Legal restrictions

1. Acquisition of immovable property by foreign persons/companies.

According to the Restrictions on Acquisition of Immovables Act there are two kind of restrictions for foreign citizens and legal persons:

  • On the acquisition of immovables used as profit yielding land (which contain agricultural or/and forest land).
  • On the acquisition of immovables arising from national security reasons.

Acquisition of a legal share of an immovable, acquisition of a right of superficies, encumbrance of an immovable with a usufruct for longer than ten years or for an unspecified term and encumbrance of an immovable with a right of superficies are deemed equal to the acquisition of an immovable if the immovable as a whole meets the requirements provided in the Restrictions on Acquisition of Immovables Act.

These restrictions are not absolute, there are some exceptions and in some cases the acquisition of the immovable is allowed with the authorisation of the county governor (restrictions concerning the specific purpose of the immovable property) or the Government of the Republic of Estonia (restrictions concerning national defence reasons).

Restrictions Concerning The Specific Purpose Of The Immovable Property

See question 2.

Restrictions Arising From National Defence Reasons

Any natural person who is not a citizen of a contracting party to the EEA Agreement or any legal person whose seat is not in a contracting party to the EEA Agreement is prohibited from acquiring immovables in the following areas or, in the event of changes in the size or name of such areas, within their boundaries as at 31 December 1999:

  • The sea islands, except Saaremaa, Hiiumaa, Muhu and Vormsi.
  • In the county of Ida-Virumaa: the cities of Narva, Narva-Jõesuu and Sillamäe and the rural municipalities of Alajõe, Iisaku, Illuka, Toila and Vaivara.
  • In the county of Tartumaa: the rural municipalities of Meeksi and Piirissaare.
  • In the county of Põlvamaa: the rural municipalities of Mikitamäe, Orava, Räpina and Värska.
  • In the county of Võrumaa: the rural municipalities of Meremäe, Misso and Vastseliina.

For reasons of national importance, the Government of the Republic of Estonia may grant authorisation, by an order, for the acquisition of an immovable in the areas mentioned above.

2. Acquisition of agricultural land: restrictions and limitations.

A citizen of Estonia or another country which is a contracting party to the EEA Agreement or a member state of the Organisation for Economic Cooperation and Development (hereinafter Contracting State) has the right to acquire an immovable which contains agricultural or forest land without restrictions.

A legal person the seat of which is in a Contracting State has the right to acquire an immovable which contains less than ten hectares of agricultural land, forest land or agricultural and forest land in total without restrictions.

A legal person of a Contracting State has the right to acquire an immovable which contains ten hectares or more of agricultural land if the legal person has been engaged, for three years immediately preceding the year of making the transaction of acquisition of the immovable, in production of agricultural products listed in Annex I to the Treaty on the Functioning of the European Union, except fishery products and cotton.

A legal person of a Contracting State has the right to acquire an immovable which contains ten hectares or more of forest land if the legal person has been engaged, for three years immediately preceding the year of making the transaction of acquisition of the immovable, in forest management within the meaning of the Forest Act or production of agricultural products.

A legal person of a Contracting State has the right to acquire an immovable which contains ten hectares or more of agricultural and forest land in total if the legal person has been engaged, for three years immediately preceding the year of making the transaction of acquisition of the immovable, in production of agricultural products or forest management.

If a legal person of a Contracting State does not meet the requirements mentioned above, the legal person may acquire an immovable which contains ten hectares or more of agricultural land, forest land or agricultural and forest land in total only with the authorisation of the county governor of the location of the immovable to be acquired.

A citizen of a third country (not a citizen of a Contracting State) has the right to acquire an immovable which contains agricultural or forest land only with the authorisation of the county governor if the citizen has resided in Estonia permanently for a period of at least six months immediately before applying for the authorisation or if the citizen has been engaged in Estonia, for one year immediately preceding the year of applying for the authorisation, as a sole proprietor in:

  • Production of agricultural products if the immovable to be acquired contains agricultural land, or
  • Forest management or production of agricultural products if the immovable to be acquired contains forest land or both agricultural and forest land.

A legal person of a third country has the right to acquire an immovable which contains agricultural land only with the authorisation of the county governor if the legal person has been engaged in Estonia, for one year immediately preceding the year of applying for the authorisation, in production of agricultural products and if a branch of the legal person is entered in the Estonian commercial register.

A legal person of a third country has the right to acquire an immovable which contains forest land only with the authorisation of the county governor if the legal person has been engaged in Estonia, for one year immediately preceding the year of applying for the authorisation, in forest management or production of agricultural products and if a branch of the legal person is entered in the Estonian commercial register.

A legal person of a third country has the right to acquire an immovable which contains both agricultural and forest land only with the authorisation of the county governor if the legal person has been engaged in Estonia, for one year immediately preceding the year of applying for the authorisation, in production of agricultural products or forest management and if a branch of the legal person is entered in the Estonian commercial register.

3. Acquisition of flat property: legal restrictions.

There are no such legal restrictions in Estonia. But acquirer of the flat property (apartment ownership) must take into consideration that upon the transfer of an apartment ownership in the case there exists an apartment association (korteriühistu), the rights and obligations of an apartment association member which belong to the transferor of the apartment ownership transfer to the acquirer of the apartment ownership at the time of transfer of the apartment ownership.

