KOWR consent to acquire agricultural land: A new approach
The Act of 26 April 2019 Amending the Agricultural System Act and Certain Other Acts made changes to the trading in agricultural real estate in Poland. It also clarified the procedure and conditions for consent to acquisition of agricultural real estate by an entity not meeting the definition of an individual farmer, and not qualifying as a family member of the seller or other entity exhaustively listed in Art. 2a(3) of the Agricultural System Act.
The amendment also imposed an obligation on the National Support Centre for Agriculture (KOWR) to create and maintain a teleinformatic system for publication of announcements of sales of agricultural land. Previously KOWR required placement of announcements at such places as commune and village offices, agricultural chambers, and county agricultural advisory centres, as well as websites such as the Online Agricultural and Commodity Exchange (IGRiT). But sometimes public offices refused to publish announcements, deeming them private or lacking a statutory basis for posting them.
When is KOWR consent required?
A farmer planning to sell agricultural land to a buyer not meeting the definition of an individual farmer must apply to the director general of KOWR for issuance of an administrative decision consenting to acquisition of the land. Prior to the amendment, to obtain consent it had to be shown that there was no possibility for acquisition of the agricultural land by authorised entities (individual farmers), that the proposed acquirer provides adequate assurance of proper conduct of agricultural activity, and that the transaction would not lead to excessive concentration of agricultural holdings by the buyer.
Under the current law, the acquirer no longer needs to demonstrate adequate assurance of proper conduct of agricultural activity. It is sufficient for the acquirer to undertake to conduct agricultural activity on the acquired land (for a reduced period of five years). As before, it is also necessary to show that there is no possibility for acquisition of the agricultural land by an individual farmer and that acquisition of the land by the buyer will not result in excessive concentration of agricultural holdings.
It is expressly stated in the amendment that the parties to the proceeding seeking consent to the sale of agricultural real estate are the seller and the buyer of the property. The application for consent to sell the agricultural land must be filed within six months from posting of the announcement in the teleinformatic system operated by KOWR. Otherwise, it must be expected that KOWR will refuse to consent to acquisition of the property.
Inability to sell to an individual farmer: What does it mean?
The amendment specifies the conditions demonstrating the inability to sell agricultural land to an individual farmer. Such an inability is deemed to exist if no one responds to the seller’s announcement of the sale and the price given in the announcement for undeveloped or unplanted property is no more than 50% greater than the average price for agricultural land of the given soil classification in the given province, unless the seller holds an appraisal demonstrating a higher price. Moreover, a response to the announcement of sale of the land is not deemed to be submitted if the price proposed in the response is more than 5% below the price stated in the announcement and was not accepted by the seller, or the response was submitted after the deadline stated in the announcement (in which respect the publication period must not be less than 30 days).
When is a forced sale conducted?
The conditions for forced sale of agricultural land to KOWR in the event of refusal to consent to sale of the property to the proposed buyer have also changed. Under the previous law, upon written demand of the seller submitted within one month after the decision refusing to consent to the sale became final, KOWR was required (regardless of the reasons for issuing a refusal) to submit a declaration on purchase of the agricultural land for a cash payment equal to its market value as determined by KOWR. Now KOWR will not be required to purchase the property if:
- The inability to sell the property to an individual farmer was not demonstrated
- It is found that acquisition of the property by the proposed buyer would result in excessive concentration of the buyer’s agricultural holdings, or
- The application for consent was filed by an entity other than the seller (for example, an educational institution).
The amendment entered into force 14 days after publication, i.e. on 26 June 2019, except for the provisions on creation and operation of a teleinformatic system by the National Support Centre for Agriculture, where there is a one-year grace period. These provisions will enter into force on 12 June 2020, meaning that until that date, the prior rules for publication of announcements of sale of agricultural land will remain in force.
It is good that the requirements for the application for consent to sale of agricultural land have been clarified and that it has been specified how to document the inability to sell agricultural land to an individual farmer. Introduction of a centralised teleinformatic system and clarification of the requirements for announcements of sale of agricultural land also appear to be positive developments. The system to be launched by KOWR should enable farmers to place announcements of planned sales of agricultural land and collect responses, all free of charge. But the practice will show whether the platform achieves the intended aims.
Sylwia Moreu-Żak, attorney-at-law, Agnieszka Saganowska, Real Estate Development practice, Wardyński & Partners