Taking counsel

What should be noted when acquiring land in the Baltics?

Marius Urbelis
After the accession of Estonia, Latvia and Lithuania to the European Union, the Baltic land market has become more liberalized than ever before. Foreign investors coming from EU member states and other countries will have more investment possibilities in this market. However, certain restrictions on acquiring land in the Baltics still remain in effect today. In addition to "who" and "what" could be acquired, land purchasers should also know how to secure their rights, as "purchasers," by purchasing land.
City land. As of May 1, 2004, the restrictions that were earlier applied against EU nationals and legal entities have been removed in Latvia and Lithuania. EU nationals and legal entities wishing to purchase city land no longer need to obtain prior permission from the respective municipality in Latvia and from the state or municipal institution in Lithuania. In Estonia some restrictions still remain, but only for the citizens of non-European economic area member states with respect to the land of borderline cities (e.g. Narva, Sillamai, etc.).
Agricultural and forestry land. Starting from the accession date, all three Baltic countries have introduced a transitional period of seven years during which foreigners are still not allowed to purchase agricultural and forestry land. But certain exceptions to this temporary restriction apply. In Latvia EU nationals, in Estonia nationals of EEA member states and in Lithuania nationals of the EU, EEA, NATO and OECD member states may acquire agricultural and forestry land on the condition that they have permanently lived and farmed land there during the last three years. In Estonia this exception also applies to EEA legal entities whose branches have been registered in Estonia. In Lithuania this exception also applies to foreign legal entities and other foreign organizations that set up representative offices or branches in Lithuania.
Legal safeguards. Legal safeguards for acquiring land are similar to all three Baltic countries. Before the purchase, the land purchaser should investigate publicly available information about any legal restrictions or encumbrances possibly applied to the land plot from the real estate, mortgage and arrest registries in Lithuania, the land book in Latvia and the land registry in Estonia.
It is worth nothing that a purchaser will acquire ownership title to the acquired land plot from the moment when such property is transferred to the purchaser's possession - that is, after signing a transfer-acceptance deed in Lithuania. The land ownership title is considered to be transferred from the moment of registering the purchaser's ownership title with the land registry in Estonia and with the land book in Latvia. A land purchaser seeking to avoid possible disputes over the acquired land plot should immediately register the ownership title with the real estate register in Lithuania as well as in Latvia. Last but not least, it is required that a land purchase contract be approved by a notary in Lithuania and Estonia. Although in Latvia the approval of a land purchase contract is not mandatory, without the notary's certification of the specific application form the land purchaser will not be able to register the ownership title in the land book.
In conclusion, after accession to the EU the land market in all three Baltic countries has become not only more liberalized but also subject to more unified legal regulation. However, due to detailed regulations applied to land acquisition, the potential land purchasers should very carefully investigate all legal and tax issues before concluding a land purchase contract. A miser pays twice.

Marius Urbelis is senior associate
at Sorainen Law Offices
in Vilnius.