Sale of agricultural land in Slovenia

In this article, the author shall present a specific issue in the legal regulation of real estate in the Republic of Slovenia, namely the sale of agricultural land, which is regulated by a mandatory legal regime. This regime is set forth in the provisions of the Agricultural Land Act (hereafter referred to as ‘ZKZ’) which dictate that agricultural land may only be sold in a special administrative procedure, meaning that the provisions of the said act supersede the general provisions of the Code of Obligations and/or the Law of Property Code.

Real estate not classified as agricultural land is not covered by the rules of sale set forth in ZKZ which means that only the following requirements must be fulfilled for the creation of a valid contract of sale: a valid binding contract (which must be in written form), a valid act of conveyance, the seller’s legal capacity to dispose of the property, and other conditions provided by the law. The sale of agricultural land (including cases where land is designated as agricultural only in part), on the other hand, is subject to a specific procedure.

According to article 20 of ZKZ, an owner intending to sell agricultural land, forest or farm must submit an offer, ie a proposal for the conclusion of a contract, containing all the essential elements of the contract, to the competent administrative unit. The administrative unit must publish the offer on a notice board and on the uniform national platform called ‘E-Uprava’. Anyone wishing to purchase the land in question must, within 30 days of the publication of the offer, provide a written declaration of acceptance of the offer to the seller and to the administrative unit.

Within 60 days of the expiry of the deadline for the acceptance of the offer, the seller must submit a request for approval of the contract to the administrative unit. Pursuant to article 22 of ZKZ, the administrative unit issues a decision on the request in the so-called approval procedure, taking into account the legal presumptions set forth by the law, such as pre-emption beneficiaries (owner, farmer bordering on the land in question, tenant of the land, another farmer, agricultural organisation, and the Agricultural Land and Forests Fund of the Republic of Slovenia) and their order.

If none of the pre-emption right holders exercise their right, the seller may sell the land to anyone who has accepted the offer in due time in the prescribed manner provided that the concluded contract is approved by the administrative unit following article 22 of
the ZKZ.

The purpose of the existence of the pre-emption right with regard to agricultural land is justified by a constitutionally permissible objective, ie to limit the legal transactions concerning agricultural land in such a way that it retains its primary productive function to the extent necessary to ensure the food supply of the population of the Republic of Slovenia. The right of pre-emption lays down no further limitations to the owner of agricultural land, except for the limitation of its disposition.

It is important to mention that the seller is bound by the offer he has made and may not unilaterally withdraw the already accepted offer or exclude his obligation against the pre-emption beneficiaries.

Given the above described procedure and the fact that ZKZ – as lex specialis – does not regulate the moment the contract for the sale of agricultural land is concluded, different theories circles in the Slovenian legal system as to when exactly the contract should be deemed to be concluded, however, this issue has been resolved by the Supreme Court of the Republic of Slovenia which held, in its landmark decision, that the contract itself is concluded in the moment when the seller receives the buyer’s declaration containing the acceptance of the offer and that such a contract is concluded under a suspensive condition which is fulfilled when the administrative unit issues a decision approving the legal transaction.

The above means that there is a possibility that several contracts may be concluded between the same seller and different buyers for the same agricultural land (if more than one buyer issues a declaration containing the acceptance of the offer), however, only one may actually enter into force – the one approved by the administrative unit.

After the approval of the transaction by the administrative unit, the seller is obliged to issue to the buyer a land registration permission necessary for the registration of the transfer of ownership in the Land Registry, which represents the final pre-requisite in the transfer of ownership over agricultural land. Should the seller refuse to fulfil this obligation, the buyer whose contract was approved by the administrative unit may file a lawsuit with the competent court seeking the issue of such land registration permission. Should the court grant such a claim, the buyer may then use such a ruling to achieve the registration of the ownership transfer in the Land Registry.

This article represents a short overview of the legislation regulating the sale of agricultural land in the Republic of Slovenia and the potential issues related thereto. This set of very formal rules is a specific feature of Slovenian law which may, if not adhered to, lead to the invalidity of sale and purchase contract concerning agricultural land.