Rent of agricultural lands under the New Civil Code

Upon the New Civil Code coming into force on 1 October 2011, Law no. 16/1994 on tenancy farming was repealed. Whilst some old provisions have been retained in the New Civil Code, the current legal framework seems to have dispensed with some of the restrictions of Law no. 16/1994, overall becoming more farmer-friendly.

Specifically, the New Civil Code no longer comprises the farmer’s obligation to ask for the landowner’s prior approval in order to invest in the farming land. It also no longer gives the landowner the right to check on how the farmer fulfils its obligations under the agreement. These matters are no longer mandatory in farming agreements.

Who can act as a farmer under Romanian law

The New Civil Code does not oblige individual tenant farmers to have a certified agricultural background. However, companies must still be authorized for farming activities.

Any individual or company (be it Romanian, foreign resident or non-resident) can be a tenant farmer.

Also, for individual farmers who are EU citizens with residence in Romania, there is no current restriction on acquiring agricultural lands. Moreover, individual farmers who are EU citizens with residence in Romania can exercise preemption rights with respect to acquisition of the farming land.

The legal restriction on acquiring agricultural lands in Romania imposed on non-resident EU individual farmers and companies set up in EU countries will expire in 2014. However, such foreign entities can still set up special vehicles governed by Romanian law (such as limited liability or joint stock companies), which can act as purchasers of agricultural lands until the restriction lapses.

Non-EU citizens or companies set up in non-EU countries can acquire land according to international treaties, based on reciprocity agreements (provided however that they cannot acquire land on more favorable terms than the ones applicable to EU citizens or companies set up in EU countries).

Compulsory written form

A standard tenancy farming agreement is no longer required for entering into farming agreements. This gives farmers flexibility to use their own form of contracts and tailor them according to their needs and concerns.

However, such agreements must be in writing in order to be enforceable.

Registration of tenancy farming agreements

Agreements are valid even if not registered with the City Hall. Farmers can however be compelled by court to register their agreements in the special registry kept by the City Hall, with a daily penalty for delay.

Agreements can also be registered with the Land Registry Office, making them binding upon any third party who acquires the land from the landowner while the farming agreement is in force.

Term

Farming agreements can be for any term up to 49 years.

Insuring the harvest

The farmer must insure the harvest against natural disasters, even if such obligation is not expressly provided by the farming agreement.

Subletting and assignment

Subletting any of the agricultural lands that are subject to tenancy farming agreements is forbidden.

The assignment of such agreements is permitted by the New Civil Code only to close family members of the individual farmer, subject to the landlord’s written consent. As such, the assignment of the rights and obligations under farming agreements by individual farmers to companies, or by companies who act as farmers to any third party, is not allowed.