As announced last week, in today's Tuesday Morning for Construction we will discuss the issue of acquiring forest properties and land intended for afforestation, including restrictions on the sale of this type of land.
Forest land, alongside agricultural land, constitutes real estate whose disposal has been significantly restricted by the legislature. Prior to the 2016 amendment to the Act of 28 September 1991 on Forests (the " Forest Act "), the acquisition of forest land not owned by the State Treasury was restricted solely to foreigners.
Under current law, pursuant to Article 37a of the Forest Act, the State Treasury has, by operation of law, the right of pre-emption to land that is sold by a natural person, a legal person or an entity without legal personality to which the law grants legal capacity (including partnerships).
The right of pre-emption in question applies in the following cases:
- Land designated in the land and building register as forest [Ls]
Unlike the right of first refusal established for agricultural properties, regulations concerning forest land establish a right of first refusal for the State Treasury regardless of the property's area. However, this right should be excluded when land is designated as wooded and shrubby land [Lz]. In practice, land registry data is often not updated on an ongoing basis, and as a result, the status disclosed in the registry may be inconsistent with the actual intended use and use of the land. Furthermore, it is possible that the State Treasury will have this right with respect to land that is not wooded (and therefore does not have the designations of a statutory forest), but is designated in the land registry as [Ls] – forests. It is also possible that, due to the lack of such a designation in the registry, despite the area being afforested, the State Forests will not have the statutory basis to exercise its right of first refusal in favor of the State Treasury.
- Land designated for afforestation specified in the local spatial development plan or in the decision on the conditions of development and land use
A pre-emptive right may exist either because the municipal council designates a given property for afforestation in a planning act, or through a decision on development conditions in the absence of an adopted local plan. However, doubts arise as to the existence of this right 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 of invalidating the legal act, it should be assumed that the land is subject to a pre-emptive right in favor of the State Treasury.
- Land that meets the definition of a forest in accordance with Article 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 by the following for the purposes of forest management: buildings and structures, water drainage facilities, forest spatial division lines, 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 starosta specifying forest management tasks for fragmented forests with an area of up to 10 ha, not owned by the State Treasury.
In such a case, the legislator provided for the application of the right of pre-emption if the land meets both conditions, namely the area standard and the property meets the legal definition of a forest based on the provisions of the Forest Act.
At the same time, the legislator indicates that in a situation where the right of pre-emption to purchase land is legally vested in several entities, priority in exercising the above-mentioned right is vested in the State Treasury, on whose behalf the State Forests operate (paragraph 5, Article 37a of the Forest Act).
The above statutory framework establishes a right of first refusal in situations where forest land is to be disposed of through a sales agreement. However, 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 a case, pursuant to paragraph 2 of Article 37a of the Forest Act, the State Forests, representing the State Treasury, have the right to purchase the land by submitting a declaration of acquisition for a monetary equivalent.
It should be noted that 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. However, opinions on this matter are divided. However, due to the far-reaching legal consequences of invalidating the agreement if the State Forests are prevented from exercising their 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 noted that this exclusion will not apply when a share in the land is to be acquired along with the right to the premises. However, a different view holds that the right of first refusal cannot apply to a real estate consisting of a separate property, even if the common property includes land that meets the requirements of the Forest Act. However, in this case, due to the potential sanction of invalidity of the legal act, the right of first refusal should be accepted when acquiring real estate through a sales agreement.
Exclusion from the obligation to acquire forest land only in the event of failure to exercise the right of pre-emption or the purchase of such land by the State Forests for the benefit of the State Treasury applies to the disposal of such land in favour of: (i) the spouse of the seller, (ii) relatives or affinities of the seller in the direct line without limitation of degree, (iii) relatives or affinities of the seller in the collateral line up to the third degree, (iv) persons related to the seller by virtue of adoption, care or guardianship, (v) local government units, (vi) in the case of inheritance and (vii) the disposal of an agricultural farm, within the meaning of the Act on shaping the agricultural system.
It should be emphasized that in addition to the cases enumerated in the Forest Act, both the conclusion of a sales agreement and the transfer of ownership rights to land constituting a forest, by means of a legal act other than a sales agreement, without the possibility of repurchase in favour of the State Treasury, implies the absolute invalidity of such an act.
Next week we will discuss legal changes and case law in the field of real estate law in May – we encourage you to follow our publications on an ongoing basis.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of May 28, 2024
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