In today's article from the series "Tuesday Mornings for the Construction Industry," we will explore the acquisition of forest properties, including restrictions on the sale of this type of land. These rules stem from the Act of September 28, 1991, on Forests ( the "Forest Act" ).
Alongside agricultural land, forest land constitutes a type of real estate whose disposal has been significantly restricted by the legislature. Before the 2016 amendment to the Forest Act, the acquisition of forest land not owned by the State Treasury was restricted solely to foreigners, who—under the provisions of the Act of March 24, 1920, on the Acquisition of Real Estate by Foreigners—were required to obtain a permit to acquire forest properties, issued by the minister responsible for internal affairs by way of an administrative decision.
Pursuant to the aforementioned amendment, Article Article 37a of the Forest Act provides the State Treasury with a statutory right of first refusal to land sold by a natural person, legal person, or entity without legal personality that is granted legal capacity by law (including partnerships).
This means that before concluding an agreement transferring ownership of a forest property with an entity other than the State Treasury conclude a conditional agreement to enable the State Treasury to exercise its pre-emptive right (we discussed the procedural steps in the event of the State Treasury's pre-emptive right in Morning #61 – in this case, the procedure will be analogous). Therefore, only if the pre-emptive right is not exercised within one month of notifying the State Treasury of the intention to sell such property will the agreement transferring ownership rights not be invalid. A legal act performed without notification to the forest district acting on behalf of the State Treasury results in its invalidity , which cannot be cured, which means that such a right, as covered by an invalid legal act, is not transferred to the acquiring entity.
As follows from the wording of paragraph 5 of Article 37a of the Forest Act, in a situation where the right of pre-emption to land is legally vested in several entities, priority in exercising the aforementioned right is vested in the State Treasury, on whose behalf the State Forests operate , excluding this paragraph in the case where this right is vested in a national park, i.e., when the forest land is located within the boundaries of a national park.
This right of pre-emption applies in the following cases:
1. land designated in the land and building register as forest [Ls]
Unlike the right of pre-emption established for agricultural properties, the regulations regarding forest land establish this right in favor of the State Treasury regardless of the property's area. However, this right should be excluded when the land is designated as wooded and shrubby land [Lz]. In practice, land register data is often not updated on an ongoing basis, and as a result, the status disclosed in the register may be inconsistent with the actual intended use and use of the land. Furthermore, it may be the case that the State Treasury holds this right with respect to land that is not wooded (and therefore does not meet the statutory definition of forest), but is designated in the land register as [Ls] – forests, or that, due to the lack of such a designation in the register, despite the area being afforested, the State Forests have no statutory basis to exercise the State Treasury's right of pre-emption.
2. land designated for afforestation specified in the local spatial development plan or in a decision on the conditions of development and land use.
The right of pre-emption may apply either because the municipal council designates a given property for afforestation in the planning act, or by way of a decision on the conditions of development, in the absence of an adopted local plan. However, doubts arise as to the existence of the right in question in the event of discrepancies between the data disclosed in the land register and the local plan. If the land is not designated for afforestation in the plan, and such land is simultaneously designated as "Ls" in the land register, due to the far-reaching consequences in the form of invalidity of the legal act, it should be assumed that the land is covered by the right of pre-emption in favor of the State Treasury.
3. land meeting the definition of a forest in accordance with Art. 3 of the Forest Act, i.e.:
(i) land with a compact surface of at least 0.10 ha, covered with forest vegetation (forest plantations) – trees and shrubs and forest undergrowth – or temporarily devoid of it: intended for forest production or constituting a nature reserve or being part of a national park or entered in the register of monuments,
(ii) connected with forest management, occupied for the purposes of forest management: buildings and structures, water drainage facilities, spatial division lines of the forest, forest roads, areas under power lines, forest nurseries, wood storage areas, as well as used for forest parking lots and tourist facilities,
covered by a simplified forest management plan or a decision of the staroste specifying forest management tasks for fragmented forests with an area of up to 10 ha, not owned by the State Treasury.
In this case, the legislator provided for the application of the right of first refusal when the land meets both conditions: the area standard and the property meets the legal definition of a forest based on the provisions of the Forest Act.
The above statutory basis establishes the right of first refusal when the forest land is planned to be disposed of through a sales agreement. Restrictions on the acquisition of forest property also apply to cases involving a contract or unilateral legal act other than a sales agreement, including, among others, an exchange agreement or a donation agreement . In such cases, the State Forests, representing the State Treasury, are entitled, in accordance with paragraph 2 of Article 37a of the Forest Act, to the right of first refusal by submitting a declaration of acquisition of the land for payment of the equivalent value.
Transferring ownership of the land through a legal act other than a sales agreement, without enabling the State Treasury to exercise the right of first refusal, implies , just as in the case of failure to enable the exercise of the right of first refusal, the absolute invalidity of such act .
The provisions restricting the acquisition of forest land by establishing a right of first refusal and the institution of redemption for the State Treasury literally apply only to the transfer of ownership rights, not the right of perpetual usufruct. Opinions on this matter are divided. However, due to the consequences of invalidating the agreement if the State Forests fail to exercise its right of first refusal on behalf of the State Treasury, it is safer for the legal transactions of real estate, especially for the land purchaser, to adopt a position that recognizes the existence of a right of first refusal also with respect to the right of perpetual usufruct.
However, the exclusion of the right of first refusal and redemption should apply to real estate consisting of buildings and premises. It is indicated that this exclusion will not apply if a share in the land is to be acquired along with the right to the premises. However, a different view holds that a right of first refusal cannot apply to a property constituting a separate real estate, even if the common property includes land that meets the requirements of the Forest Act. However, in this case, due to the potential invalidity of the legal act, the right of first refusal should be accepted when acquiring real estate through a sales agreement.
Exemption from the right of first refusal applies only if the State Forests fails to exercise the right of first refusal or if such land is purchased by the State Treasury. This applies to the disposal of such land to: (i) the seller's spouse, (ii) the seller's direct relatives or relatives by marriage, without limitation of degree, (iii) the seller's collateral relatives or relatives by marriage up to the third degree, (iv) persons related to the seller by adoption, guardianship, or wardship, (v) local government units, (vi) in the case of inheritance, and (vii) the transfer of an agricultural holding, within the meaning of the Act on the Development of the Agricultural System.
The above illustrates the importance, from the perspective of the buyer of given land, of conducting a prior legal due diligence of the property before entering into an agreement transferring ownership rights to the land or the right of perpetual usufruct. It may turn out that the buyer disposes of their property in favor of the holder of title to the forest property by paying the sum specified in the sales agreement, without simultaneously acquiring ownership to such property—contrary to the subject matter of the sales agreement—in accordance with the legal regulation discussed above, concluding a contract without allowing the State Treasury to exercise its right of first refusal implies (with the exception of subjective exemptions) in every case the absolute invalidity of such a contract, which is in no case subject to rehabilitation.
Next week, we will discuss the development of a habitat plot and permissible farm development on it, including exemptions from the requirement to obtain a building permit.
This alert is for informational purposes only and does not constitute legal advice.
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