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Title guarantee

Historical Overview

Prior to 1990, most land in Romania was owned by the state, by state-owned entities or by so-called "agricultural cooperatives". Individuals owned only a limited amount of farmland and residential land.

After 1990, specific regulations were passed governing the retrocession of property taken over by the state either legally or abusively during the socialist regime back to their former owners. The main regulations are Land Law no. 18/1991, Law no. 1/2000 on the Retrocession of Agricultural and Forestry Land, Law no. 10/2001 on the Legal Regime of Immovable Properties Abusively Taken from their Legal Owners between 6 March 1945 and December 1989 and Law no. 247/2005 on the Reform in Property and Justice Domains and Certain Adjacent Measurements, as subsequently amended.

Land acquisition

Romanian individuals and legal entities (regardless of the citizenship or nationality of their shareholders) are free to acquire ownership title to the land.

Romanian legislation currently in force prescribes a specific legal status for the acquisition of real estate properties in Romania by foreign nationals (individuals and/or legal entities). Regarding the acquisition of title to land, as a rule, European nationals (which includes residents of the European Union and of the European Economic Area) are able to acquire ownership under the same terms as Romanian citizens and entities, as from Romania's accession to the EU.

European nationals will be allowed to acquire title to agricultural lands, forests and forestry lands within seven years as of Romania's accession to the EU (except for European farmers having Romanian residency, who are allowed to acquire ownership of this category of land as of Romania's accession to the EU). Likewise, European non-residents in Romania will be allowed to acquire land ownership for establishing a secondary residence or a secondary office, within five years of Romania's accession to the EU.

Foreign nationals from outside the EU and European Economic Area are allowed to acquire land ownership under the terms of international treaties and based on reciprocity. By no means may the rules applicable to non-European nationals be more favourable than those established for European nationals.

Land transfer

Authentication by a public notary is compulsory for the land transfer to be valid. Validity of transfer of title to the land against third parties is to be ensured by recording the title with the relevant Land Registry. When purchasing real estate properties, one should take into account that there are certain regions in Romania where the registration of ownership in the Land Registry has been implemented only recently, and therefore a proper review of ownership when purchasing real estate property in Romania may be quite difficult. It is therefore advisable to conduct legal title checks for any property before acquiring it.

Furthermore, the National Cadastre and Land Registration Agency has recently been established (through the reorganisation of the former National Cadastre Office), with its remit to include real estate property registration in Romania, a role taken over from the Ministry of Justice. This Agency also coordinates and oversees the performance of cadastral work at the national level.

Under the new legal provisions, ownership right and other in rem rights on immovable properties are to be recorded with the real estate information register (i.e. Land Registry) solely on the basis of transfer deeds, which must be concluded in authentic (notarised) form. Upon authentification of an instrument establishing, modifying or cancelling a legally enforceable right in property, the public notary should request a Land Registry abstract for authentication or, as the case may be, a certificate of charges. During the term of validity of the abstract for authentication, the Land Registry may only register the transaction for which the abstract was issued. After the public notary has prepared the deed of conveyance, which alters, establishes or cancels a legally enforceable right interest in real estate, the public notary must by law send the relevant documents to the Land Registry Office, applying for the registration with the Land Registry of such deeds. A recently enacted regulation also requires the existence of a fiscal certificate assessing the payment of taxes over the real estate property for a valid transfer of ownership.

Mortgages

Mortgages are created under authentic deeds and in order to have effect towards third parties they must be recorded in the Land Registry. Mortgages are created either over land/buildings as a whole or over the ownership of shares of the co-owners. The creation of mortgages over a future asset is subject to compliance with specific regulations regarding the mortgage credit for real estate investments, based on the prior registration with the Land Registry of the building permit and the partial delivery and acceptance minutes.

Also the intent to create a mortgage for land/building can be recorded in the Land Registry. Further to the intent being registered, if effectively created, the mortgage has a ranking corresponding to the intent of creating the mortgage already registered with the Land Registry. The record of the intent to mortgage expires two months after its registration in the Land Registry.

In order to enforce the mortgage, the mortgager (e.g. a bank) must resort to an enforcement agent to start the enforcement procedures. Commencement of this procedure is registered in the Land Registry. Objections can be filed against the enforcement procedure before a competent court, which could suspend such a procedure based on a specific request to this effect. In case of bankruptcy, the mortgager submits its claim with the liquidator and has priority in the sale proceeds of the asset mortgaged, over any other receivables, except for the taxes, stamp duties and liquidation costs relating to the sale of the asset.