The amendments of the Act on the Transactions in Agricultural and Forestry Land (Land Act) entered into force on 11 January 2019. Based on the new rules, in the approval procedure of the sale and purchase agreement for agricultural lands, the regional entity of the Hungarian Chamber of Agriculture as local land committee will prepare an opinion whether the sale and purchase agreement is in compliance with the aspects included in the Land Act (e.g. transparency of the relationship of tenures, preventing speculative land acquisition). The amendment determines the conditions that shall be considered in the course of the assessment of the compliance with these aspects, such as the purchase price of the land, the lands already owned by the purchaser, or how the sale and purchase of the land serves the acquisition of ownership of young farmers or new agricultural producers.
The amended Land Act reforms the pre-emption rights of the farmers keeping animals, and the scope of persons having pre-emption right or the right of first refusal has been extended by persons performing horticultural activities or producing propagating materials.
The amendment introduces stricter rules for checking the performance of the obligations undertaken by the purchaser and determined as a condition for the acquisition of lands and for the legal consequences of the omission. In case the obligor breaches the restrictions of the acquisition, as a first step he/she must comply within six months with the conditions that are necessary for the maintenance of the lawful status. Failing this obligation, in case of a sale and purchase agreement, as a new legal consequence the Land Act establishes call option right by the rule of law for the persons having pre-emption right or for the Hungarian State on the land affected.
According to the amendments, from 11 January 2019, no share-cropping (“feles bérleti” in Hungarian) or share-farming (“részművelési” in Hungarian) agreement may be concluded, and the agreements already existing on the date of entering into force the amendment of the Land Act will be terminated on 31 December 2028 by the rule of law.
By Gabriella Galik, Partner, KCG Partners Law Firm