Restrictions on the marketing of agricultural real estate in Poland

The legislation governing the trading of agricultural property on the private market is the Act of 11 April 2003 on the Development of the Agricultural System (consolidated text: Journal of Laws of 2021, item 234, as amended; hereinafter: “the Act”).

The acquisition of agricultural property may take place, inter alia, as a result of: a sale agreement, exchange, gift, acquisitive prescription, termination of joint ownership, confirmation of inheritance, partition of an estate, or division of joint property.

Pursuant to Article 2(1) of the Act on the Organisation and Management of Agricultural Land, the term **‘**agriculturalproperty’ shall be understood to mean agricultural property within the meaning of the Civil Code, excluding property situated in areas designated in spatial development plans entirely for purposes other than agricultural ones.

Pursuant to Article 461 of the Act of 23 April 1964 – Civil Code (i.e. Journal of Laws of 2021, item 2459, as amended), agricultural properties (agricultural land) are properties which are or may be used for productive activities in agriculture in the field of crop and livestock production, including horticulture, fruit growing and fish farming.

In accordance with the above provisions of the Act on the Development of the Agricultural System, under the current legal framework**, anyone may purchase agricultural property with an area not exceeding 0.3 ha.** This follows from Article 1a of the Act on the Development of the Agricultural System, which contains a list of agricultural properties excluded from the scope of the Act. According to its provisions, the Act does not apply to:

• agricultural properties:

1. forming part of the State Treasury’s Agricultural Property Reserve, as referred to in the Act of 19 October 1991 on the management of the State Treasury’s agricultural property,
2. with an area of less than 0.3 ha,
3. which are internal roads,
4. sold pursuant to Article 42(1) or (6) of the Act of 19 October 1991 on the management of agricultural property of the State Treasury,
5. where the land, designated in the land and buildings register as land under ponds, constitutes at least 70% of the property’s area;

• shares in the co-ownership of the properties referred to in point 1.

Agricultural properties with an area of more than 0.3 ha but less than 1 ha may also be acquired by any entity (not necessarily an individual farmer), although the process of acquiring such a property is more complex. This is because, by virtue of the law, the tenant of the agricultural property being sold has a right of first refusal provided the conditions set out in Article 3 of the Agricultural Land Act are metof the Act on Agricultural Land, i.e. the lease agreement was concluded in writing and bears a certified date, and has been in force for at least 3 years from that date, and the agricultural property being acquired forms part of the tenant’s family farm.

Where the above conditions are not met and the tenant does not exercise the right of first refusal, the right of first refusal vests in the National Centre for Agricultural Support, which may exercise it within 30 days of the date on which the preliminary agreement between the vendor and the purchaser of the property was drawn up. If the National Centre for Agricultural Support does not exercise its right of first refusal, the parties to the preliminary agreement may conclude the relevant agreement transferring ownership of the agricultural property.

Furthermore, the purchaser of agricultural property with an area exceeding 0.3 ha is, as a rule, not permitted to dispose of it before the expiry of 5 years from the date of acquisition, subject to certain exceptions listed in Article 2b(4) of the Acto.k.u.r. These include, for example, a sale to a close relative, a local government body, the State Treasury or the National Centre for Agricultural Support acting on its behalf, or a property situated within the administrative boundaries of a town with an area of less than 1 ha. Importantly, the National Centre for Agricultural Support may, by way of an administrative decision, grant consent to the sale of agricultural property before the expiry of five years from the date of acquisition; however, this must be justified by a significant interest of the purchaser or the public interest. The granting of consent by the National Centre for Agricultural Support is voluntary. Legal doctrine emphasises that the ‘concept of the purchaser’s important interest’ means, amongst other things, the occurrence of extraordinary circumstances caused by factors over which the purchaser had no influence and which were independent of their conduct. The National Centre for Agricultural Support may also recognise the property owner’s individual economic situation or the need to satisfy creditors, where it is not possible to satisfy them from other sources, as a valid reason.

The most complex process involves the sale of agricultural property with an area exceeding 1 ha. The Act on the Development of the Agricultural System requires that the purchaser of such agricultural property be an individual farmer; otherwise, the National Centre for Agricultural Support must give its consent for the sale of the agricultural property to proceed. Consent to the sale of agricultural property is issued in the form of an administrative decision, following the fulfilment of a number of formal requirements. This is primarily preceded by the publication of the offer on the erolnik.gov.pl ICT system. The burden of proof lies with the seller of the agricultural property to demonstrate that: the sale of the agricultural property was not possible to an individual farmer, the purchaser of the agricultural property undertakes to carry out agricultural activities on the agricultural property being purchased, and the acquisition of the agricultural property will not result in excessive concentration of agricultural land. It is emphasised that the above conditions are deemed to be met if no individual farmer has responded to the advertisement for the agricultural property posted on the erolnik.gov.pl ICT system by the seller of the agricultural property, or by the local branch of the National Centre competent for the location of the agricultural property – following an application submitted to that branch by the seller of the agricultural property.

The legislator also intervenes in the freedom to set the sale price of agricultural property with an area exceeding 1 ha. Under the previous legal regime, determining the sale price of agricultural property was the exclusive competence of the contracting parties. The current provisions of the Act on the Organisation of the Agricultural System impose an obligation on the seller to ensure that the price of the agricultural property stated in the advertisement does not exceed by 50% or more the average price of agricultural land for a given soil quality class in a given province, as published by the Central Statistical Office. An exception to the above regulations is a situation where the seller of the property has a valuation report showing that the price of the agricultural property exceeds by at least 50% the average price of agricultural land for a given soil quality class in a given province.

Author

Adrian Łukasik

Radca prawny, Senior Associate

He gained his professional experience in one of Lublin's renowned law firms, dealing with civil and business law in its broadest sense. At the law firm Hewelt Wojnowski i Wspólnicy spółka komandytowa, he deals on a daily basis with current counseling in the field of business and the development of corporate documentation of companies, such as. Company agreements, bylaws of company bodies, agreements regulating relations between shareholders, resolutions of company bodies, M&A transactions. In addition to…

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