Transactions with land properties after November 1, 2014

We have already informed you that amendments to the Law "On Land Privatization in Rural Areas" entered into force on November 1, which provides for a new approach to the legal regulation of transactions with agricultural land. The amendments are aimed at preserving agricultural land for production, as well as reducing speculative transactions with land.

Currently, representatives of certain municipalities are speaking out in the mass media quite critically about the new conditions. We understand that the conditions have made the acquisition of LIZ a little more time-consuming, however, the new criteria are created to weed out those LIZ buyers who do not buy land for agricultural activities. We call on farmers, municipalities and municipal commissions to treat the new LIZ acquisition system with understanding. We have held discussions with the Ministry of Agriculture about possible improvements to make the system faster and more efficient. It is planned to make changes to the legislation in February and March to eliminate some minor shortcomings. We remind you that the implementation of such systems in other countries was not ideal right away, so we call on you to be understanding, because our goal is to preserve LIZ for its intended purpose – production!

In November and December, the registration of properties that include LIZ in the Land Register was slowed down. We received the first calls from members who were confused about the situation. We negotiated with the Ministry of Agriculture and Justice so that the Land Register would allow the registration without the opinion of the commissions at least of those LIZ properties whose transaction contracts were concluded by November 1. In order to register this property in the Land Register, a purchase contract concluded by November 1 and a refusal from the municipality for pre-emptive rights, which can also be issued in November or December, are required.
However, we hope that this arrangement will not be in place for long.

To make your work easier, explanatory material has been prepared on how municipalities should act in cases of alienation or sale of agricultural land, see below!
We remind you that during negotiations with the Ministry of Agriculture, there are opportunities to improve and refine both the specific law and the regulations of the Cabinet of Ministers. In case of any uncertainties, questions or suggestions, please call Mārtiņš Tronas, mobile phone: 29805456

On November 1, 2014, amendments to the Law "On Land Privatization in Rural Areas" entered into force, which provides for a special procedure in the field of alienation of agricultural land.

Which land transactions are subject to restrictions?
The restrictions apply to:
1. agricultural land;
2. land, the dominant land use category of which is agricultural land, by comparing its occupied area with the sum of the areas of the transaction object corresponding to other land use categories;
3. the area of a separate land unit included in the transaction object, as well as the presumed share of this land property.

– The dominant land use category in a transaction with agricultural land is the land use category whose occupied area in the transaction object is larger than the occupied area of other individual land use categories.

– If the object of a transaction with agricultural land is two or more independent real estate properties, the dominant land use category is determined separately for each real estate property.
– If the object of a transaction with agricultural land is one real estate consisting of two or more land units, the dominant land use category is the land use category whose sum of the occupied area in land units is greater than the sum of the occupied areas in land units of other individual land use categories.
– The area of the relevant land use category is determined using data from the State Real Estate Cadastre Information System on the land use categories of the transaction object and their areas.

Persons entitled to acquire land dominated by agricultural land:
1. natural persons, who meet the status of persons entitled to acquire land (see above) and who simultaneously meet all of the following conditions:
a) are registered as economic operators in the Republic of Latvia,
b) have received single area payments for at least one year during the last 3 years or have acquired agricultural education or equivalent education in a vocational education programme, vocational secondary education programme or professional development education programme, acquiring crop production, animal husbandry or other relevant subjects for at least 160 hours,
c) confirms in writing that the use of this land in agricultural activities will be commenced within a year after its acquisition and will be ensured also in the future, if the land has been applied for single area payments or direct payments in the previous or current year, or will be commenced within three years and will be ensured also in the future, if the land has not been applied for single area payments or direct payments in the previous or current year,
d) on the date of submission of the application, they have no tax debts in Latvia or in the country of their permanent residence;

2. legal entities, who meet the status of persons entitled to acquire land (see above) and who simultaneously meet all of the following conditions:
a) have received single area payments for at least one year during the last 3 years;
b) confirms in writing that the use of this land for agricultural activities will be commenced within 1 year after its acquisition and will be ensured also in the future, if the land has been applied for single area payments in the previous or current year, or will be commenced within 3 years and will be ensured also in the future – if the land has not been applied for single area payments or direct payments in the previous or current year,
c) at least one owner or permanent employee has appropriate professional education in the relevant field of activity of the legal entity, obtained at least in a vocational education program or a vocational secondary education program
d) can indicate the beneficial owners and certify that all beneficial owners are the persons referred to in Section 28, Paragraph one, Clause 1 of this Law,
e) on the date of submission of the application referred to in Section 30.1, Paragraph one of this Law, they have no tax debts in Latvia or in the country in which they are registered.

