Agricultural tenancy law in Hungary

The foregoing solely discusses the property acquisition of agricultural land. If a foreign natural or legal person wishes to take on Hungarian land under an agricultural lease (renting of property), he/she can do so without a problem.
According the Hungarian Civil Code, the lessee, by virtue of the agricultural lease agreement, is entitled to the temporary use of a certain plot of agricultural land or another business that can be run for profit and to collect the proceeds thereof, for which he, in consideration thereof, is obliged to pay rent. Depending on the agreement between the parties, the payable rent is set in cash, in kind or a combination of the two. The lease agreement must be entered into in writing. If the lease agreement is not drawn up in writing, the legal effect is that the agreement is void and as such deemed not to have been in place at any time.

Regulations with regard to the term of the agricultural agreement
The maximum term of the lease agreement is 20 years. However, this rule is subject to two exceptions:
- The lease agreement relating to land registered as a forest and/or which relates to a wooded area can be entered into for a maximum period of 5 years after the production period (the time at which the trees were cut);
- For agricultural land that is used as a vineyard or fruit orchard and for agricultural land with alternative plantations, the lease agreement can only be entered into until the end of that year in which the vineyard, the fruit orchard and/or the plantation has value (the depreciation period).
Restrictions with regard to the size of the area to be leased
Incorporated companies and cooperatives can lease land of up to 2500 hectares or land with a maximum AK value of 50,000 AK (Aranykorona - this is a unit used to indicate the quality of the agricultural land). Other market participants can lease a maximum area of 300 hectares or agricultural land of up to 6000 AK.
Regulations with regard to the lessee
The lessee is solely entitled to use the leased land in accordance with the rules applicable to organised management. The lessee is obliged to work the land in accordance with its dedicated purpose, while ensuring that the fertility of the land is maintained. The lessee is also responsible for the general expenditure attached to the lease. The lessee is obliged to settle the rent periodically (in arrears).
Right to rent reduction
Unless the law, in applicable cases, determines otherwise, the lessee can claim for a reasonable reduction and/or remission of the rent for the year in which natural phenomena or other extraordinary occurrences renders it impossible to achieve less than two-thirds of the average proceeds. Prior to harvesting the produce, the lessee must communicate his claims to this scheme to the lessor. The lessor cannot demand payment of rent reduced and/or remitted in any one year in subsequent years. The lessor can establish a pledge on the proceeds of the leased land up to the extent of the outstanding rent as well as on possessions of the lessee located in or on the leased land.

(Notice of) termination of the lease agreement
Normal termination
A lease entered into for an indefinite period of time can be terminated by giving notice at the end of the relevant operating year, 6 months in advance.
A lease entered into for a fixed period of time can, subject to termination by mutual agreement, only be terminated during the term of the lease by giving special notice.
Special termination
The lessor is entitled to terminate the lease with immediate effect, if the lessee:
- despite previous warnings, has failed to work the land or if his agricultural activities are of such nature that this impedes the achievement of a proper return or if the lessee seriously compromises the fertility of the ground, wildlife stock or company equipment;
- fails to pay the rent or the general expenditure, also after having been reminded and a new payment term having been set after the previous term had lapsed;
- without the approval of the lessor, has transferred the use of the agricultural leased land to a third party or has made investments on the leased agricultural land that deviate from normal operations or if he has changed the agreed use of the land. Subleasing of agricultural land is void, although the law does offer the possibility to temporary transfer the use of the agricultural land to someone else. The lessee, in the interest of integration of the production and subject to approval from the lessor, can agree with a third party that the use of the agricultural land is temporarily accrued to a third party. This agreement, as well as the approval from the lessor, must be laid down in writing. Unless agrees otherwise between parties, this does no affect the obligations the lessee has towards to the lessor;
- activities in breach of legislation with regard to nature conservation or that breach the regulations of the government body charged with nature conservation. Examples thereof include when the lessee carries out activities that negatively affect the condition of a nature conservation area and, furthermore, if the preservation of nature is compromised in any way.
The lease agreement must be terminated in writing.
Rights of the lessee in relation to the termination
Provided the lessee is a natural person, Hungarian law provides reasons on the basis of which of he can terminate the lease agreement with immediate effect.

These reasons are:
- a deterioration in the health condition of the lessee to the extent that he is unable to fulfil his obligations arising from the lease agreement;
- a change in the family and living circumstances of the lessee to the extent that he is unable to fulfil his obligations arising from the lease agreement; Instead of terminating the lease agreement with immediate effect, the lessee, subject to approval from the lessor, can appoint a third party to take the place of the lessee, continue the legal relations between the lessor and lessee without a change in conditions;
- death of the lessee. In that case, the heirs of the lessee can terminate the lease at the end of the agricultural year, with due observance of a notice period of 6 months
Rights and obligation of the lessee when terminating the lease agreement
The lessee can take the systems and equipment provided by him at the end of the lease agreement. At the same time, the lessee can claim the value of the systems and crops planted by him and which cannot be taken. The lessee can further claim the value of the measures and installations to protect the fertility of the soil and which has resulted in an improvement of the quality thereof. At the end of the lease, the lessee is obliged to dismantle any temporary structures he erected and/or remove these, at his own expense, unless he has entered into a deviating agreement with the lessor to this end. The lessee is not entitled to any compensation of the value or costs involved therein. If the lessee fails to comply with the obligation to dismantle or remove, the lessor can opt to have dismantling and/or removal carried out at the expense of the lessee.
Statutory pre-emption lease rights
When terminating the lease agreement, the pre-emption lease rights must be taken into account.
The following parties have pre-emption lease rights on agricultural land:
- the former lessee, provided the lease was not terminated by the lessee with immediate effect;
- the neighbour living locally;
- an individual living locally.

Agricultural land use register
The government property services (land registry offices) maintain an independent register with regard to the use of the agricultural land situated in their region. This register contains the land register number of the agricultural land, the size of the relevant area, the value of the land expressed in aranykorona, the details of the user, the title to the use and, if the lease agreement has been entered into for a fixed period of time, the term of the use. An individual, regardless under which title, who uses agricultural land that exceeds more than 1 hectare is obliged to report this use within 30 days of commencement of this use. Reports must be made to the government property service in order to be included in the records. If the user of the agricultural land is not the owner at the same time, the registration form applicable to that end must be signed by the user, the owner and/or usufructuary. If the user of the agricultural land fails to report the use thereof, the government property service will impose a fine on the individual concerned.