration of invalidity of this legal act.
Next week, we'll move away from topics directly related to real estate acquisitions and instead focus on the implementation of investments in agricultural land. We'll explain the procedure for excluding agricultural land from production.
This alert is for informational purposes only and does not constitute legal advice.
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