New rules for trading in agricultural land
13 May 2019
3 min
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On Thursday, 9 May 2019, the Senate adopted the new Agricultural System Act without any amendments. In comparison with the government’s draft amendments to the Agricultural System Act, which we described several weeks ago, the adopted regulations are definitely less favourable for entrepreneurs and investors.
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Under the final version of the Act on an Amendment to the Agricultural System Act and Some Other Acts, non-farmers (both in the countryside, and in cities) will have the right to buy agricultural properties with an area of up to 1 ha. Unfortunately, agricultural land situated in cities has not finally been excluded from the Act.
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Under the new regulations, non-farmers will also have the right to purchase agricultural land in the course of enforcement or insolvency proceedings, in connection with removal of co-ownership, division of property after cessation of marriage, division of inheritance and as a result of division, transformation, or merger of commercial law companies.
In the above situations, it will not be necessary to obtain consent from the National Centre for Agriculture Support (Krajowy Ośrodek Wsparcia Rolnictwa, shortly KOWR) to purchase a property, but KOWR will have the pre-emption right. However, in the case of sale of shares or stocks in a company, KOWR will not have the pre-emption right for the shares or stocks in a company being the owner of a property with an area of up to 5 ha or of properties with the total area of up to 5 ha.
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The Agricultural System Act will not apply to plots of land marked in the land and building register as land under ponds which make up at least 70% of the property area.
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It must be borne in mind, however, that under the new regulations a purchaser of agricultural land will have the obligation to operate an agricultural farm for 5 years, instead of 10 years as it has been before. During such period, the property may neither sold nor transferred to other entities. For instance, in the case of division of a company resulting in a transfer of ownership of agricultural land, the acquiring company will have the obligation to operate an agricultural farm on the acquired land and it will not be entitled to even lease the property to other entities (during the said period of 5 years). However, the above restrictions will not pertain to agricultural properties with an area of less than 1 ha situated within administrative boundaries of a city.
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The catalogue of close relatives within the meaning of the Agricultural System Act, to whom the restrictions under the above regulations do not apply, has been extended by parents and stepchildren.
The new Agricultural System Act will enter into force within 14 days of its publication.
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