By Iulia Simion, Senior Lawyer at WOLF THEISS Rechtsanwälte GmbH & Co KG.

In 2014, Law no. 17 (the "Law") was enacted. The Law enforced new prerequisites for the sale of agricultural land located outside the built up area of the cities, the most relevant for the dynamics of investments and real estate transactions being the pre-emption right in favour of the co-owners, land tenants, neighbours and state authorities, which the landlord would need to observe when selling these lands.

The Law generated many discussions and concerns, both amongst professionals, to understand and clarify how the procedures set out by law would actually apply in practice and investors, who were concerned that the new provisions would slow down, if not in some cases even hinder their investments.

The Law did not enter into force on the date it was published, but only thirty (30) days thereafter. Interestingly enough, the Law stipulated that its provisions (including those referring to the pre-emption right mentioned above) would not apply to the sale of relevant agricultural land in case a notarized pre-sale purchase agreement or an option agreement was concluded in relation thereto prior to its entry into force. Hence, the Law offered the possibility to avoid the pre-emption right by concluding a pre-sale purchase or option agreement in front of the notary prior to the elapse of the thirty (30) days term which followed its publication. As long as such pre-agreement or option was in place, even if the sale purchase agreement was to be concluded after the entry into force of the Law, the pre-emption right would not have been applicable.

However, later on, in December 2014, the Constitutional Court declared the provision of the Law exempting from the applicability of the pre-emption right those agricultural lands for which notarized pre-sale purchase agreements have been concluded prior to its entry into force as contravening the Romanian Constitution.

The Constitutional Court found that such a provision creates a privileged situation for those who have concluded notarized pre-agreements, as opposed to those who have also entered into such pre-agreements, but did not notarize them. This contravenes the constitutional principle which states that all are equal in front of the law and the private ownership right is guaranteed and protected equally by the Romanian Constitution. This principle means that the same legal treatment should apply when situations do not differ (in our case, the legal effects of entering into a pre-sale purchase agreement are identical, irrespective whether such pre-agreements are notarized or not: they create the entitlement for the parties to conclude a sale purchase agreement at a later date). Differences are allowed in so far as there are objective and rational criteria to justify a different treatment. For certain categories of persons, such differences are required precisely to grant them access to the same rights as everyone else (and not discriminate them). However, in this case, the Constitutional Court deemed that no such objective criteria may be evoked to justify a privileged position for those with notarized pre-agreements.

Decisions of the Constitutional Courts are of general applicability (i.e. are mandatory for everyone, not only those who were parties in the court file) and enforceable for the future. This means that where notarized pre-sale purchase agreements have been concluded, but not also the final sale purchase agreement, from now on, the parties will observe the pre-emption right in favour of the co-owners, land tenants, neighbours and state authorities. However, where the sale purchase agreements have already been concluded prior to the issuance of Constitutional Court's decision, those remain valid and in force.

The Constitutional Court was not vested to rule with respect to the option agreements as well; therefore, where option agreements were concluded in front of the notary prior to the entry into force of the Law, the parties may still conclude the sale purchase agreement without observing the pre-emption right.