Definition of agricultural property | In Principle

The Agricultural System Act introduces a number of restrictions and obligations related to trading in agricultural property in Poland. Thus it is vital to define precisely what agricultural property is. Incorrect classification of property may render the transaction defective. Below we discuss the definition of agricultural property in light of the Agricultural System Act.

The general definition of real estate is a part of the earth’s surface constituting a separate object of ownership (i.e. land), as well as structures permanently attached to the land or parts of such structures, if under special provisions they constitute the subject of ownership separate from the land.

In turn, Art. 46¹ of the Polish Civil Code defines agricultural property as property “that is or can be used to conduct productive activity in agriculture involving vegetable or animal production, not excluding garden, orchard or fish production.” Notably, the code definition of agricultural property refers to the possibility of using the property for agricultural purposes, not the current use of the property.

The Agricultural System Act specifies that “agricultural property” is agricultural property within the meaning of the Civil Code, but excluding real estate in areas designated in zoning plans for purposes other than agricultural. Moreover, for the Agricultural System Act to apply to a given agricultural property, its agricultural area must amount to at least 0.3 hectare. The act also introduces additional thresholds for the area of agricultural property, beyond which particular provisions of the act apply. For example, in principle only an individual farmer can purchase an agricultural property without the approval of the National Support Centre for Agriculture (KOWR). This rule will not apply if the area of the agricultural property is less than 1 hectare. Therefore, to determine whether the Agricultural System Act applies to a particular property, it is necessary to verify not only whether it has the status of agricultural property, but also what its area is.

Potential concerns

This legal framework raises a number of questions and interpretative doubts. In practice, the following basic issues in particular may require clarification:

• How should the concept of the property be understood? How to determine the area of an agricultural property?
• How to determine the designated use of a property to which the local zoning plan does not apply?
• If only part of a property is agricultural land, is it an agricultural property?

We will try to resolve these doubts in this article, based on the legal practice and the rulings from the courts.

How should the concept of the property be understood? How to determine the area of an agricultural property?

In practice, we may encounter a situation where two bordering properties, described in two separate land and mortgage registers, are sold at the same time. Should they be considered two separate properties, and should the restrictions of the Agricultural System Act be applied separately to each of them, because they are covered by two different land and mortgage registers? Or do they effectively constitute a single property?

Neither the regulations nor the decisions from the courts provide clear answers. Each situation should be analysed on a case-by-case basis, taking into account a number of circumstances, including ownership issues and how the property is used. As a precaution, it is better to assume that if the combined area of the two properties causes the restrictions of the Agricultural System Act to apply, they should be considered a single property. This understanding of the concept of real estate is confirmed by a line of case law emphasising the criterion of ownership and the location of the property. For example, in its order of 17 November 2003 (case no. V CK 396/02), the Supreme Court held that “the concept of property in the legal in rem sense depends neither on the existence nor the number of land registers, but only on the identity of the subject of ownership.”

On the other hand, when a single land register covers a number of parcels of land that do not border each other, one should consider applying the most prudent interpretation in such a situation, i.e. the opposite interpretation of the concept of real estate stressing the criterion of the property being identified in a single land register. This interpretation is also supported by rulings from the Supreme Court of Poland. For example, in the judgment of 22 February 2012 (case no. IV CSK 278/11), the court held: “Bordering plots of land, owned by the same person, for which separate land and mortgage registers are kept, constitute two separate properties within the meaning of Art. 46 §1 of the Civil Code. This separateness is lost if they are merged into one land and mortgage register, as the ‘one register—one property’ rule applies.”

Determination of the status of property not in the area covered by a local zoning plan

In light of the Agricultural System Act, to assess the nature of the property, it is first necessary to determine whether the property is fully covered by a local zoning plan. If the local zoning plan covers the entire area of the property and provides for its use for purposes other than agriculture, then the property does not constitute agricultural property. In such a case, it should be considered that the property will not constitute agricultural property even if it is physically possible to carry out agricultural activities there.

If the area where the property is located does not have a local zoning plan, or the local zoning plan does not cover the entire area of the property, the nature of the property should be determined on the basis of the Civil Code. The case law and transactional practice indicate that the wording of the entry in the land registry will be relevant to this assessment. As Supreme Administrative Court stated in its judgment of 12 March 2020 (case no. II OSK 1279/18): “The entries in the land registry as to the agricultural nature of the property determine the possibility of using it for agricultural production activity in crop and livestock production and determine its nature.”

If only part of a property is agricultural land, does the property constitute agricultural property?

Taking into account the foregoing comments relating to the local zoning plan, if the land registry indicates that the area of the property includes at least 0.3 hectare of agricultural land, it should be assumed that the entire property is agricultural within the meaning of the Agricultural System Act, and the restrictions therein apply to it. It does not matter, for example, that the rest of the property, with a much larger area, is used for purposes other than agriculture.

If certain land is not and cannot be used for agricultural purposes, but due to its history it is described in the land register as agricultural land, for precautionary reasons we recommend regarding the land as agricultural property until the historical entry in the land register is corrected. This position is confirmed by the courts. For example, as the Province Administrative Court in Warsaw held: “The official confirmation of whether a given area meets the requirements of agricultural land or forest land is the relevant entry in the land and buildings register. This evidence cannot be independently challenged by administrative bodies, or by a court, by classifying a given piece of land as agricultural property based solely on the statutory definition in the Civil Code and ignoring the entry in the record.” As a result, if a property cannot be used for agricultural purposes, but is described as agricultural land in the land register, from a practical perspective it is reasonable to amend the land registry before disposing of the land. Otherwise, there is a risk that the transaction will be deemed inconsistent with the Agricultural System Act.

The definition of agricultural property in the Civil Code, effectively referring to any property where agriculture can be carried out, may raise concerns that this definition might even apply to scraps of land created through subdivisions or other property of unusual shape, where it is hard to imagine that agriculture could be effectively carried out. These doubts are allayed by rulings from the Supreme Court case recognising that in assessing the status of property, it should be considered whether in practice it is economically feasible to conduct agricultural activity on the site.

For example, in the order of 30 September 2022 (case no. I CSK 2598/22), the Supreme Court stated that “negligible amounts of produce to meet the needs or personal tastes of the landholder cannot be considered productive agricultural activity.” And the Supreme Administrative Court held that, for similar reasons, transit routes do not constitute agricultural property: “Transit routes as such are not and cannot be used for agricultural production, and therefore do not constitute agricultural property within the meaning of Art. 46¹ of the Civil Code. Roads are used for connections, not directly for agricultural production, and are not used for conducting crop or animal production” (judgment of 10 August 2021, case no. I OSK 498/21).

The Agricultural System Act also contains a catalogue of exemptions, including categories of property to which the act does not apply. One exclusion is for “internal roads.”

Due to these basic legal conditions, to limit legal risks, before disposing of a property it is necessary to verify its status and determine whether it meets the conditions to be regarded as agricultural property.

Marcin Rżysko, attorney-at-law, Real Estate practice, Wardyński & Partners