Amendments to the Land Transactions Act from 1 January 2022

On 14 December 2021 certain acts of agricultural subject were amended by the Hungarian Parliament, affecting inter alia the Act on Protection, Management of Wildlife and Hunting, the Forest Act, the Act on Transactions in Agricultural and Forestry Land (Land Transactions Act) and the Act on the Termination of the Undivided Joint Ownership on lands.

The majority of the new provisions entered into force on 1 January 2022, however, certain rules will only enter into force on 1 February 2023 simultaneously with the new Land Registry Act.

Based on the amendment to the Land Transactions Act, considering that in the case of land acquisition from a close relative, the party acquiring the ownership does not have to make the necessary declarations under the Land Transactions Act in his/her own name, it may be a circumvention of the legal provisions if a person transfers the land acquired to a close relative. It has been therefore clarified that in this case the undertakings made by the predecessor are transferred to the close relative.

In case of sale and purchase agreements and lease agreements of lands, the public notification and the approval procedure by the agricultural administration body has been re-regulated to eliminate the problems emerging on the basis of the feedback from the legal practitioners. As a result, in case of contracts subject to approval of the authority, where the right of first refusal or first lease may be exercised, the parties must submit the contract to the agricultural administration body, and not to the public notary. During the preliminary examination, the authority will identify contracts which are fundamentally defective and refuse to approve them. If no such refusal is made, the authority will take the necessary steps ex officio to the public notary to have the contracts published.

Furthermore, on the basis of the amendments, the agricultural administration body may also refuse to approve the lease agreement of lands if the value of the consideration is disproportionate. The amendment clarifies that the value of the rent shall be considered disproportionate if the land concerned does not possess any advantageous characteristics (e.g. its location or quality) which justify a derogation from the normal local rent. Furthermore, the rent of land must be paid by bank transfer or domestic postal order from 1 January 2022, except in certain cases. Any agreement to the contrary between the parties shall be null and void.