This is a follow-up to our article dated 6 December 2013 on the Draft Law concerning pre-emption rights over agricultural land. Since the publication of that article, the Draft Law has been further amended by the Romanian Parliament and a final version of the relevant law was adopted on 18 February 2014. The new law is expected to be published in the Official Gazette soon and will enter into force 30 days from such publication (which will be around mid-April 2014).
As of 1 January 2014, EU citizens are entitled to buy agricultural land in Romania. The Romanian Parliament in turn enacted a new law that aims to set out a more restrictive and regulated framework than the one currently in force with respect to the acquisition of extra muros(outside the city borders) agricultural land (the “Law”).
Agricultural land located intra muros (within the city borders) is not subject to this Law. Additionally, the Law does not apply to agricultural land which, prior to the entry into force of the Law was subject to notarized pre-sale or option agreements.
Ranking of Pre-emption Rights
The Law will give pre-emption rights to buy the extra muros agricultural land for sale at an equal price and on equal conditions to the following categories in the order described below:
- co-owners of the land that is being sold;
- tenant farmers who have been working on the agricultural land that is being sold;
- neighbors of the land for sale; and
- the Romanian State (through the State Domain Agency).
The New Pre-emption Procedure
The Law provides that the Ministry of Agriculture will oversee the procedures regarding the pre-emption rights and endorse the sales of extra muros agricultural land.
As such, the new pre-emption rights involve a procedure conducted by the seller in conjunction with the relevant City Hall where the land is located and also with the Ministry of Agriculture.
The Law does not comprise sufficient details about the pre-emption procedure, but does indicate as follows:
- The seller’s offer to sell must be made publicly at the City Hall and on the website of either the Ministry of Agriculture or the Department for Agriculture and Rural Development (“DADR”) dependent on the size of the land being sold (see the next point below).
- If the sale is of less than 30 hectares of land, the Ministry of Agriculture will be represented throughout the procedure by its local structures (i.e. DADR), whereas transactions involving more than 30 hectares of land will be scrutinized at central level, directly by the Ministry of Agriculture.
- The seller’s offer will remain in force for 30 days from its publication at the City Hall, during which all beneficiaries of the pre-emption rights must submit their acceptance of the offer to the City Hall.
- If an under-ranked beneficiary of the pre-emption rights offers a price higher than the one requested by the seller, an additional 10 days bid shall be performed at the end of the 30 days term.
- Upon expiry of the 30 (and, where applicable, the additional 10) day term, the seller shall choose a buyer in accordance with the pre-emption ranking mentioned above and communicate its choice to the City Hall.
- In turn, the City Hall must inform the Ministry of Agriculture or the relevant DADR about the seller’s choice of buyer.
- Ultimately, it is the Ministry of Agriculture’s or the relevant DADR's responsibility to check whether the buyer fulfils the conditions under the Law, and consequently, to finally endorse the sale.
- The final endorsement of the sale issued by the relevant DADR or by the Ministry of Agriculture, as mentioned above, must be provided to enable notarization of the sale by the notary public. However, if no beneficiary of the pre-emption rights submits an offer to buy the land within the relevant offer period, it is not necessary to have the final endorsement issued and in such a case the notarized sale agreement can be concluded based merely on confirmation issued by the relevant City Hall.
- If the seller amends the price or any of the sale conditions published initially, it should undergo the entire procedure mentioned above again. If the seller sells the land for a lower price or on different conditions than communicated, or if it sells without the above-mentioned final endorsement where such endorsement is required, the sale is null and void.
Seven days after the entry into force of the Law, the Government should issue guidelines for the application of the new Law, which will hopefully shed more light on the procedure described above.