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New reality on agricultural real estate market in Poland

rural_final2Entities interested in agricultural real estate investments or companies being owners of such properties have to meet formalities indicated in the act on agricultural system forming (Polish Journal of Laws as of 2012, item 803, hereinafter the “Act”) in shape governing after changes as of April 30, 2016.

According to the disposition of Article 2a of the Act, it is rule that the agricultural property purchaser may be (some exclusions existing) only individual farmer. Furthermore the overall area of purchaser family farm cannot exceed 300 hectares of rural area.

Following the Civil Code, it should be revealed that agricultural properties (agricultural lands) form properties which are or may be used with agricultural production purposes such as: plants and animals production, not excluding garden, orchard and fish production. According to the Act an “individual farmer” is a neutral person who is already owner, perpetual usufructuary, independent owner or tenant of the agricultural properties which overall area of rural lands does not exceed 300 hectares, having agricultural qualifications and living for at least 5 years in the municipality on the area of which one of rural properties being a part of agricultural farm is situated and leading for such a period this farm what means being included personally in agricultural production. Abovementioned should be additionally documented by a village administrator, a mayor of the town or a president of the city.

Acquisition of the agricultural property by other entities than the “individual farmer” may take place only by approval of the President of Agricultural Real Estate Agency (hereinafter the “Agency”) in form of administrative decision. Aforementioned decision is issued at the request of a seller. In the same time we should indicate that it would not be possible to sell the property to the “individual farmer” or one of other entities under this exception, included the State Treasury which is represented by one and the same Agency president of which issues decision. While a chosen purchaser have to “give warranty of leading agricultural activity in a proper way”.

On the other side obtaining a permit for agricultural land acquisition on purchaser request is only possible for those who would like to establish its own agricultural farm and lead it by themselves for minimum 10 years. During this period acquired property cannot be sold or passed into ownership to other entities without Court’s permission.

Aforementioned restrictions are secured by given to the Agency pre-emption right on any agricultural property purchase according to the provisions of law, including cases of selling the perpetual usufructuary or share in joint ownership or share in perpetual usufructuary. The Agency has also the pre-emption right on assets and shares in a commercial law company which is owner of the agricultural property and has right to act in case of division, transformation or joining of commercial companies. In case of changing the partner in partnership company which is owner of the agricultural property, the Agency may also acquire the right to this property ex officio while paying the officially indicated price. In this case the partnership company has to make application in connection with any ownership transformation to the Agency.
The Act stipulates not numerous exclusions from abovementioned strict rules. Doubtlessly, applying the Act as well as the scope and interpretation of these exclusions will become a challenge in the nearest months and years for offices, courts and plenipotentiaries of interested parties. According to our Law Office experience acquired while providing law services under the Act, any transaction, the point of interest of which is agricultural property, due to the lack of strong judicial decisions or at least law provisions interpretation should be verified in an individual manner in terms of comparability of individual case under the Act.

atty. trainee Piotr Olborski

06 October 2016