Acquiring Agricultural Real Estate by a Family Foundation
The provisions of the Act on Shaping the Agricultural System apply to the acquisition of specific agricultural properties as listed in the closed catalog provided in Article 1a of this act.
When can the Act on Shaping the Agricultural System not be applied?
For example, the provisions of the aforementioned law will not apply to the acquisition of agricultural properties with an area of less than 0.3 hectares.
Therefore, any entity, including a family foundation, can acquire the properties specified by the legislator without restrictions imposed by the provisions of this law.
Who can be the purchaser of agricultural real estate?
According to Article 2a, paragraph 3 of the Act on Shaping the Agricultural System, only an individual farmer can be the purchaser of agricultural real estate, unless the law provides otherwise. The legislator has also stipulated that when the purchased agricultural real estate has an area of less than 1 hectare (i.e., from 0.3000 hectares to 0.9999 hectares), anyone interested, including a family foundation, can acquire such property.
Can the right of first refusal apply to agricultural real estate?
In the case of purchasing such real estate, according to Article 3, paragraph 4 of the Act on Shaping the Agricultural System, the Agricultural Support Center has the right of first refusal to this agricultural real estate.
In such a situation, the parties to the transaction (e.g., the seller and the family foundation as the buyer) must first conclude a conditional sales agreement with a notary, which should be promptly sent to the Agricultural Support Center (preferably to the local branch of the Agricultural Support Center responsible for the location of the agricultural real estate).
Who makes the decision to exercise the right of first refusal for agricultural real estate?
Within one month of receiving notification of the content of the conditional sales agreement, the Agricultural Support Center will make a decision regarding the exercise or waiver of its right of first refusal for a specific piece of agricultural real estate.
Failure to provide a statement of acquisition of the agricultural real estate within the specified period by the Agricultural Support Center, written notification by the Agricultural Support Center to the obligated party about not exercising the right of first refusal, or the expiration of the specified period without a response from the Agricultural Support Center means that the parties to the transaction can proceed to conclude the final agreement transferring ownership of the real estate.
Does the acquisition of agricultural real estate require the consent of the Agricultural Support Center?
In a situation where the real estate with an area of 1 hectare or more is to be acquired by a legal entity (including a family foundation) and none of the cases listed in Article 2a, paragraph 3 of the act apply, the acquisition of such agricultural real estate will require obtaining the consent of the Director General of the Agricultural Support Center, expressed through an administrative decision (i.e., the consent mentioned in Article 2a, paragraph 4 of the aforementioned law).
As of May 22, 2023, the provisions of Article 2a, paragraph 3, point 1 of the Act on Shaping the Agricultural System have been amended by adding two additional exceptions, stating that for the acquisition of agricultural real estate by:
a family foundation from its founder, and a beneficiary of a family foundation, who is a close relative of the founder of that family foundation, from the family foundation,
prior consent of the Director General of the Agricultural Support Center, as mentioned in Article 2a, paragraph 4 of this law, will not be required.
However, it should be noted that excluding the aforementioned cases from the requirement of obtaining consent, as mentioned in Article 2a, paragraph 4 of the law, may simultaneously require informing the Agricultural Support Center about its right of first refusal and acquisition rights, as specified in Article 3, paragraph 4 and Article 4, paragraph 1 of the Act on Shaping the Agricultural System.
