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Purchase a Romanian Property

Purchase a Romanian Property

by Vlad Cuc

Can foreign EU citizens purchase a property in Romania? 

Yes, EU citizens are entitled to purchase properties in Romania, a right which is also available for Romanians purchasing properties in the EU. In fact, the interest of EU citizens for real estate properties has increased in the last years. Real estate properties in Romania can be easily purchased by EU citizens, when we refer to apartments, office space, etc. 

Foreigners can also buy land in Romania, but only in certain circumstances. The law has been modified few years ago, by introducing more complex rules for non-EU citizens, who can only acquire properties in specific circumstances.

Our team of lawyers in Romania can present the main rights EU/non-EU citizens have concerning the acquisition of properties in this country.

 Quick Facts  
Types of properties foreigners can purchase 

– residential properties,

– commercial properties,

– industrial properties,

– the purchase of land has been limited for foreigners (for agricultural land)  

Mandatory legal representation (yes/no)

No, but it is highly recommended for various legal steps, especially for those who are not familiarized with the Romanian language and laws.

Main legal responsibilities of property lawyers in Romania

Legal assistance for:

– preparing the sale contract,

– verifying the provisions of the contact,

– performing the due diligence procedures,

– completing the transfer of ownership,

– representing clients in litigation cases,

– verifying any other documents required during the sale and after the sale of the property 

Due diligence (yes/no) 

Yes

Documents necessary for the property purchase 

– the identity documents of the parties involved in the sale,

– the documents of the property,

– the fiscal certificate,

– the cadastral papers,

– the land registry extract,

– the energy performance certificate

Main property taxes 

– the building tax,

– the land tax,

– the property tax (payments in advance can lead to a reduction of 10% on the overall taxation)

Parties involved in the sale/purchase of a property 

– Mandatory: the seller, the buyer, the notary (the sale transaction is always completed through a notary public)

– Optional: the lawyer and the real estate agency, if the puchase was facilitated by a realtor 

Fees charged by notaries/lawyers (if applicable)

Yes, both the notary and the lawyers charge fees. The notary can charge 0.5% to 2% of the value of the transaction.

Law regulating property and property sales in Romania 

 – the Civil Code,

– the Romanian Constitution,

– the Law no. 312 of 2005 on the Acquisition of Ownership over Real Estate by Foreign Citizens, Stateless Persons and Foreign Legal Entities, etc. 

Conditions to purchase for EU nationals 

The same rules applied for local citizens 

Conditions to purchase for non-EU nationals 

Non-EU citizens can purchase real estate properties, but they can’t own land in Romania (exceptions from this apply, but they are very limited). Reciprocity principle applies as per the provisions of international treaties. 

Documents necessary for the purchase of commercial/industrial property 

– the documents of the legal entity are necessary (the fiscal certificate, the registration certificate, the power of attorney for companies that appointed a local representative, etc.),

– the documents of the property that is for sale

Institutions involved in the registration of new ownership 

The Office for Cadastre and the Romanian Trade Registry 

The mandatory provisions of a property sale contract 

– the seller,

– the buyer,

– the selling price,

– the type of property,

– the rooms it has and their respective surface,

– the obligations of the parties involved etc. 

Types of property contracts to sign in Romania 

Pre-contract and the sale contract 

 Deposit requirements on the sale of a property   Usually 10% from the sale price of the property (and minimum 15% for properties bought through mortgage)

 Penalty clauses 

 Penalty clauses are established for both the seller and the buyer, provided that either party does not respect the terms of the agreement. 

 Property inheritance rights 

 In Romania, both Romanian citizens and foreigners related to Romanian property owners can inherit various assets.

The property rights are established based on the family tie of the heir and total number of surviving heirs.

Other parties, not related to the testor, can become heirs, as per the stipulations of the will.   

 Due diligence procedures  

Due diligence involves a complete background check of the property from a legal and financial viewpoint.

The purpose is to discover if the property is sold with any legal issues or debts.

A physical inspection of the property is also included in standard due diligence procedures.  

 Categories of properties stipulated by the Romanian law 

There are 2 main categories – private domain properties and public ones 

 Ancilliary rights granted to the owner of a property 

 Those who want to purchase a property in Romania can benefit from the following:

-the right to use the property;

– the right of habitation in the property;

– administration rights;

– concession and mortgage rights;

– usufruct.  