The maximum area of agricultural land that may be owned by one natural or legal person:
– One natural or legal person may acquire ownership of up to 2,000 hectares of agricultural land. This condition does not apply to the state, state-owned enterprises, including the manager of the Latvian Land Fund, which acquires ownership of agricultural land for the implementation of functions delegated by law, as well as to agricultural land acquired in insolvency proceedings.
– The maximum area limit does not include agricultural land that a person leases or for which a person receives unified area payments according to the situation as of 01.11.2014.
– A regional government may determine in binding regulations a different maximum area of agricultural land owned by one natural or legal person in its administrative territory, based on the municipality's long-term development vision and priorities, strategic objectives and spatial development perspective, but not exceeding the limit of 2,000 ha.

Decision-making procedure for acquiring ownership of agricultural land:
1) The regional government shall establish a municipal commission for making decisions regarding the acquisition of agricultural land in the form of at least seven commission members, including representatives of the local government, and inviting at least one representative of a direct state administration institution to participate in it.
2) Representatives of the local government shall be elected to the commission in accordance with the procedure set out in the Law "On Local Governments". The commission shall adopt decisions by a simple majority of votes. In the event of an equal division of votes, the vote of the chairman shall be decisive.
3) The Commission shall elect a Secretary from among its members. The work of the Commission shall be materially and technically ensured by the relevant local government.
4) If a member of the commission or an invited expert, in accordance with the Law "On Prevention of Conflict of Interest in the Activities of Public Officials", has a conflict of interest in relation to the application being evaluated, the said member of the commission or expert is not entitled to participate in the relevant decision-making process.
Responsibilities of the Commission:
1) inform the members of the commission, the land buyer, the land seller and other invited persons about the time of the meeting and the agenda items (the draft regulations of the Cabinet of Ministers provide for this – no later than 5 working days before the relevant meeting),
2) send a copy of the decision to the local government of the county in whose administrative territory the land to be alienated is located, for which a relevant commission decision has been adopted, if the land to be alienated included in one transaction deed is located in the administrative territory of another local government of the county.

Commission rights:
1) invite experts from other institutions to the commission meeting;
2) request the submitter (the draft regulations of the Cabinet of Ministers provide for this within 3 working days) after receiving the request to eliminate the identified inaccuracies in the submitted information, supplement the submitted information or submit the missing documents confirming the person's right to acquire ownership of agricultural land.

Regarding the deadlines and procedure by which the land lessor or lessor informs the local government about the concluded agricultural land lease agreements:
1. Local governments must introduce a register of land lease agreements (it shall be introduced in a format that the local government deems necessary; the introduction of a land lease agreement registration journal in the form of a simple record-keeping system is also acceptable).
2. After concluding a land lease agreement, the land lessee or lessor shall submit a copy of the agricultural land lease agreement in person or send a copy of the land lease agreement electronically or by post to the local government of the county in whose administrative territory the leased land is located.

3. The regional government, upon receiving a derivative of the land lease agreement:
1) make a note on the derivative of the agricultural land lease agreement for registration in the municipal register of agricultural land lease agreements, if the derivative of the land lease agreement has been submitted in person;
2) send the applicant a statement regarding the registration of the land lease agreement in the municipal agricultural land lease agreement register within ten working days, indicating the date of registration of the land lease agreement and the register number, if the derivative of the land lease agreement was received electronically or by mail.

4. If changes are made to the essential components of a land lease agreement registered in the municipal register of agricultural land lease agreements or the land lease agreement is terminated or annulled by a court decision, the land lessee or lessor should inform the relevant regional government thereof.
5. The local government is entitled to register in the register of land lease agreements also those land lease agreements that were concluded before 01.11.2014.