Amendment of the Norms to Law no 17/2014 regarding sale of extra-murros land
Daniel Vlasceanu – Partner at Vlasceanu, Ene & Partners
1. General comments
The amendment of Law no 17/2014 regarding (among others) the sale of land located outside of buildable areas (Romanian: teren extravilan) in the last year’s autumn (via Law 175/2020) triggered multiple concerns for the energy sector. The concerns were caused by the newly introduced provisions that added supplementary restrictions on the sale of extra murros land.
As such, following the amendment of Law 17/2014, it became necessary to amend the methodological norms (the „Norms”) for the application of Title I of the Law 17/2014. Said amendment entered into force upon publishing the Order 311/2020 (the “Order 311/2020”) on 8 February 2021 in the Official Gazette of Romania. We expressed¹ (even before the entry into force of the Norms amendment) the hope that certain provisions of Law 175/2020 will be corrected while the amended Norms were supposed to clarify certain grey aspects introduced by the same Law 175/2020.
It is to be stressed that intra murros land (Romanian: teren intravilan) does not fall subject to Law 17/2014; neither the means of securing land (presented in the previously published material) which do not involve sale of ownership right (i.e. such other means can be used without observing the Law 17/2014 restrictions). Moreover, for particular situations (e.g. the land is owned by a special purpose vehicle) even the indirect transfer of ownership can be performed without observing the Law 17/2014 conditions.
2. The conditions for sale of extra-murros agricultural land
- Logistics clarifications
In accordance with the amendments brought by Law 17/2014 under Law no 175/2020, the attributions of the public authorities involved in the procedure of sale of agricultural land have been amended/ detailed: as such, the course of the documentations is specified in detail; the response time of the authorities is provided for each step of the prcedure (as per Art. 3-5 si 8-10 of the Methodological Norms). Moreover, the standard forms to be used under the procedure prescribed by Law 17/201 (such as the offer for the sale of land, the notification of the pre-emptors or the decision to select a pre-emptor etc) were updated/ supplemented and are available under the Annexes of the Norms.
- Justifying documents
One of the elements brought by Law 175/2020 was the substantial broadening of the pre-emptors’ categories; consequently, in order to differentiate between such categories, the Norms had to specify which documents are necessary to be exhibited by each category of pre-emptors in order to exercise their pre-emption right. As such, under Article 6 of the Norms, each of the first 6 categories of pre-emptors (the State, which represents the 7th category, is not listed therein) has a dedicated section clearly listing the documents they have to produce in order to be acknowledged as pre-emptors.
Along the same line, considering that (by Art. 41 of Law 17/2014), a new (intermediary) category was introduced between the pre-emptors and the seller’s freely chosen buyer(s), i.e. namely the potential buyers (“Potential buyers”), the Norms specify (under Art. 8) the documents they must exhibit (in order to fulfil the conditions imposed under Art. 41 of Law 17/2014).
- Selection between multiple pre-emptors
An useful clarification is brought regarding the selection between multiple pre-emptors of the same category (or between Potential buyers): the seller is given the right to freely choose between the purchase offers submitted by such “equal” pre-emptors (or by the Potential buyers) [as per Art. 9 para (1) and (2)].
3. Approvals of the Ministry of National Defence/ Ministry of Culture
The following prior approvals must be obtained (as per Law 17/2014):
- The approval of the Ministry of National Defence, if the sale concerns a plot of land located within 30 km from the state border/ from the Black Sea shore or within 2,400 m from special objectives; and
- The approval of the Ministry of Culture, if the sale concerns a plot of land encompassing an archaeological site.
In order to avoid delays, both the Law 17/2014 and the Norms set forth that if the approval is not issued within 20 working days, the respective approval is considered favourably issued; the Norms also specify that the sale-purchase agreement may be concluded based on the proof of the registration of the application [Art. 12 para (1) letters. a) and b)]. While this is an useful provision meant to exert pressure on the respective authorities, in practice, one can hardy take the risk of perfecting a sale based on a tacit approval (for example, one would not like to be in a position where the Ministry of Defense discovers - following the closing of the sale - that the acquired land plot is strategically necessary for a special objective; however, from our experience, the approval of the Ministry of Defence is regularly obtained very fast).
4. The obligation to use agricultural land exclusively for agricultural activities
One cannot end the discussion regarding the amendment of Law 17/2014 without mentioning a big concern of the energy community (especially relevant for the photovoltaic industry), namely the express obligation to use agricultural land (only) for agricultural activities [as introduced by the amendments under Law 175/2020 (Art. 42 para 5)]. Unfortunately, the Norms do not bring any clarification (nor the awaited exemption for specific investments) in this respect. However, it is expected that an interpretation favouring the use of agricultural land only for agriculture is not acceptable and the above referred to legal text shall be amended.
¹The present material is a follow up to the previous comment published in the November 2020 edition of Energy Industry Review.