Obligations of the purchaser of agricultural property
The current provisions have greatly restricted the possibility of trading in agricultural property, introducing a number of requirements that must be met before acquiring such property. But it doesn’t end there. The Agricultural System Act imposes a number of obligations on the owner following the acquisition.
Running a farm
In principle, the purchaser of an agricultural property may not use the property for purposes other than running a farm. The Agricultural System Act requires the purchaser of an agricultural property to run the farm that was included in the property for a minimum of five years following the date of acquisition (before the 2019 amendment to the act, it was a minimum of 10 years).
This obligation applies to any purchaser of agricultural property, although in the case of natural persons the act adds that the farm should be run personally, which means working on the farm or, at the very least, making all decisions on the agricultural operations there (Art. 6(2)(1)). We should add that running a farm includes plant or animal production, including horticultural, orchard and fish production.
A natural person who acquired an agricultural property after obtaining approval from the director general of the National Support Centre for Agriculture (KOWR) is also required to reside for a period of five years following the date of acquisition of the property in one of the communes where the agricultural properties making up the family farm are located.
The act refers to the concept of an agricultural holding introduced by the Civil Code (agricultural land together with forest land, buildings or parts thereof, equipment and livestock, if they constitute or may constitute an organised economic unit, and rights related to operation of the agricultural holding), but also introduces a territorial rule. Thus the obligation to run a farm arises only if, as a result of the acquisition of agricultural property, the area of agricultural property becoming part of the farm amounts to at least one hectare (regardless of the nature of the title to the property). The act will not apply to farms that include agricultural properties with a total area below one hectare.
Therefore, within five years after acquiring an agricultural property, it is impossible to change its use. An exception is entry into force of a local zoning plan designating the property for non-agricultural purposes, which will effectively terminate the statutory obligation (Art. 2(4)(9)).
Doubts may arise when a purchaser who obtains approval from KOWR to acquire agricultural property does not have a farm at the time of acquisition, but acquires an agricultural property of more than one hectare. Thus, pursuant to the literal wording of Art. 2b(1) of the Agricultural System Act, this obligation should not apply (as the act does not mandate establishment of a farm, and the property being purchased does not even have to allow for the possibility of establishing a farm there per se) (although commentator Tomasz Czech takes a different view in Agricultural System Act: Commentary (3rd ed., Warsaw 2024), Art. 2(b)).
On the other hand, Art. 9u(3)(1) of the act provides that the sanction for violation of the obligation to run a farm will be applied when the purchaser of agricultural property has not taken up operation of a farm or has ceased to operate the farm that included the acquired agricultural property.
Ban on turning over the property to third parties
The act prohibits the purchaser of agricultural property from handing over such property for possession or disposal to a third party within the aforementioned five-year period after acquisition. For example, the agricultural property cannot be leased, sold or donated to a third party, except with the prior approval of the director general of KOWR.
Obtaining approval for such a transaction, in the form of an administrative decision, requires that the application be justified by important interests of the purchaser or the public. The act indicates as an important interest of the purchaser, for example, that the seller’s health makes it difficult or impossible for the seller to operate a farm, as well as the seller’s intention to cease farming activity. If approval for the transaction is granted, the approval is valid for one year from the date when the decision becomes legally final.
The ban on disposing of or delivering possession of the property is not absolute, and there are a number of notable exceptions, e.g.:
- Possession of the property can be delivered to, among others, a family member, a local government unit, or the State Treasury
- Disposal of the property in the course of enforcement proceedings
- Disposal or transfer of possession of property with an area of less than one hectare, located within the administrative boundaries of a city
- Disposal or transfer of possession of property as to which, after acquisition, a local zoning plan was adopted designating the property for non-agricultural uses.
The ban on disposal applies only to actions by the owner, not events beyond the owner’s control, such as succession or a specific bequest. Also excluded from the ban is property acquired from a spouse during the marriage (if the property was owned by one of the spouses for at least five years prior to the acquisition or was part of their joint marital estate), as a result of division of the property after the end of the marriage (if the property was part of the divisible joint property for at least five years prior to the acquisition). The same applies to property acquired by prescription (adverse possession).
Doubts may arise when acquiring property covered by an existing lease agreement. In such a situation, the lease agreement would pass by operation of law to the purchaser of the property. In our opinion, stepping into an existing lease or tenancy agreement does not constitute an act of delivering possession of the property to a third party, so there should be no violation of the statutory ban. Nonetheless, given the strict practice of applying the act by KOWR, a different interpretation of Art. 2b(2) of the act cannot be ruled out, and it might be concluded that in such a situation violation of the ban occurs, as long as such a lease agreement is not terminated.
Sanctions
If the purchaser does not fulfil the obligations arising from acquisition of agricultural property, for example by failing to use the property for agricultural purposes, or does not carry out the project by a certain date, KOWR may apply to the court to acquire the property for a price corresponding to its market value, taking into account the encumbrances as of the date of acquisition of the property by the purchaser (we write more about sanctions in the article “Sanctions for violations of the Agricultural System Act”).
Conclusion
The obligations discussed above under the Agricultural System Act may seem highly restrictive and potentially exert a negative impact on trading in real estate in Poland. However, these obligations do reflect a general trend across Europe to ensure rational management of agricultural land, prevent excessive fragmentation of farms, and safeguard socio-economic interests in rural areas.
Dr Jakub Baranowski, attorney-at-law, Aleksandra Szczepińska, Real Estate practice, Wardyński & Partners
