Authorisation for agricultural land transactions

Authorising authority for land transactions and land lease transactions

legal basis:

• Real Estate Transfer Act
• Land Lease Act

Both laws are federal laws with regulations to improve the agricultural structure and to safeguard agricultural and forestry operations. Corresponding state regulations (implementation laws) for both laws have been passed and must be observed.

Authorisation procedure for the sale of agricultural and forestry land

The Land Transfer Act (GrdStVG) intervenes in a controlling manner in business transactions involving agricultural and forestry land as well as wasteland that can be brought into agricultural or forestry cultivation. It is a law on measures to improve the agricultural structure and to safeguard agricultural and forestry operations.

The legislator pursues three main purposes with this law:

• Ensuring the continued existence of agricultural and forestry businesses (microeconomic aspect)
• Protecting nature and the environment by maintaining and improving the agricultural structure
• Securing the food supply (macroeconomic aspect)

According to Section 1 (2) of this Act, agriculture within the meaning of this Act is the cultivation of land and the keeping of animals associated with the use of land in order to obtain plant or animal products, in particular arable farming, meadow and pasture farming, commercial horticulture, commercial fruit growing and viticulture as well as fishing in inland waters. According to case law, land within the meaning of this law is land in the legal sense (BGHZ 45 p. 145).

This may involve individual parcels of land or an entire farm, provided that it is registered with its farmyard and building areas and all of its parcels on one land register sheet. Accordingly, an agricultural property is also the so-called farmstead of an agricultural business.

The change in society's view of agriculture and the environment has led to a rethink regarding the size and profitability of an agricultural business. As a result of constant legal judgements, part-time farmers are now treated in the same way as full-time farmers. A part-time farmer is someone who is able to generate sustainable profits, but whose livelihood is predominantly derived from another activity. Under these conditions, a part-time farmer cannot be refused authorisation as a purchaser, even if other farmers need the land more urgently. In this respect, the authority is not entitled to choose between farmers. Environmental protection and landscape conservation are also becoming increasingly important due to recent case law and must be taken into account in the authorisation procedure.

In its first section, the law contains regulations on the authorisation of legal sales (§§ 2 ff) and in its second section, regulations on the judicial assignment of a business belonging to a community of heirs created by intestate succession (§§ 13 ff).

According to the GrdStVG, the sale of land used for agricultural or forestry purposes and the granting of usufruct over such land require authorisation from the licensing authority. A distinction is made between legal transactions requiring authorisation (§ 2), legal transactions not requiring authorisation (§ 4) and legal transactions requiring authorisation (§ 8). If authorisation is not required, a negative certificate is issued upon application, which is equivalent to an authorisation (§ 5). These decisions must be made within one month. If the examination of the application cannot be completed within this period, an extension of the deadline must be notified in writing (§ 6). The grounds for refusal of an authorisation are regulated in § 9 and must be complied with.

Authorisation procedure for lease agreements for agricultural and forestry land

The land lease is a contract in agriculture. It is a bilateral contract under the law of obligations for a fee, by which a plot of land with the residential or farm buildings used for its cultivation (farm) or a plot of land without such buildings is leased primarily for agricultural purposes. Sections 585 to 597 of the German Civil Code (BGB) regulate the rights and obligations of the tenant and landlord that apply specifically to land lease agreements. There are also special regulations in the Land Lease Act. The Land Lease Act is therefore a protective law in favour of tenants of agricultural and forestry land.

Civil and public land lease law has numerous interactions with other legal areas and laws. These include agricultural structure law with the Land Transfer Act (GrdStVG), the Reich Settlement Act (RSG) and the Federal Expellees Act (BVFG), inheritance law and the Land Consolidation Act (FlurbG).