Abstract
When granting credits, commercial banks can take a gricultural land as guarantee. Because the three components of agricultural farm a re land, work and capital, we consider that evaluation of agricultural land is of extreme importance when accepting it as a guarantee for the solicited credits for agricultural use. Agr icultural customers prefer to offer land as guarantee for mortgage instead of personal houses o r apartments for real estate mortgage. In Romania after 1990, commercial banks have been reticent in accepting agricultural land as guarantee upon granting credits for agriculture, du e to difficulties that have appeared in the process of applying legislation in this domain. Thi s attitude of the banks has also been motivated by the following reasons (Harangus, 2004): - lack of a functional land market; - non-existence, up to 1998, of a complete and cohere nt legal framework concerning selling and owning agricultural land; - late procurement of title deeds by agricultural lan d owners; - difficulty in establishing the value of agricultura l land that could be taken into consideration as credit guarantee; - difficulty of the bank to establish the value of th e land of a debtor because of the pre-emption right upon alienation of any of the agr icultural lands . In 1998, Law nr. 54/1998 regarding juridi cal circulation of land established a juridical framework for the land market. The difficulty in ev aluating the land of agricultural lands consisted also in the evolution of the number of ho useholds and their small surfaces. Evaluation of agricultural land is an extremely dif ficult task as the evaluator has to take into account and to analyse information regarding indica tors specific for a particular cultural area (Mertz, Wadley & Christensen, 2005). Such information can be obtained from the centres for agricultural consultancy and from agricultural spec ialists. Because of the complexity of methodologies for evaluation of agricultural land, namely the six new standard methods of evaluation of agricultural lands, the banks have di fficulties in establishing the value of the collaterals that can be considered as guarantees fo r credits granted to agricultural customers. REFERENCES
Published Version
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