On 1 January 2023, a new act on the transfer of agricultural farms entered into force. The management of generational issues and the smoothing of generational change in agriculture is essential for the future of the Hungarian agriculture. In addition, the security of Hungary’s food production could be jeopardised if farm succession is not carried out properly or at all, therefore, the new act aims to help the agricultural sector to renew itself generationally.
The scope of the act covers the transfer of farms of agricultural farmers and self-employed persons engaged in agriculture, forestry and ancillary activities. The act determines the definition of the farm, the farm transferor and the farm receiver. The farm transfer contract is introduced as a new legal instrument and can be concluded under the provisions of 4 types of contracts: sale and purchase contract, contract of gift, maintenance contract or life-annuity contract. The farm transfer contract must be recorded in a public deed or a private deed countersigned by a lawyer, with the statutory content prescribed by the new act. The farm transfer contract must be submitted to the agricultural administration body for approval within 60 days of its conclusion.
From 1 January 2023, certain provisions of the act on the turnover of agricultural and forestry land were also amended. For instance, it is clarified that the land transfer contract must also contain the statutory commitments and declarations relating to the pre-emption right designated by the party acquiring the land. Furthermore, if the land being the subject of the ownership transfer contract is affected by a land use contract in force or not yet in force at the time of the conclusion of the contract, the contract must contain information on the duration of and the consideration for the use of the land. In addition, the fact of the submission of a contract for the transfer of ownership can be recorded automatically based on cooperation between the authorities in case the contract is not refused immediately in the course of the preliminary examination by the authority.
By Lidia Suveges, Attorney at law, KCG Partners Law Firm