Before purchasing a property, examine its legal and factual status and its designation in the Local Development Plan

The Law Firm’s lawyers provided legal services to a Client who intended to purchase two properties for business purposes.

As part of the legal services, an audit was performed, including an analysis of the real estate registers, which showed that the properties planned for purchase by the Client are agricultural land and the provisions of the Act of April 11, 2003 on the Agricultural System (AAS), which imposes restrictions on the circulation of agricultural real estate, apply to them.

Article 2a (1) of the AAS establishes the principle that only an individual farmer may be the purchaser of agricultural real estate, unless the law provides otherwise. The provision of Article 2(1) of the AAS does not apply to the acquisition of agricultural real estate of less than 1 hectare.

According to Article 2(1) of the AAS, “agricultural real estate” should be understood as agricultural real estate within the meaning of the Civil Code, excluding real estate located in areas designated in zoning plans for non-agricultural purposes.

Acquisition of agricultural real estate by other entities or in cases other than those mentioned above may be made with the approval of the Director General of the National Center, expressed through an administrative decision, issued at the request of the seller of agricultural real estate, if:

• demonstrates that it was not possible to sell the agricultural real estate to the entities referred to in Article 2a (1) of the AAS, unless the acquisition of this real estate is to take place on the basis of a legal act other than sale,
• the purchaser of the agricultural real estate will undertake to conduct agricultural activities on the acquired agricultural real estate,
• the acquisition of the agricultural real estate will not result in an excessive concentration of agricultural land,
• the sale price of the agricultural real estate is not less than 95% of the price included in the announcement of the intention to sell the agricultural real estate.

 

Pursuant to Article 2b(1) of the AAS, the purchaser of agricultural real estate is obliged to operate the farm that includes the acquired agricultural real estate for at least 5 years from the date of his acquisition of the real estate, and in the case of a natural person, to operate the farm personally. During this period, the acquired property may not be sold or given possession to others.

For the purposes of applying Article 2b(1) of the AAS, the status of the purchaser of the agricultural property is generally irrelevant. It can be a natural person, a legal person or an organizational unit without legal personality, to which the law grants legal capacity, such as a general partnership.

Article 2b of the AAS assumes that the purchaser owns – or, as a result of the acquisition, will begin to own – an agricultural holding in the material sense. It is defined in Article 2(2) of the AAS. According to the cited provision, it means an agricultural holding within the meaning of the Civil Code, in which the area of agricultural real estate or the total area of agricultural real estate is not less than 1 hectare. This provision refers to Article 55 (3) of the Civil Code, according to which an agricultural holding is considered to be agricultural land together with forest land, buildings or parts thereof, equipment and livestock, if they constitute or may constitute an organized economic unit, and rights related to the operation of an agricultural holding.

If the purchaser has not previously had a farm, he should organize it using the acquired property. The purchaser is under an obligation to start an agricultural activity, within the framework of which the property will be properly developed. The obligation referred to in Article 2b(1) of the AAS also arises if the area of the acquired property – including the existing agricultural land owned by the buyer (regardless of legal title) – exceeds 1 hectare. It is then possible to establish an agricultural holding. This is also the position of the National Center for Agricultural Support.

The exemption, which was introduced in Article 2(1) of the AAS, applies only to the area covered by a local land use plan (adopted in accordance with the provisions of the Law on Planning and Spatial Development). If the plan has not been enacted, the land should always be considered agricultural property when it meets the prerequisites set forth in Article 46 (1) of the Civil Code. The exemption in question does not apply to legal or administrative acts – other than the zoning plan – that establish the conditions for the development of real estate. It does not cover other urban planning acts or individual acts issued in this regard.

Similarly, a decision on a construction permit should be treated. Even if the investment is not of an agricultural nature, this does not affect the qualification of the property under Article 2(1) of the AAS. If, on the other hand, the investment is carried out, it may, according to the circumstances, deprive the property of its agricultural characteristics.