Law no. 17/2014 on certain regulatory measures regarding the sale and purchase of agricultural land located outside city limits (the “Law”) was published in Official Gazette no. 178 of 12th of March 2014.

It will enter into force in 30 days from its publication in the Official Gazette while the methodological norms should be published within 7 days from the entering into force.

Scope of application

The Law applies to the following persons who want to sell or buy agricultural land located outside city limits in Romania:

• Romanian citizens and legal entities;

• Citizens and legal entities from European Union member states, Norway, Liechtenstein, Iceland or Switzerland, as well as stateless persons domiciled in these states.

Preemption right

When selling agricultural land located outside city limits, the preemption right of the co-owners, land tenants, neighboring owners and of the Romanian state (through the Agency of State Domain), in that order, at the same price and in the same conditions must be observed.

Moreover, the sale must observe the usual conditions regarding the substance and the formalities for valid conclusion of contracts (e.g. the notarized form).

The sale procedure, with observance of the preemption right

The seller has the obligation to register a request accompanied by a sale offer with the mayor’s office corresponding to the location of land in question, by which he requests the publication of the sale offer in order for the preemptors to be informed regarding this offer.

Within a working day, the mayor’s office has the obligation to post the sale offer at its headquarters and, as the case may be, on its internet page. The offer must be kept posted for 30 days.

The mayor’s office also has the obligation, within 3 working days of the date of the registration of the request, to submit a file containing the list of preemptors, copies of the documents and the request to post the sale offer to the central, or the territorial structure of the Ministry of Agriculture.

The central structure or, respectively, the territorial structures of the Ministry of Agriculture have the obligation to post on their websites the sale offer for 15 days.

The holder of the preemption right must manifest in writing its intention to buy within the 30 days term, communicate the acceptance of the seller’s offer and register it with the mayor’s office where the offer was posted. The mayor’s office will post, within 24 hours of the registration of the acceptance of the sale offer, the data provided in the methodological norms for the application of the Law and will send them to the central structure, respectively the territorial structure of the Ministry of Agriculture to be posted on its website.

Cases of accepting preemptors

a) Different ranking preemptors (e.g. land tenant and neighboring owner) manifest their intention to buy in writing, at the same price and in the same conditions.

In this case, the seller will communicate the name of the preemptor to the mayor’s office (while respecting the order of preemption rights).

b) More than one preemptor of the same rank (e.g. land tenants) manifest their intention to buy in writing at the same price and in the same conditions (e.g. co-owner) and no other preemptor of superior ranking accepted the offer.

In this case the seller will choose between them and will communicate to the mayor’s office the chosen preemptor’s name.

c) An inferior ranking preemptor (e.g. neighboring owner) offers a higher price to the one in the sale offer or to the one offered by the other superior ranking preemptors that accept the offer (e.g. co-owners).

In this case the seller may reinitiate the procedure, asking for the registration of the sale offer at the higher price.

The procedure may be reinitiated just once, within 10 days of the expiration of the 30 days term. At the expiration of the 10 days term, the seller will communicate to the mayor’s office the name of the preemptor.

d) None of the preemption right holders manifest the intention to buy the land in the 30 days term.

In this case the sale is considered free and the seller can transfer the land ownership to a buyer of his choice, without being required to obtain a permit from the central or territorial structures. However, a certificate from the mayor’s office attesting the completion of the procedure will be required.

The mayor’s office has the obligation, within 3 working days from the communication by the seller of the preemptor’s name, to transmit to the corresponding structures of the Ministry of Agriculture the identification data of the chosen preemptor in order for the fulfilment of the legal conditions to be verified.

The structure of the Ministry of Agriculture must verify the fulfilment of the legal conditions within 5 working days from the receipt of the data and issue the final approval required for the conclusion of the sale agreement. This approval is issued by the territorial structure for land with a surface less than 30 ha and by the central structure for land with a surface exceeding 30 ha.

Exceptions

The provisions of the present Law will not apply to:

• promissory agreements and option right agreements notarized before the entering into force of the present law;

• sales between relatives up to and including the third degree.

Agricultural tenancy agreements

The Law does not provide what are the effects in case land subject to prior agricultural tenancy agreements is sold (in case the tenant does not buy it). In exchange, this issue is regulated by the Civil Code. Therefore, in case the agricultural tenancy agreement is registered with the land book (for third party opposability) and with the local council (for validity), the contract is enforceable against the buyer. In other words, the buyer will take over the obligations resulting from the agricultural tenancy agreement concluded by the seller.

Sanctions

The sale of agricultural land located outside city limits without observing the preemption right or without obtaining the necessary permits is sanctioned with the absolute nullity of the sale agreement.

For additional information, please contact:

Dragoş Radu, Attorney-at-law, Partner – Head of EY Law

Radu Diaconu, Attorney-at-law, Manager of EY Law

15-17 Ion Mihalache Blvd.

Bucharest Tower Center Building, 22nd floor

District 1, 011171 Bucharest, Romania

Tel: (40-21) 402 4000, Fax: (40-21) 310 7124

Email: office@ro.ey.com

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