 Information recorded in the Property Registry 

Once you purchase a property in Romania, the Property Registry will have details on the new ownership and the property, on matters such as the: owner’s name, the location, details about the property, the neighbouring properties, the survey number, the surface of the property, mortagages, etc.  

 Legal assistance in property disputes (yes/no) 

 Yes 

 Statute of limitation for property litigation 

 For issues pertaining to misrepresentations/mistakes on title deeds – 3 years. For the restitution of land/immovable property – no statute of limitations are imposed.  

 Ways to resolve property litigation  Out-of-court (such as negotiation) or court proceedings 
 Legislation on renting properties 

 Provisions of the Romanian Civil Code

 Average property sale price requested by property sellers 

 It depends on the city (in Bucharest, the average price for new properties is EUR 1.489 per square meter and EUR 1.682 for older properties).  

 Access to viewing details on properties listed in the public registries (yes/no)  

 Yes

 Right to buy land in Romania (yes/no) 

 Yes

 Ways in which our lawyers can help foreign clients  

 Our lawyers can help foreigners purchase a Romanian property (prepare the documentation, address a public notary, submit papers with local institutions, etc.).

They can also assist in immigration formalities for those who need visas to relocate here and can also assist with: renting properties, property litigation, property inheritance, etc. 

The legislation in Romania also presents the legal requirements that must be fulfilled by those who are interested in purchasing land. Here, the Law No. 312/2005 provides the main legal framework through which EU citizens can purchase land in this country; the right to purchase land is also available for non-EU citizens. 

The Article 4 of the above-mentioned law specifies: “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 legislation distinguishes based on the categories of land. For example the persons or legal entities mentioned above can only gain ownership of Romanian forests and 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).

If you want to purchase a property here, you can address to our team of Romanian lawyers for in-depth legal advice and legal representation; our team can offer legal services for buying property in Romania, some of them being presented in this article. We invite you to read our article and for any other information you may need on this subject, our law firm in Romania remains at your disposal. We can also help you with the formalities for company formation in Romania.

Foreigners who want to open a company in Romania have many options in this sense. Currently, one can choose from 7 types of business forms, as follows: 1) the sole trader, 2) the branch office, 3) the general partnership or 4) the limited partnership.

For companies with their own legal personality investors have the following options: the limited liability company, the joint stock company and the company limited by shares.

Investors interested in company set up in Romania for a large company can choose the joint stock company or the company limited by shares. These 2 entities have a large capital requirement, of EUR 25,000.

Both of them must be incorporated by at least 2 shareholders. For a limited liability company, only 1 shareholder will suffice (however, the company can’t have more than 50 shareholders).

What are the rules when purchasing an apartment in Romania?

When purchasing an apartment in Romania, the real estate law stipulates that the person who becomes the owner of the property will also own a small percentage of the land on which the building was built on (thus, owning an adjacent part). According to the law, at the moment, the foreigners are also required to have either their residency in Romania or having a Romanian company.  

What about non-EU citizens?

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, persons from outside the EU can’t own properties here following more favorable conditions compared to the EU nationals. 

Below, you can watch a short presentation on how to buy a property in Romania:

Real estate due diligence in Romania

E&C Law Firm is specialized in real estate law, due diligence procedures as well assistance on all the necessary procedures related to the transfer of a Romanian real estate property. Given the fact that we have been present on the Romanian market for more than 10 years, our Romanian law firm has an in-depth experience regarding the real estate sector

We have represented foreign clients for hundreds of transactions on the sales of properties and this is why we consider that it is necessary to present few of the basic aspects one should take into consideration when purchasing a property in this country. 

Purchasing Romanian properties with the assistance of a notary public in Romania 

Over the years, we have had several clients who were interested in purchasing a property who did not know that a real estate property transaction has to be concluded through a notary public in Romania. 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!

Please mind that contracts or documents attesting property transactions and sales which are not notarized will not be considered valid from a legal point of view.  An important aspect to remember: public notaries have the task of authenticating documents. They do not have the responsibility to protect neither buyer nor seller from certain clauses, practices or issues related to the property

Although our Romanian lawyers can offer numerous legal services for buying property in Romania, you must know that the sale/purchase contract must always be concluded in front of a public notary; no other entity is allowed to provide this legal service; however, during the procedure, our team of lawyers in Romania will be present there to represent you and make sure that all the steps are done in accordance with the applicable law.  

