The purchase of land is one of those areas which have caused heated debates in Romania. It is also an area where many lawyers- both Romanian lawyers and foreign law firms, have become involved. Over the last twenty years the purchasing of land as distinct from property has become easier for individuals and companies but there are still pitfalls for the unwary. These pitfalls may not prevent the sale but may delay it.
A condition of Romania’s admission to the European Union was that she would allow foreigners (non-Romanian citizens and companies) to buy Romanian farmland. Romania, like many new entrants, negotiated a period of time before this was implemented. The period agreed was seven years, so that from 1st January 2014 EU citizens and companies have been allowed to own land.
Romania is very protective of its agricultural industry and was naturally concerned that the agricultural land would not be purchased by foreign companies as investments and left fallow. This was a fear which does not seem to have materialized, and the Romanian Government has taken limited steps to protect the position.
To this end the Government passed in March 2014 Law no. 17/2014. This was a law which gave to certain people a right of pre-emption in relation to the purchase of agricultural land which was extravilan.
Under Romanian planning law, land is designated as either intravilan or extravilan. Intravilan is land which is shown on the local plan as being within a town for planning purposes. Only land which is designated as intravilan can be developed commercially for housing, industrial sites etc. and provided it is not designated as agricultural land. Extravilan is land which is shown on the town plan as not being within the town.
Under Law 17/2014 on the sale of agricultural land which is extravilan, the seller has to give a right of pre-emption as provided for in the law. The rights of pre-emption are given in the following order: co-owners, tenant farmers (arendasi), owners of neighbouring land and the Romanian State, through the Domains of the State Agency.
Having signed a sale/purchase agreement for the land, the seller must record/register, the contract with the local town hall with an application requesting the display of his sale offer for the Land, in order that the persons who have pre-emption rights are aware of the proposed sale. The application must be recorded/registered together with the attached offer and other documents mentioned in the Norms.
Within one working day after the recording of the application the town hall must display for thirty days the sale offer at its office and, if applicable, on its internet page. In addition, within three working days starting from the date of the recording of the application, the town hall must send to the central office of the Agriculture and Rural Development Ministry, as well as to the local territorial office ,a file containing the list of the persons who have pre-emption rights, a copy of the display application, the sale offer and the other documents attached to the seller’s application.
Within three working days from receiving and recording the file in the central and regional offices, they must display on their internet sites the sale offer for fifteen (15) days.
The persons entitled to the pre-emption rights must, within the thirty days period, indicate in writing their intention to purchase to the seller and to register it with the relevant town hall. If no one registers their right to purchase the land then then their pre-emption right is lost. If nobody has given notice of their intention to purchase then at the expiry of the notice period the original seller can proceed with the sale of the farmland.
Since the beginning of the year there have been a number of transactions in the agricultural field which have taken place subject to Law 17/2014. Will the law be effective in ensuring agricultural land is not sold to foreign speculators, that is not clear. Perhaps more importantly will those people who have pre-emption rights be able to exercise them? That is more problematical. The Romanian State will in all probability not be able to exercise its rights as it does not have the money, as to third parties we will have to wait and see.