Romanian farmland law, March 14th 2014

Brief summary of the new Romanian land law (Feb 2014)

Based on the request of re-examination of the Agricultural Land Sale Law made by the President of Romania, the Parliament approved on February 18 the new final version of the law. The law will be sent to the President for promulgation and then to the Official Gazette of Romania for publication.

One of the most important changes compared to the initial draft is that the law will apply now also to Romanian and EU legal persons, not only to individuals. Another important change is that the conditions under which an EU company/individual can buy land in Romania must be identical to the conditions which would apply to a Romanian company/individual in the EU member state of the purchaser (“reciprocity principle”).

Preemption rights have been preserved also in the final version of the law. The following categories of buyers have preemption rights (in this exact order): co-owners, lessees, neighbouring land owners, owners of land within the same physical block (“tarla” – a continuous piece of land delimited by permanent boundaries such as roads, rivers, dikes, etc.), and the Romanian State through the State Domains Agency ADS, at the same price and in the same conditions.

Also, the approval of each land transaction by either the local or central structures of the Ministry of Agriculture and Rural Development is preserved in the final version of the law.

Basically, the law introduces an extensive procedure for agricultural land transactions which applies to both Romanian and EU citizens/companies.

Procedure

The land owner (seller) needs to register with the townhall a request by which he/she asks his/her land sale offer to be displayed/published so that the preemptors are thus informed + he/she will add some proof documents which will be foreseen in the implementation norms. The seller needs to attach also the list of preemptors. The townhall has to compare then this list with the records of the Agricultural Registry (handled by the townhall). Within 1 day of the registration of the seller’s request, the townhall has to display the sale offer at its headquarters (and possibly website), for 30 days. Also, within 3 days of the sale request registration, the townhall has to send to the local/central structures of the Ministry of Agriculture a file comprising: the list of preemptors, the request for publication/display of the sale offer, the sale offer and the proof documents. Then, within 3 days of the file registration, the local/central structures of the Ministry of Agriculture have to publish on their websites the sale offer for 15 days.

The holders of preemption rights must express in writing the acceptance of the sale offer within the 30 days in which it is publicly displayed.

If more preemptors of different ranks accept the offer, the seller can choose the winner (but only in the priority order provided by the law). If more preemptors of the same rank accept the offer, the seller can choose the winner.

If a preemptor of lower rank offers a price higher than the price stated in the sale offer or higher that the price offered by higher rank preemptors, the seller can restart the procedure (only once), for this higher price - with the higher rank preemptors.

If no preemptors show interest in the sale, than the sale is “free”, but still subject to this law and its implementation norms. In the end, the seller needs to inform in writing the townhall about the sale. The free sale of agricultural land at a lower price or under better conditions than the ones requested in the sale offer is forbidden and in such case the transaction is null.

The approval of the sale transaction is granted by the local structures of the Ministry of Agriculture for transactions of less than or equal to 30 ha, and by the central structure of the Ministry of Agriculture for transactions larger than 30 ha.

The law enters into force 30 days after its publication in the Official Gazette of Romania. After that, within 7 days, the implementation norms will have to be approved by the Ministry of Agriculture and Rural Development, Ministry of Regional Development and Public Administration, Ministry of Defence, Ministry of Culture, in consultation with the National Union of Public Notaries and the National Agency for Cadastre and Land Registration.