The acquisition of real estate in Estonia is restricted in some cases. The Restrictions on Acquisition of Real Estate Act (below, the Act) provides restrictions on acquiring real estate used as profit-yielding land, the categories of which include 10 hectares or more of forest or agricultural land.
Such land may be, without further conditions, acquired only by
* Estonian citizens
* citizens of any state that is a member of the European Economic Area Agreement (the European Union, Norway, Iceland and Liechtenstein) who at the time of concluding the contract of sale have permanently resided in Estonia for at least the last three years and who is a sole proprietor entered in an Estonian register and has engaged in forest management or manufacture of agricultural produce in Estonia during at least the last three financial years
* an Estonian legal entity or a branch of an EEA member in Estonia that has been engaged in forest management or manufacture of agricultural produce in Estonia during at least the last three financial years.
If a person/entity does not meet the above requirements, it can acquire relevant real estate only with the authorization of the county governor. A county governor should decide on granting authorization within 60 days of receipt of the relevant application. The authorization is checked by a public notary prior to making the transaction.
Additionally, the Act provides a restriction that a natural person who is neither an Estonian citizen nor a citizen of any EEA member or a legal person who is not entered in the appropriate Estonian register may acquire an real estate used for profit-yielding land only with the authorization of the county governor. The restriction is applicable even in cases where the profit yielding land includes agricultural or forest land to a small extent. Thus such land cannot be acquired without restrictions, for example, by Russian citizens.
The Act is not applicable when acquiring real estate as the joint property of spouses if the restrictions provided by this Act do not extend to at least one of the spouses. So any Estonian citizen can, without restrictions, acquire any type of land, the land use type categories of which include agricultural land and forest land. For example, if one of the spouses is an Estonian citizen and the other spouse is a person to whom the restrictions deriving from the Act would be applicable, then the spouses can acquire the real estate without authorization of the county governor.
The restrictions are also not applicable if a co-owner acquires a legal share in the real estate from another co-owner, or if the real estate is acquired by the transferor's spouse, descendant or ascendant, or if the real estate is acquired by succession.
In addition, the Act is not applicable if the transferring entity is the Estonian state, or if the real estate is acquired on the basis of the Land Reform Act (by privatization or restitution).
The restrictions also do not apply upon acquiring apartment ownership and encumbrance of real estate with a right of superficies in apartments.
Any transaction that is in violation of the restrictions on acquiring real estate as provided in the Act is void.
Pille Pettai is a lawyer at Glikman & Partnerid, a member firm of Baltic Legal Solutions, a pan-Baltic integrated network of law firms including Kronbergs & Cukste in Latvia and Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.
