- Legal system How would you explain your jurisdiction’s legal system to an investor?
Romania has a civil law system applicable nationwide. The majority of real estate norms are contained in the Romanian Civil Code, the Land Book Law and construction-specific legislation. The Civil Code regu-lates all aspects related to real estate, the enforcement of obligations, as well as the execution of contracts.
Judicial precedent is not binding before courts of law. However, all decisions of the Constitutional Court and certain decisions of the Supreme Court are mandatory, and, in recent years, there has been an influx of such decisions in the real estate domain.
The agreements regarding the transfer of ownership right and/or establishment of encumbrances must be concluded in written authen-ticated form before a notary public, and registered afterwards with the relevant Land Book. For other types of agreements (eg, lease, free use) the written form will suffice.
- Land records
Does your jurisdiction have a system for registration or recording of ownership, leasehold and security interests in real estate? Must interests be registered or recorded?
Romanian real estate law is governed by the registration principle (ie, real estate rights are registered with an assigned Land Book and cadas-tral number). The Land Book is a public register of real estate property that contains three parts:
- description of the property;
- the current owner; and
- encumbrances (eg, easements, mortgages, land charges or heritable building rights).
Each real estate operation is registered with the relevant Land Book in order to ensure opposability against third parties. All past operations remain registered in the archive and can be accessed.
For historical reasons however, not all of Romania’s territory has been subject to cadastral surveying yet. Therefore, especially in rural areas, a purchaser must perform a topographic survey and Land Book opening prior to the acquisition of a plot, if such operations have not yet been done.
Land Book information which has been registered and updated is accessible online. Registration in the Land Book creates a presumption of ownership. Since all agreements implying the transfer of ownership are concluded in front of a notary public and afterwards immediately registered in the Land Book, there is a small chance of failure to register such rights.
Security interests are also registered with the Land Book in order to ensure the rank of the secured creditor. In case such registration is not performed, the creditor cannot oppose its rank against other creditors in case of enforcement.
- Registration and recording
What are the legal requirements for registration or recording conveyances, leases and real estate security interests?
The rule of real estate registration with the Land Book applies uni-formly throughout Romania and the public notaries who authenticate the agreements are automatically requesting their registration. The registration of leases is optional and regularly used for medium and long term-leases in order to ensure the tenant’s use right in case of transfer of leased property regardless of the form of transfer.
In order to perform a registration, a Land Book excerpt must be obtained at a cost of 200 Romanian leu (approximately €40). The reg-istration is subject registration tax calculated at the declared value of the transaction and range between 0.5 per cent and 1 per cent of the price of the asset being transferred or the secured amount. To this, the notary fees are added, amounting to 0.5 to 2.5 per cent of the same. The purchaser and/or borrower customarily pay the fees.
- Foreign owners and tenants
What are the requirements for non-resident entities and individuals to own or lease real estate in your jurisdiction What other factors should a foreign investor take into account in considering an investment in your jurisdiction?
From 1 January 2014, European Union member states’ entities and individuals may acquire real estate assets without any restrictions. This also applies to some other countries with which Romania executed bilateral agreements. Other third-country entities and individuals can-not directly acquire plots of land in Romania. Such parties may acquire ownership rights only indirectly by establishing a Romanian limited liability company, which is a common straightforward procedure.
With respect to Romanian agricultural land, there is a specific regulation stipulating that the sale of agricultural and forestry land is subject to a pre-emption right which is reserved to the co-owners, lease-holders, neighbours and the Romanian State, at the same price and under the same conditions. The pre-emption procedure implies certain regulated steps among which publication with the local city hall.
- Exchange control
If a non-resident invests in a property in your jurisdiction, are there exchange control issues?
There are no exchange control issues applicable to real estate deals of non-resident investors. There are no restrictions on the repatriation of profits.