The Rights of Tenants to First Refusal in the Sale of agricultural land

Italy protects agricultural tenants in the event of the land they have been leasing farming land for a minimum of two years is put on the market for sale. Art. 8 of Law no. 590 of 26 May 1965 states that the tenant, sharecropper, settler or co-participant, have the right of pre-emption (first refusal to buy) in the event of the sale of the land. The landlord must inform the tenant of the terms of the sale, including the price and any conditions. If the tenant does not exercise their right to buy the tenants are entitled to fair compensation for any improvements they have made to the land that increases its value.

If the tenant wishes to take up the right of pre-emption, there are various conditions that apply that the tenant must fulfil. 

The law applies in the following circumstances:

• In the case of the transfer of agricultural land for consideration or in the case of the granting of an emphyteusis (a type of contract that provides for the use of land for a long period in exchange for the payment of a fee).
• The land in question must be leased to direct cultivators, sharecroppers, part-time tenants, or co-participants. However, land leased under seasonal contracts is excluded
• The pre-emption is granted to the tenant, the sharecropper, the part-time tenant, and the co-participant, provided certain conditions are met.
• To exercise the right of first refusal, the cultivator must have cultivated the land in question for at least two years. This requirement ensures that the cultivator has a stable and lasting connection with the land.
• The land against which the right of first refusal is to be exercised, combined with other land possibly owned by the cultivator (in ownership or emphyteusis), must not exceed three times the area corresponding to the working capacity of their family. This limit serves to prevent excessive accumulation of land and to ensure a fair distribution of agricultural resources.

In essence, Article 8 of Law No. 590 of 1965 protects cultivators who have long term connections with agricultural land by guaranteeing them the priority to purchase the land when it is sold, provided they meet certain requirements and limits on the area.

Instruments to protect the landlord

The landlord also has protection under law against a tenant that does not adhere to their contractual obligations under the agricultural lease. The instrument to protect the landlord and enable the possibility of regaining possession of the land rented under an agricultural lease is governed by Article 5 of Law No. 203/82. This law states that the landlord can request the termination of the contract in the event of a serious breach of the tenant's obligations, including:

• The abandonment of the land or failure to carry out agricultural activities for a period time that compromises the normal productivity of the land.
• Failure to perform the necessary ordinary repairs to keep the land in good cultivation and efficient condition.
• Unauthorized changes to the use of the land.
• Failure to comply with good agricultural practices, seriously affecting the productivity of the land.

Giambrone & Partners experienced real estate lawyers point out that should such situations occur, the third paragraph of Article 5 of Law No. 203/82, stipulates that “…before resorting to judicial authorities, the landlord must notify the other party of the breach by registered letter with acknowledgment of receipt, outlining their justified requests. If the tenant remedies the breach within three months of receiving this communication, the contract will not be terminated…”

This law provides the tenant with a 90-day period to remedy the breach. However, if the breach is not remedied within this time the landlord can, under Article 46 of Law No. 203/82 can approach the Provincial Inspectorate of Agriculture with the view of attempting a mandatory conciliation in accordance with Article 11 of the Legislative Decree No. 150/2011. Should no agreement be able to be reached through the Inspectorate, following 60 days after the registered letter has been sent to the tenant, the Landlord has the option of approaching the Judicial Authority to arrange for the termination of the contract due to the tenant’s breach.

Giambrone & Partners’ multi-lingual real estate lawyers can advise and guide you through the laws relating to agricultural land.