Government Urges Normalization of Farmland Leases: "Inherited Farmland Over 1 Hectare Must Be Entrusted to Farmland Bank"

Ministry of Agriculture, Food and Rural Affairs to Operate Special Rectification Period for Farmland Lease Contracts Until July 31
Tenant Rights Protected Only When Lease Contracts Are in Writing
Inherited Farmland Over 1 Hectare Cannot Be Owned Unless Entrusted to Farmland Bank

In order to eradicate farmland speculation, the government, which has begun a comprehensive investigation of farmland, has decided to operate a rectification period for normalizing farmland lease contracts until the end of July this year. During this period, the government will encourage written lease agreements to protect tenant farmers and will also provide a kind of grace period to promote the entrustment of inherited farmland to the Farmland Bank.

The Ministry of Agriculture, Food and Rural Affairs announced on May 13 that it will operate a special rectification period for normalizing farmland leases from May 18 to July 31.

An official from the Ministry of Agriculture, Food and Rural Affairs explained, "The special rectification period is intended to encourage landlords and tenants who have traditionally entered into verbal lease contracts to formalize their agreements in writing and to report them to the local town or township office where the farmland is located, or to entrust the lease to the Korea Rural Community Corporation's Farmland Bank. While farmland leasing is generally prohibited, exceptions apply, allowing for private lease contracts or entrustment to the Farmland Bank in certain cases."

◆Lease contracts must be in writing= As a rule, private farmland lease contracts must be made in writing. After entering into a written lease agreement, if the tenant obtains confirmation from the head of the town or township office with jurisdiction over the farmland, the tenant gains the legal right to assert the lease agreement against third parties, such as transferees or buyers, meaning the tenant can continue farming even if ownership of the land changes. In addition, the minimum lease period of at least three years (or at least five years for perennial crop cultivation land) is more clearly guaranteed. If the landowner or tenant does not apply for a change in the farmland register within 60 days after signing the contract, a fine of up to 3 million won may be imposed.

In particular, inherited farmland exceeding 1 hectare cannot be owned unless it is entrusted to the Farmland Bank. Some urban residents who have inherited farmland have failed to prepare written lease contracts or to apply for changes in the farmland register, even when leasing to relatives or rural residents.

◆Farmland eligible for leasing must be contracted and reported= Farmland acquired before January 1, 1996, inherited or retired farmland (up to 1 hectare), and farmland cultivated for over five years by persons aged 60 or older are eligible for private lease agreements. Landlords or tenants wishing to enter into a farmland lease contract should visit the city, district, town, or township office with jurisdiction over the farmland, bringing their identification and a copy of the lease contract, and submit the application for confirmation of the lease contract and the application to change farmland register information.

Farmland owned for more than three years by an individual, inherited farmland, and farmland acquired before January 1, 1996, can be entrusted for lease to the Farmland Bank. In this case, the landlord and tenant may sign a lease entrustment via electronic contract through the Farmland Bank, or visit the regional office of the Korea Rural Community Corporation with identification and a copy of their resident registration. For in-person contracts, the person entrusting the land must bring a certified copy of the land registry and a comprehensive real estate certificate, while the tenant must bring a farmer verification certificate.

When using the Farmland Bank, it is possible to sign the lease entrustment contract, register the land in the farmland register, and update the farming entity registration online via PC or mobile phone, without visiting in person. For inherited farmland, entrustment to the Farmland Bank is mandatory for parcels of 1 hectare or more. If the land is entrusted to the Farmland Bank for eight years or more, the additional capital gains tax is exempted, and if a farmer entrusts the land, the entrustment fee (5% of the annual rent) does not apply.

The Ministry of Agriculture, Food and Rural Affairs will also operate a reporting center during and after the special rectification period. This allows tenant farmers to report cases where landlords unilaterally terminate lease relationships in order to evade the comprehensive farmland investigation. Reports can be submitted through both the online reporting center within the Farmland Space Portal and the offline reporting center. Farmland reported in this way will be subject to in-depth investigation as part of the comprehensive farmland survey starting in August, and tenant farmers whose leases are terminated will be given the highest priority in being supplied with farmland entrusted to the Farmland Bank.

Kim Kihwan, Director of the Farmland Division at the Ministry of Agriculture, Food and Rural Affairs, stated, "We hope the special rectification period will serve as an opportunity to bring informal verbal lease contracts into the official system. This will more clearly guarantee the legal rights of tenant farmers, and provide landlords with an opportunity to prove legal lease arrangements before the comprehensive farmland investigation."