Purchasing real estate is a significant decision, both financially and in terms of life comfort if it is to serve as a residence or for the potential to exploit it under desired conditions if you intend the transaction for a different utility. To avoid future discomfort and losses or being unwittingly drawn into litigation, a thorough preliminary analysis, including legal aspects of the targeted property and the conditions and mechanisms through which you will acquire ownership, is mandatory.
You will find below some important aspects to consider.
IDENTITY AND REPUTATION OF THE SELLER. OWNERSHIP STATUS
Only the owner can sell. Ensure that the seller is indeed the owner based on the Property Title and the Land Registry Extract. For real estate developers or corporate sellers, checking past customer reviews and any ongoing or past litigations is advisable.
DETAILED PRELIMINARY ANALYSIS OF THE PROPERTY
Conduct a thorough inspection of the property’s condition, both individually and in relation to its surrounding area. A price significantly below the area's average might indicate potential defects; future or ongoing construction projects in the area could mean pollution, noise, traffic congestion, or even may affect your rights as future neighbour. Additionally, if you plan on making changes/extensions/improvements, ensure that local urban planning regulations allow it. For older properties, check for seismic risk classification.
PROPERTY TITLE - PROPERTY HISTORY - LITIGATION
The Property Title and documents regarding successive transmissions can reveal grounds for invalidity or other flaws of the Seller's Title, requiring risk analysis for the subsequent acquirer. Ongoing court trials – mentioned or not in the Land Registry - should also be considered.
URBAN PLANNING DOCUMENTATION - CONSTRUCTION PERMITS – RELATED COURT TRIALS
Particular attention is needed to these documents, especially for new buildings.
These documents must have been issued in compliance with the law, and the construction must adhere to them. Otherwise, future disputes with neighbours and others may arise.
You can check with the City Hall that issued these documents if they have been contested or if there are noted litigations in the Land Registry and their status, or you can ask the Seller to provide this proof.
CADASTRE AND REGISTRATION
Only a property with completed cadastre and registration can be sold.
Request a recent Land Registry Extract, the Lang Registry Entry Conclusion, and the cadastral documentation (plans) approved by the Romanian National Agency for Cadastre and Land Registration for preliminary verification.
MORTGAGES AND ENCUMBRANCES. OTHER LAND REGISTRY NOTATIONS
These can be checked based on the Land Registry Extract.
If present, they will be enforceable against you. In the case of mortgages made by the seller, they follow the property, regardless of ownership. This means the mortgaged creditor can seize the property even after it has been sold and transferred to you.
Other notations that could lead to long and costly disputes and cause discomfort might include:
AUTHENTIC FORM
The sale-purchase contract must be concluded at public notary in authentic form, otherwise is void. Parties must come to sign in front of the notary personally or through a representative with an authentic Power of Attorney.
SALE-PURCHASE CONTRACT CLAUSES. PRE-CONTRACT BEFORE SALE
It is required a combined analysis of proposed clauses. For a fair, balanced agreement, clauses to protect each party are needed. They will discourage potential breaches and false statements, providing adequate remedy mechanisms. Attempts to eliminate or limit certain legal obligations and warranties, whose validity, though debatable, can initially lead to various complications and prolonged discomfort.
For sales preceded by a pre-contract, more details are available here.
SOME MANDATORY DOCUMENTS FOR AUTHENTICATION
In specific situations, the list of these documents can extend.
SALE EXPENSES
Unless otherwise agreed, the sale expenses are borne by the Buyer.
These include notary fees, advertising fees, mandatory preliminary checks, etc.
Regarding notary fees, for 2024, the Romanian Ministry of Justice Regulation 177/2004 establishes a minimum, gradual, percentage-based fee related to the sale price, starting from 2.2% but not less than 230 lei for prices up to 20,000 lei, reaching up to 6,405 lei + 0.6% for amounts exceeding 600,001 lei.
The fee must be at least at this level by law, although a higher fee can be agreed upon unless legal causes for reduction apply.
HANDOVER PROTOCOL
Carefully check the property when it is handed over to you and report any non-conformities from what was agreed with the Seller. Later, you won’t be able to claim apparent defects (that could have been identified without specialist knowledge), as it will be presumed you accepted them.
If there are such non-conformities, request rectification, set a deadline for it, and document everything in handover protocol (is they are serious enough you can refuse the take-over until the remedies are offered).
Importantly to mention: since 11.01.2020, real estate developers are obligated to perform utility connections at their expense. By law, the property can only be handed over to the buyer after the reception and operationalization of authorized and definitive utility connections. In practice, many situations deviate from this, disadvantaging buyers, or attempts are made to limit this obligation and corresponding liability through various contractual clauses.
Detailes about Sale Pre-Contracts in Romania - here.
At Legal Pro Advisory, we provide the necessary support in preliminary checks of purchase decision, drafting solid pre-contracts and Sale-Purchase Contracts, as well as representation in related litigations, ensuring your rights and interests are respected.