It means that the buyer is responsible for the debts of the seller to the apartment association.

4. Acquisition of immovable property in special areas (such as on the coast or near military-related sites or in national parks, in the mountains, etc.)

See question 1 (restrictions arising from national defence reasons ) and question 2 (pre-emption rights).

5. Acquisition of immovable property and listed monuments and memorials.

There are no special permits required for the acquisition of monuments or listed buildings.

If the monument or building is protected by the Heritage Conservation Act, owner (buyer) of the land must consider with obligations stated in the above mentioned legal act and with tasks arising from the statutes of heritage conservation area if there is one. Notary who certifies the deed explains all these obligations to the buyer.

The buyer must also take info account that the state and thereafter the local government have the right of pre-emption upon transfer of an immovable on which an immovable monument (statue, building) is located.

The state and the local government do not have the right of pre-emption if the thing is transferred to a spouse, descendant or parent or to a brother or sister or a descendant thereof and also if an apartment ownership, right of superficies or right of superficies in apartments is transferred.

To find information, one can use Estonian Land Board´s geoportal services http://xgis.maaamet.ee/xGIS/XGis for free.

6. Planning Code and legal restrictions (pre-emption right; approval by the municipality or other authorities; splitting a land parcel).

Pre-emption right can be created on the basis of law or by the transaction.

The legal acts on the basis of which the pre-emption right can be created are:

  • Heritage Conservation Act – the state and thereafter the local government have the right of pre-emption upon transfer of an immovable on which an immovable monument is located (see question 4.5).
  • Nature Conservation Act – the state has the right of pre-emption upon transfer of an immovable located, in whole or in part, within the boundaries of a shore building exclusion zone, protection site of a species in the protected category I, limited management zone of a protected natural monument, protected area or limited-conservation area. The Minister of the Environment or a person authorised by the Minister exercises the right of pre-emption in the name of the state.
  • Permanently Inhabited Small Islands Act – the local government has the right of pre-emption upon transfer of an immovable in the islands of Abruka, Kihnu, Kessulaid, Kõinastu, Manija, Osmussaar, Piirissaar, Prangli, Ruhnu, Vilsandi and Vormsi.
  • Law of Property Act – upon the sale of a legal share in an immovable to a person who is neither a co-owner nor privileged pursuant to law, the other co-owners have the right of pre-emption to the legal share being sold.
  • Principles of Ownership Reform Act – tenants have a joint right of pre-emption in the transfer of a returned residential building and of a corresponding registered immovable or a part thereof. Upon transfer of a physical share which is not subject to commercial restrictions, a tenant of the physical share has the right of pre-emption.

The state, local government, co-owners and tenants do not have the right of pre-emption if the immovable is transferred to a spouse or close relatives.

An immovable may also be encumbered with a right of pre-emption on the basis of contract. It means that the right of pre-emption is established for the benefit of a particular person or the actual owner of another immovable.

A legal share of an immovable may be encumbered with a right of pre-emption only if it is the share of a co-owner. A real right contract required for the establishment of right of pre-emption must be notarised and the right must be entered into land register.

Notations concerning the right of pre-emption must be entered in the land register. The absence of the notation does not always mean that there is no right of pre-emption in cases the right of pre-emption is created on the basis of law.

But if the notation is entered into the land register, the buyer is not protected against losing the ownership of the immovable in case the entitled person practices his/her right of pre-emption even if the buyer is already entered into the land register as an owner.

For division of immovables the owner needs to submit a registration application to the land register. However, there are certain proceedings which must be done before that (the number and nature of proceedings depend on concrete circumstances):

  • Planning activities – the preparation of detailed plans is mandatory for areas located in cities and towns and for existing or planned, clearly delimited built-up of small towns and villages. Detailed plans are adopted by local governments.
  • Land readjustment activities – cadastral surveys, changes in the cadastre (local offices of Estonian Land Board).
  • Entries in the land register – land register information system and land cadastre information system change data electronically and entries concerning the composition of the registered immovable are made automatically into Land Register. After the data exchange there will be a registered immovable which is composed of several cadastral units.

7. Land given by the municipality to domestic inhabitants: legal restrictions?.

Does your national law have a so-called local residents model, i.e. the allocation of land by the municipality under the condition that the buyer is obliged to keep the land and not to move away for a specific number of years?
If yes, are there any legal restrictions for the purchaser?

No, there is no local residents model in Estonia.

8. Acquisition of immovable property and tax affairs.

The registration in the land register is only made after payment of a state fee unless otherwise provided by law. Registrars do not have to check payment of other fees, e.g income tax, VAT. All tax related questions are in competence of Estonian Tax and Customs Board.

9. Destination of the land parcel and legal restrictions.

Information about the description of the land parcel (the specific purpose of the immovable) is entered into land register but by looking at it one can only assume that there may be some legal restrictions.

The land tax regulated in the Land Tax Act is also based on the specific purpose of the land parcel, but there are also many other factors affecting the actual amount of the tax.

One can find additional information about restrictions from the geoportal http://xgis.maaamet.ee/xGIS/XGis for free maintained by Estonian Land Board (e.g electric lines, gas pipes, roads) and from notary certifying the deed.

10. Any other legal, very specific restrictions.

There are no other, very specific legal restrictions.