A topic of great debate was the right of foreign citizens to buy land in Romania. In 2020, the Romanian Parliament adopted a law providing new requirements for transactions of agricultural land located outside the built-up area.
For the purposes of this article, foreigners mean citizens of a European Union country, or legal entities headquartered in the European Union. Citizens of countries located outside of the European Union may acquire ownership over the Romanian land under conditions governed by international treaties, on the basis of reciprocity.
Respecting the right of pre-emption - an essential requirement when concluding contracts for the sale and purchase of extra-urban land
The right of pre-emption is that right enjoyed by someone who is preferred as a buyer of a good. According to Law no. 175/2020 for the amendment and completion of Law no. 17/2014, the transfer by sale of agricultural land located outside the built-up area is done in compliance with the substantive and formal conditions provided for by Law no. 287/2009 regarding the Civil Code, and with the right of pre-emption, at a price and under conditions equal to those stipulated in the offer, in the following order:
first-degree preemptors: co-owners, first-degree relatives, spouses, relatives and relatives up to the third degree inclusive;
rank II preemptors: owners of agricultural investments for tree crops, vines, hops, exclusively private irrigation and/or tenants of agricultural lands;
rank III preemptors: the owners and/or tenants of neighboring agricultural lands;
rank IV preemptors: young farmers;
rank V preemptors: institutions with activity in the field of agricultural research, located in the vicinity of the existing lots in their patrimony;
preemptors of rank VI: natural persons with domicile/residence located in the administrative-territorial units where the land is located or in the neighboring administrative-territorial units;
rank VII preemptors: the Romanian state, through the State Domains Agency.
The term for exercising the right of preemption is 45 days.
Thus, the sale of lands located outside the built-up area can be made both to Romanian citizens and to foreign citizens only in compliance with the aforementioned right of pre-emption.
Other legal provisions that must be respected by foreigners who want to purchase land in Romania
In the situation where the holders of the right of pre-emption do not express their intention to buy the land, its transfer to third parties will be made under the condition that they have their domicile/headquarters on the Romanian territory for a period of at least 5 years prior to the registration of the sale offer and to carry out agricultural activities on the national territory for a period of at least 5 years prior to the registration of the offer for sale of agricultural land located outside the built-up area, and in the case of legal entities, they must present evidence showing that, from the total income of the last 5 fiscal years, at least 75% represents income from agricultural activities.
Two other essential conditions provide:
The owners will have the obligation to use the land exclusively for carrying out agricultural activities from the date of purchase, and in the situation where there are agricultural investments on the agricultural land for tree crops, vines, hops and exclusively private irrigation, the agricultural destination of this will be preserved investments.
Compliance with the obligation to keep ownership of agricultural land outside the built-up areafor a minimum of 8 years from the date of acquisition, under the penalty of paying a penalty tax of 80% on the amount representing the difference between the sale price and the purchase price, based on the land value.
Therefore, although it is possible to buy land outside the built-up area by foreigners, it is essential that they know the legislation when they want to buy a property. Collaboration with a real estate lawyer in Romania brings a visible added value as the lawyer can also offer assistance with regard to the creation of a real estate due-diligence report that includes information regarding the characteristics of the land, owners, the legal situation of the land, possible risks and legal impediments to the purchase, to draft pre-contracts or sale-purchase contracts, also providing assistance and representation in the negotiation process in order to conclude contracts.