Check the ownership of the property in Romania prior to purchasing it

Prior to actually starting the process of purchasing a property in Romania, it is compulsory to verify the data of the property, including on its current ownership. The procedure is not mandatory from a legal point of view, but it is always in the benefit of the person who will purchase the respective property, in order to avoid any financial or legal issues. 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. Here, the buyer can request a Land Registry Extract issued for the respective property; in this procedure, you can easily rely on the services of our Romanian lawyers

In order to be able to complete this step, it is necessary to provide a copy of the sale agreement or another similar document, or the property’s Land Registry Number. Otherwise, our lawyers will not be able to request additional information. Provided that the information on the property is not available, our lawyers can also obtain an Extract from the local city hall. If this will apply, the legal investigation can take up to several weeks and our team of lawyers in Romania will need to know at least the exact location where the property is situated. 

Verifying any hidden property litigation cases

In the case in which the property of interest is involved in any litigation process, this can imply numerous delays and other potential problems for the future owner of the property. Buying a property in Romania in this case will have numerous implications and as a buyer, you should be aware on the situation and on its consequences. 

In this particular case, it is always recommended to request the legal assistance of a Romanian law firm. We advise this as the verification of the property will become very difficult, as numerous institutions will have to be contacted, and they will need to offer specific information and documents on the case. 

Verifying the past transactions of the Romanian property 

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 previous sale or purchase contracts for which the new owner can become liable and be sued at any given time).

It is also very important to note that all private real estate properties in Romania were formerly owned by the State and the return of these properties to private owners have created a legal problem at a national level, and some of these lawsuits are still carried out at the moment. 

Verify the property’s accurate address 

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 can happen not due to malicious intents, but it can be the consequence of the fact that the current address of the property may differ from the address that it was allocated with in records held over decades. 

The verification of the accurate address has to be done with the assistance of a real estate valuator, and here, our law firm in Romanian can provide you with reliable recommendations and we invite you to contact us if you need the service of a Romanian real estate valuator when buying a property in Romania

Verify gas, oil pipes and cables located on the property 

You should run a close check-up on the types of oil pipes or gas pipes that can be located on your property as they can have an negative impact on the way you want to use your property. You must know that certain types of pipes will not allow the owner of the property to build any type of building above them. 

Verify the conditions of the land you purchase in Romania 

Given that Romania has a very good quality agricultural land, foreign investors are very interested in purchasing agricultural land for the purpose of starting an agricultural business; however, the purchase of agricultural land may imply certain risks for the buyer. A common problem that we have experienced with our clients is that it is very infrequently for a seller to have large plots of land that are compacted, as in Romania, land plots are generally composed of smaller properties owned by separate owners. 

What should foreigners know when buying a property in Romania?

If you want to buy a property in Romania, you should know that this is a country where residential ownership is the highest at a global level; as a general rule, in all countries located in the Central Eastern Europe ownership on residential properties has become an important matter for the population after the fall of communism, as at that moment, only few were able to actually own properties. Below, you can discover few important aspects on this subject:

  • in 2018, the homeownership in Romania was 96%, making it the highest ownership rate in the world;
  • the 2nd country with a high ownership rate was Singapore, with 90.8%, and Slovakia, with 90.3%, the 3rd;
  • those interested to purchase office space in Romania, or to rent office space, must know that at the end of 2020, the available office space in Bucharest reached 2.95 million square meters and out of this, a large percentage of 63% accounted as Class A office space;
  • with regards to residential properties, by the end of 2020 the market prices increased by 2% (on a year to year basis); 
  • this represented a small increase in price compared to other neighboring countries – for instance, in Bulgaria the increase was of 5.4% (while the EU average was 5.7%). 

If you need to receive legal services for buying property in Romania, we highly recommend you to address to our team of lawyers; you can obtain numerous important details from our lawyers with regards to the property that you are interested in and our team can do an in-depth background check on its cadastral registration data – its cadastral number, its serial number, the accurate description of the property

Romanian institutions are in line with the European requirements regarding the regulations applicable to properties of all types. For instance, the Romanian Land Registry is a part of the European Land Registry Association, an entity created with the purpose of applying the EU principles in all EU member states. 

The aspects that were presented in this article by our lawyers in Romania represent just few of the important things that foreign buyers should take into consideration when deciding to buy a property here. If you require in-depth information please contact us to be able to provide a personalized list. If you need legal services for company formation in Romania, you can contact us.