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Impact of amendment to Act No 330/1991 Coll. on exercising ownership rights

Slovak National Council Act No. 330/1991 Coll. on Land Adjustment, Settlement of Land Ownership Rights, Land Offices, the Land Fund, and Land Associations as amended and amending and supplementing certain laws.

Land ownership in the Slovak republic after the year 1989 was marked by communist ideology and socialistic practice. The majority of Slovak farmers did not own large acreage, very often only a few hectares created by several parcels of land. A farmer who owned acreage of 10 to 20 hectares was considered as a big landowner in the village. Larger land acreages were owned only by a small number of people in Slovakia. Collectivisation in the 50´s of the 20th century resulted in consolidation of separate parcels and plots of land into larger units, ploughing across abuttals, making void land boundaries kept by generations of farmers as well as liquidation of the natural land boundaries and access roads. There appeared large, very often of several hundred hectares land areas, which sometimes consisted of hundreds of separate parcels of land. These land areas were cultivated by agricultural cooperatives and state property enterprises, which up to the year 1989 did not pay any ground rent to land owners. Inheritance law valid in the CSSR caused even further fragmentation of relatively small land parcels among separate co-owners, so that some land owners owned only a few square metres of land. Owners could not dispose of their ownership right what resulted in non-effective settlement of ownership rights. After the year 1989 landowners required to assign land parcels, which were utilized by agricultural cooperatives. Very complicated ownership rights characterized by big defragmentation of land and for 40 years interrupted continuity in utilization of land by its owners and in general disposal of land ownership rights as well as the requirement of the original agricultural cooperatives not to split consolidated land areas into small land parcels made the “lawmaker “ to adjustment of the method of land assignment by law. Act No 330/1991 Coll. on Land Adjustment, Settlement of Land Ownership Rights, Land Offices, the Land Fund, and Land Associations, in § 15 reads: Sect. 1 The land registry can approve location of compensatory land parcels on request of the participant in order to ensure smooth transition to farming according to a new

adjustment and commencement of farming on them upon negotiation of principles for location of compensatory land parcels provided it concerns an owner whose claim for compensation is undoubted… - regulation creates conditions for participants to start farming on the land parcels determined for this purpose by the principles for location of compensatory land parcels in reasoned cases based on the decision of the land registry. Sect. 2 On proposal of owners or authorized persons who received parcels of land according to special provisions and who submitted their applications for of their land utilized by agricultural and forest enterprises in compliance with special regulations, the land registry orders accelerated adjustment of ownership and utilization rights for the period up to the approval of the project of land adjustment in case the land parcels are not accessible or if it is necessary due to other reasons .... If it is not possible, because of the economic reasons, to assign land parcels to their owners, other land parcels are allotted for compensatory utilization free of charge. These land parcels are not exempt from land adjustment - the regulation creates conditions for transfer of land parcels to their owners, which were joined into big units due to different utilization rights and are still controlled mainly by agricultural enterprises. If in justified cases it is impossible to assign the land for its owner (especially when it is not accessible) other plots can be allotted for compensatory utilization free of charge up to the realization of land adjustment (i.e. land reform). This law and order with small changes lasts until now. Costs connected with assignment of land for compensatory utilization are paid by the state. The Institute of compensatory lands was drawn up as a temporary solution until the period of the so-called land reform. Land adjustment was though carried out slowly; the funds expended on it were used non-effectively, so that this temporary condition has lasted for 15 years. Agricultural enterprises sort of resisted giving over land to be cultivated by owners, in some cases owners have still not received their land yet. The fact is documented also by the share of natural persons cultivating 260 049 ha of land in the year 2003 what represents 12,48 % (source: Report on agriculture and food industry in the Slovak republic for the year 2005). On the contrary unsatisfactory reform of the socialist-type agricultural enterprises, tunnelling of enterprises resulted in very low rent for utilization of land, which was often not paid for several years and was reasoned mainly by undercapitalization of farming. In this situation

