Real Estate
Last update: April, 2010
In this regard, Law no. 312/2005 regarding the right of foreign citizens, of stateless persons, as well as of legal entities to acquire ownership over the land, which entered into force upon Romania’s E.U. accession, sets the general rules under which foreign nationals/legal entities may acquire ownership rights over land. The provisions thereof differentiate among different classes of foreign nationals as follows: 1) Romanian residents who are citizens of a member state of the E.U. may acquire land ownership rights in the same manner and under the same conditions as Romanian citizens (i.e. 2007) except for agricultural land and forest (for which other conditions should be met); 2) Romanian non-residents who are citizens of a member state of the E.U. may acquire land ownership rights as of 5 years of Romania’s accession to the E.U. (i.e.2012); and 3) all other foreign citizens may acquire land ownership rights under any reciprocal agreements contained in international treaties concluded by Romania and the foreign citizen’s State.
In respect of constructions, the relevant law does not provide any special conditions for the acquisition of ownership rights thereon. Foreign citizens may freely acquire ownership rights over building structures, whereas for the appurtenant land a superficies right can be established (the right to use the land) as long as the construction exists.
Restitution of Real Property
From 1991 to 2005, several laws were adopted allowing former owners of
real estate whose properties were abusively seized by the State during
the period of 1945 to 1989 to reclaim their properties or to obtain fair
compensation if actual restitution was not possible.
At the end of 2005, the legislative reform in real property and justice
instituted a new method for compensating former owners: the
“Proprietatea” Fund. The fund, whose share capital corresponds to the
value of compensation owed to former owners, and whose initial sole
shareholder was the Romanian State, provides former owners a mean of
fair compensation.
Former owners are given shares in the Fund, which they may trade on the
capital markets.
In the past, the restitution proceedings implied some interdictions and
restrictions in which concerns the transfer of the properties object of
the procedures and other related operations. In light of the severe
sanctions which could affect even the final ownership title, in the
context of a real estate transaction the observance of such restrictions
in the past should be checked.
Acquiring Real Estate
Real estate transactions represent complex legal operations which should
take into consideration various legal, tax and commercial aspects. In
order to acquire real estate, it is necessary to determine the legal
status of such asset by analyzing the following documents: current title
to the property (sale/purchase agreement, donation, inheritance
certificate, title deed, etc.); previous titles within the ownership
history of the real estate, from where it may be reconstructed (before
confiscation by the communist regime), including restitution under
judicial or administrative procedures; recent excerpt from the Land
Registry, required for the verification of the entries in the Land
Registry ( recording of owners, potential encumbrances on the property
and any other remarks regarding the property) and cadastral file,
required for the verification of the precise area and borders of the
property, since, in practice, it happens quite often that actual
measurements have not matched to the measurements indicated in the title
deed.
A real estate transaction is generally materialized in the conclusion of
a sale/purchase agreement.
Our legislation provides for an authenticated form of the sale/purchase
agreement in respect of land – any contract regarding the transfer of
the ownership right over the land which is not concluded in an
authenticated form is null and void.
In respect of buildings, the law does not provide for the obligation of
an authenticated act; however, the transfer of the buildings may trigger
the establishment of a superficies right over the appurtenant land.
Nevertheless, in case the appurtenant land is also transferred, then the
sale/purchase agreement must also be concluded in an authenticated
form. Upon conclusion, such sale/purchase agreements must be registered
with the Land Registry.
Litigation
The existence of a litigation over the real estate does not prohibit the
transfer or the constitution of any real or receivable right over the
respective real estate, except for the situation where the object of the
litigation is represented by the reconstitution of the private
ownership right or the validity of the ownership title according to the
land laws.
Lease/Free Use/Concession of Land/Real rights
Under current law, foreign investors may enjoy the benefits of using and
developing land under different legal mechanisms including leases,
free-use agreements or concessions.
Privately owned real estates may be leased under a lease agreement
concluded by the owner of the property in question for a determinable
period of time, which may be extended upon the parties’ consent. If the
lease term exceeds three years, the agreement should be registered in
the Land Registry so as to allow for notice and enforcement against
third parties. Should the lease term be lower than 3 years, a certified
execution date ensures notice and enforcement against third parties.
State owned real estates may be leased if approval is obtained in the
form of a Governmental Decision, while where such immovables are owned
by local authorities a Decision of the Local Council or a Decision of
the County Council is required. Any such lease agreement must contain
language providing for the terms of exploitation in consideration of the
real estate’s characteristics.
Free use rights over state owned real estate may be granted to
non-profit entities that perform charitable activities.
With respect to concessions of privately/publicly owned real estates the
applicable legal regime contains strict regulations. As a general rule,
concession rights may be granted in favor of investors, Romanian or
foreign individuals and legal entities, following a certain procedure
established by law upon fulfillment of certain conditions prescribed for
by law. The concession agreement may be concluded for a maximum term of
49 years, which may be extended for a period equal to ½ of the initial
term. The concession contract must be registered in the Land Registry.
Real rights (e.g. the right to use, the easement right, the superficies
right, etc.) may be established through deeds concluded in an
authenticated form and for certain real rights an urbanism certificate
must be obtained.
Securities over the Real Estate
Mortgages over real estate may be established upon the conclusion of an
authenticated agreement which should be registered with the Land
Registry. The enforcement of the mortgages is regulated by specific
provisions.
Publication Formalities
According to the law, for publicity and opposability towards third
parties, any act or fact related to a real property (e.g. transfer,
security or promissory agreement, etc.) should be registered with the
Land Registry. The Land Registry is kept within the real estate offices
in the district where the real property is located. All real estate
transactions are based on verifications of the Land Registry in order to
determine the current legal status of the property, its rightful
owners, as well as any existing encumbrances on the property. However,
Land Registry recordings do not always guarantee the legal security of a
transaction and additional verifications are strongly recommended.
Construction Permits and Urbanism Plans
Civil, industrial or any other type of construction works may be
performed on the basis of a construction permit, which may be obtained
by the titleholder or any other person holding a right to build on the
land. Moreover, starting with February 2009, the construction permit may
be obtained only by the titleholder of a real right over the land
identified with a cadastral number.
Construction permits are valid for 12 months from issuance date, and the
investor must begin the construction works within this period of time. A
one time extension of maximum 12 months may be granted subject to
payment of 30% of the initial issuance tax. During construction, the
investor must observe the technical parameters and characteristics as
per the construction permit; any modification thereof requires a new
construction permit.
Urbanism documentation (i.e. urbanism plans and corresponding
regulations) provides the conditions under which the land may be used
for construction; all regulations regarding construction performance are
contained therein.