by Vlad Cuc
There are more and more foreigners interested in purchasing real estate properties in Romania. The question is whether at this time they are able to buy land (or at least other real estate properties such as apartments) directly as in other EU legislations.
Law No. 312/2005 stipulates the conditions in which European Union citizens (as well as non-EU foreign citizens), are able to purchase Romanian land.
This is article 4 of the above-mentioned Law translates: “The citizen of a member state without legal residency in Romania, the stateless non-resident having residency in an European Union country and the non-resident foreign legal entity (company) incorporated per the stipulations of the EU legislations, are able to gain ownership on land for secondary residences, respectively secondary headquarters, in a term of 5 years after Romania has joined the European Union”.
The Law differentiates depending on the type of land. For example the persons or legal entities mentioned above can only gain ownership of Romanian forests, agricultural land after 7 years from the date Romania has joined the EU. (This last stipulation is not applied to foreign farmers who are able to prove their statute as farmers in their home countries).
Buying an apartment in Romania automatically implies buying the adjacent part (a percentage) of the land on which the building stands upon. As a result even if theoretically foreign European Union citizens would be able to acquire apartments directly, practically it is not yet possible without a Romanian company or without having at least legal residency in the country (this is a more recent interpretation of the Law).
The non-EU-foreign-citizen is able to own real estate properties in Romania in conditions of reciprocity based only on international treaties between the countries; however they cannot acquire ownership of Romanian land in more favorable conditions then citizens of the European Union.
E&C Law Firm is specialized in real estate law, due diligence procedures as well assistance with all the necessary procedures related to the transfer of a Romanian real estate property. As we have been on the market for over 10 years, our law firm possesses important experience in this field. We have represented foreign clients for hundreds of property transactions in the country and we therefore believe it’s important to outline a few basic tips that anyone purchasing Romanian real estate should take into account.
1) All real estate property transfers are done through a Romanian Public Notary
We have had quite a few clients who were actually not aware that all property transactions must be performed through a local Public Notary’s office. (Some of these clients were unfortunately even under the impression that they own certain properties in Romania to which they had gained ownership through non-authenticated contracts!). All real estate buy/purchase transactions that are not notarized are not valid.
An important NOTE: Public Notaries have the task of authenticating documents. They do not and do not have the responsibility to protect neither buyer nor seller from certain clauses, practices or issues related to the property.
2) Check the ownership of the property before going forward with the transaction.
It is very important to perform a background check on the ownership of any Romanian property before committing to the purchase. This verification is also recommended before signing even a formal pre-contract (this type of contract between the parties does not have to be notarized to be valid) and signing usually implies payment of an advance-fee.
Ownership verifications will have to check whether the signatory of any agreement is in fact the true/sole owner of the property in question, check for any mortgages on the property etc. This type of verification can be performed by requesting a Land Registry Extract for the property in question, a step for which our attorneys can represent you. Please note however that in order to solicit this Extract we will have to have a copy of the title (sale/purchase agreement or similar) or at least a Land Registry Number. If these details are missing one can also obtain an Extract by performing certain investigations with the local city hall. In this case however we will have to know the exact location of the property and the investigation may take a few weeks.
3) Perform a verification to check whether the property is not involved in any litigation.
On-going litigations on certain properties might give a potential buyer big headaches. Purchasing a property with a status which depends on a judge’s decision implies big risks which you should be at least aware of. This verification is somewhat difficult since the search should be contacted with different institutions and is therefore advisable to hire a lawyer for this step.
4) Reviewing past transactions of the real estate property in question
A very diligent approach should also include checking the property’s last transactions to gain an idea on certain risks (for instance if there are any unclear issues on the legality on past sale/purchase agreements the new owner can risk being sued in the future). It is also very important to note that all private real estate property in Romania was formerly owned by the State and the return of these properties to private owners have generated a series of nationwide lawsuits which are still going on.
5) Check to see whether the physical location of the property coincides with official details
This verification is predominantly important when purchasing Romanian agricultural land as many times plots of the land do really have the surface which the buyers (or even the Land Registry) claim. This is not necessarily because these parties are ill-intentioned but simply because the physical reality differs from often outdated records. This type of verification should be done by an experienced real estate valuator (our law firm can provide some recommendations).
6) Verify for any oil or gas pipes, cables etc. that might be located on your property
These types of works can hinder you from fully using your property. For instance one cannot build on certain pipes or cables.
7) Verify whether your agricultural land is truly compact
There is a rush of foreign investors purchasing Romanian agricultural land in Romania, however these types of transactions are not without risk. One of the most frequent is the fact that seldom large plots of land are compact. Mostly the larger plots are in reality made out of smaller properties with separate owners.
The above are just a few examples of what should be verified purchasing real estate in Romania. If you require in-depth information please contact us to be able to provide a personalized list.