landowners strove to take up land from agricultural collectives and rent it to entrepreneurs (independent farmers – natural persons undertaking on land) who were willing to provide them an adequate rent from land. Provisions of § 15 Act No 330/1991 were applied to

achieve this aim. Many owners who came across unwillingness of agricultural cooperatives to give over land, slowness and “effectiveness” of state authority administration, weak right enforcement and long lasting legal pursuits kept land in utilization of agricultural collectives and for price of low or no rent. Collectivisation of farming a related to it new adjustment of land parcels in the past led to liquidation of original parcel boundaries as well as access roads. In the context of the above-mentioned facts, since 1991 the state has provided marking boundaries of the original land parcels or parcels assigned for compensatory utilization as well the need of funds required. Since 1992 the amount of 260 mil Slovak crowns has been spent for these activities and 273 thousand ha of land parcels have been assigned. The state has not managed to carry out land adjustment in spite of colossal funds (billions of Slovak crowns) over the last 15 years . We believe that the funds were spent highly ineffectively. For quite a long time we have been discussing the issue that the state is spending a lot on assigning original land parcels and compensatory parcels, that owners “speculate” with

these parcels, apparently the image of a “villain” owner, who withdraws money from the state budget, is evoked deliberately. Our opinion is unambiguous! For 40 years the enterprises established by the state have been using someone’s land for free, land parcel boundaries and access roads were made void. The state is therefore is obliged to provide and financially support the recover of original land parcels, complete realization of land adjustment. We do not agree with taking halfway measures and thus getting of the problem by the state officer. 260 mil Slovak crowns spent by the state to restore original boundaries of land parcels is only a fraction of the sum of which landowners were deprived over 40 years when they could not dispose of their property which was used by the state for free. In February 2006 the minister of agriculture submitted the draft act amending Act No 330/1991 and the Government approved the draft. Apart from other things § 15 is supplemented with new sections 2 and 3 after section 1, which read: “2) Land parcels assigned for free temporary compensatory utilization shall not be leased to a another person. If the land parcel assigned for compensatory utilization was leased, the leaser is obliged to pay expenses connected with assignment of the parcel for compensatory

utilization. District land registry will subsequently cancel compensatory utilization by adopting a decision as well as determine the amount of expenses connected with assignment of the parcel for compensatory utilization and at the same time impose a fine of 2000 Slovak crowns on the leaser for each hectare and year of unauthorised lease and determine the date of its maturity. Appeal against the decision shall have no deferring effect. 3) Procedures pursuant to section 1 do not apply if land adjustment is regulated by decree or permitted according to § 8.” The proposed amendments are reasoned in the Explanatory report, as follows: The original version of the law upon amending Act No 229/1991 Coll. by Act No 205/1996 Coll. enabled to lease land parcels assigned for compensatory utilization to another person. This situation destabilize agricultural enterprises and it often happens that persons who act as substitute users take advantage of this land at the expense of their owners. The amendment creates conditions only for owners who will provide for agricultural production also in cases when conditions defined by law relate to the agricultural enterprise. In other cases the existing entrepreneurial entities, newly established as well will manage farming only in the form of lease contracts. Thus, if I own a land parcel which is utilized by an agricultural cooperative which neither pays me rent for this land nor because of some reason is willing to give it over in the original place, I can use the institute of compensatory land only in the case that I will cultivate the land myself. I cannot lease the compensatory land parcel to another entrepreneur under the threat of sanctions, which in relation to average paid rent for the land in the SR are excessively high. Therefore, if I don’t undertake on land I am forced to leave it in the cooperative and tolerate the self-will of the user, I can go to litigation with them and wait for court verdict probably for about ten years, which will be reasoned by destabilization of the agricultural enterprise. This is about how the minister of agriculture of the SR intends to provide execution of ownership rights to land. We demand to omit these sections in the amendment to this Act! We are aware that the institute of compensatory land parcels is not perfect and that it might be misused. As it is a temporary solution until land adjustment takes place we suggest that the realization of land adjustment should be given priority instead of putting the majority of land owners and entrepreneurs on the land at a disadvantage based on the possibility of misuse of only one paragraph of the law.