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The Real Estate Transfer Act (GrdstVG) explained simply

The Real Estate Transfer Act (GrdstVG) explained simply: Important information for buyers and sellers of agricultural and forestry land

The purchase or sale of farmland, grassland, or forest land differs significantly from traditional real estate transactions. One of the most important reasons for this is the Real Estate Transfer Act (GrdstVG).
In this article, we explain in easy-to-understand terms what this is all about and what buyers and sellers of agricultural and forest land should definitely know.

What is the Real Estate Transfer Tax Act?

The Real Estate Transfer Act is a federal law that regulates the sale of agricultural and forestry land.
It is intended to ensure that agricultural land is used sensibly, distributed fairly, and does not become too expensive.

In short:
A sale of agricultural or forestry land only becomes valid once it has been approved by the competent authority.

To which areas does the GrdstVG apply?

The approval requirement applies to, among other things:

  • farmland
  • Grassland, i.e., meadows and pastures
  • Forest areas
  • Land that is officially classified as agricultural or forestry land and is to be purchased in conjunction with a farmstead, an agricultural business, or other real estate.

The law therefore affects sellers and buyers alike—private owners, farmers, companies, communities of heirs, and investors.

What does the authority check?

The relevant authority—usually agricultural offices, chambers of agriculture, or district administrations—checks several points:

  1. Is the purchase price in line with the market value?

If the price is significantly inflated, approval may be denied in order to prevent speculation on agricultural land.

  1. Who would like to purchase the land?

It is often checked whether local agricultural businesses need the land for their operations.

  1. Will agriculture be strengthened or weakened by the sale?

The aim is to promote a sustainable and stable agricultural structure.

Right of first refusal of land companies

In certain cases, a land association may exercise a right of first refusal.
This means that it can "preempt" the buyer if this benefits agricultural use or structural development.

Approval procedure

This is how the process normally works:

  1. Notary certifies the purchase agreement.
  2. The contract will then be automatically forwarded to the approval authority.
  3. The authority reviews the case (typically 4–6 weeks).
  4. Buyers and sellers receive approval or denial.
  5. Only then is the entry made in the land register.

Without this approval, a change of ownership cannot be completed.

Are there regional differences?

Yes, because although the GrdstVG applies nationwide, the federal states have their own supplementary regulations. These include, for example:

  • Different area limits, i.e., the states can determine that the sale of land up to a certain size does not require approval (e.g., in North Rhine-Westphalia, up to 1 ha is exempt from approval).
  • varying responsibilities
  • Special provisions in forestry and nature conservation law

However, the basic procedure is similar everywhere.

Conclusion: The Real Estate Transfer Act – important for all agricultural and forestry transactions

Anyone wishing to buy or sell farmland, grassland, or forest land must comply with the Real Estate Transfer Act.
It ensures that:

  • Agricultural land remains put to good use,
  • agriculture is treated fairly,
  • Prices do not rise uncontrollably,
  • and land does not become purely speculative.

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