Failure to respect the tenant’s right of first refusal

Article 4a of Law 203/82, introduced by Art. 5 of Legislative Decree 228/2001, introduces and regulates the institution of tenant preemption on new leases that the grantor intends to enter into with third parties for the same fund upon the expiration of the current one.

Jurisprudential pronouncements regarding the application of this rule are, to the best of our knowledge, rather scarce, among others we can mention the Judgment n. 1309 of 14/11/2002 of the Specialized Agricultural Section of the Court of Rimini.

In it, it states that “failure to comply with the rules set forth in Article 4 bis of Law 203/82 on the subject of the tenant’s right of first refusal on new leases determines the ineffectiveness of the new contracts and the takeover in the new relationship of the preferred tenant under the same conditions” and, incidentally (reiterating a previous and, to all appearances, peaceful and constant direction of the jurisprudence of legitimacy), that ” awaiver of a right expressed when the same has not yet arisen in the renouncer is invalid(see in this regard, Cass. 10272/95),
even if the waiver is contained in an agreement in derogation, concluded with the assistance of agricultural professional organizations under Article 45 of Law 203/82.”

It is believed that the decision under consideration makes good governance of the new provisions, in keeping with the intention of the legislature, which is to ensure that the tenant settled on the land has more opportunities to continue on the same land the exercise of agricultural enterprise.

In a nutshell, the rule stipulates that the grantor who, upon expiration of the lease, intends to lease the land again, to a different tenant, must notify the tenant of the proposals received, by registered letter with return receipt, at least 90 days before the expiration.

Within the next forty-five days, the tenant who wishes to exercise the right of first refusal must offer equal terms to the grantor in the same manner.

It should be noted that the “denuntiatio“, however, is not due, other than in the case of default by the tenant or withdrawal from the same pursuant to Article 5 of Law 203/82, even if the latter has informed the grantor that he does not intend to continue the tenancy.

On these premises, it has become an established practice in agricultural contracting to include clauses in the text-types of derogatory leases that require the tenant’s prior declaration of renunciation of the continuation of the lease after the agreed contractual term.

In view of the above, it seems appropriate to ask whether, in the light of the text of Article 4 bis of Law 203/82, such an agreement can always and in any case be considered legitimate and valid, or, on the contrary, does it not mask and imply the tenant’s substantial and implicit renunciation of pre-emption on new leases or, in any case, an intent to circumvent the rules that govern it.

Invested in the issue, Sect. Specialized Agrarian Court of Piacenza (judgment no. 1 of 18/10/2004, rel. est. Picciau), after ascertaining the legal context in which the clause in question was inserted, namely that, in the specific case, the clause itself that was contained in agreements of a transactional nature, aimed at extending the date of release of the fund, held “that,in the context of such settlement agreements, the plaintiff could well have waived the pre-emption provided for in Article 4 bis of Law 203/1982, given that a question of nullity for violation of a mandatory rule can arise at the time of the stipulation of the contract and not at the time of transactions related to the termination of the relationship”.

To this assertion the court adds, for mere completeness, that “these are in any case agreements made pursuant to Article 45 of Law 203/1982, with all the consequent guarantees, and therefore ‘valid between the parties, even in derogation of the rules in force on agricultural matters and even if not in the nature of a settlement’ (see, literally, the aforementioned Article 45).”

One aspect of considerable relevance to the dispute remains in doubt, on which the pronouncement seems unsupportable.

It is necessary, in fact, to point out in order to validly settle, even under Article 2113 of the Civil Code, it is necessary, always, to have the availability of the rights that constitute the object of the transaction.

But, in the case examined by the Piacenza court, it does not appear (and is, indeed, disputed) that at the time the settlement agreement was entered into, the right of first refusal under Art. 4 bis Law 203/82 was already in the availability of the party that has, in the argument, renounced it.

In the absence of this prerequisite, in fact, such an agreement should be considered radically null and void even if it is included in an agreement signed with the assistance of professional agricultural organizations under Article 45 of Law 203/82.

In fact, agreements in derogation clearly cannot be granted healing powers of any and all defects in the understandings between the parties, but only validating effects of derogations from the provisions of Law 203/82.

On these premises, the inclusion, by way of exception, in leases of clauses of prior waiver of reconduction or, more generically, of continuation to the lease would seem unsuitable to produce the effects referred to in paragraph 2 of Art. 4 bis Law 203/82 as well as, sic et simpliciter, the automatic waiver of tenant preemption on new leases.

Such a clause would, in fact, appear to be solely aimed at circumventing the legal rules on preemption on new leases and therefore, in that respect, illegitimate.

The tenant’s declaration of intent not to continue the tenancy, referred to in paragraph 2 of Art. 4 bis Law 203/82, in order to obtain the liberating effects, for the grantor, provided for therein, according to the interpretation proposed here, should indeed have to be inserted in the only functional moment and not also in the genetic moment of the agrarian lease relationship.

The correctness of such an interpretation would seem to be confirmed by the textual fact of the provision under consideration, where it speaks of “communication” of the tenant, a term that is more appropriate to a communication subsequent to the beginning of the relationship, rather than to a clause inserted in the text of the relevant, original contract.

Conform to the interpretation ruling issued by the Court of Rimini, Sect. Sp. Agricultural, 14.11.2002, no. 1309 and to the ruling of the Cass. 10272/95: the Sent. of Cass. June 13, 1992 no. 7250 according to which ” it must be further confirmed, in fact, that the right of pre-emption provided for in Article 8 of Law 590/65, which exists potentially in the head of the direct cultivator tenant farmer and the other subjects indicated by the law from the moment of the stipulation of the agrarian contract, being part of their subjective position within the agrarian relationship, becomes actual and concrete at the moment when the granting owner communicates to them in any way, even verbally, his intention to alienate the fund for consideration.” it follows which since it is not valid to waive a right that has not yet arisen and therefore is not yet known to the holder in its full extent, that the direct cultivator and other persons specified by law cannot validly waive the preemption to which they are entitled under Laws May 26, 1965 no. 590 and August 14, 1971 no. 817 before the “denuntiatio” by the selling owner, which marks the very birth of his right, since a conscious and responsible renunciation can occur only in the event that the owner of the right is placed in a position to evaluate all the positive and negative aspects of his choice and, therefore, has had timely and ritual knowledge of the sale decided by the owner, in particular the name of the buyer and the transfer price (see also: Cass. January 29, 1991 no. 872; Cass. January 30, 1990 no. 633; Cass. August 10, 1988 no. 4920).

Lastly, we still point out that the Cass. Sect. III, sent. n. 4590 dated 03-09-1985 states that” the right to agricultural preemption under Law 590/65and Law 871/71arises only with the “denuntiatio” of the alienating owner and cannot be waived before it has arisen. This principle admits of no exceptions, neither in relation to the quality of the person making the waiver, nor in relation to the quality of the person to whom the waiver is addressed or who has otherwise solicited it from the rightful claimant“, and that the Cass. Sect. III, sent. No. 3672 dated 21-02-2006 states that “in the matter of agrarian contracts, the waiver of preemption cannot be exercised except after and in dependence of the communication of the owner’s will to alienate the land, so-called“denuntiatio,” without, in the absence of such communication, acquiring relevance the knowledge of the preliminary contract that the person entitled may possibly acquire from another source. In fact, for the configuration of a valid waiver of the right of first refusal, it is necessary for the grower to have had ritual knowledge of the sale decided by the owner, in order to be placed in a position to evaluate all the positive and negative aspects of his choice, in hypothesis, make a conscious waiver.”