1. Parties and ownership – Who can own real estate and what types of ownership are there?


Any “person” can own real estate. This will include individuals, companies, entities established by statute and certain charitable bodies.

The New Civil Code which came into force on 1 October 2011 introduces the concept of fiducia, a mechanism similar to some extent to the English common law concept of trust.

Owners of commercial real estate include private developers, private or public companies, charities, the central bodies of government and the local authorities. Property owned by the government and local authorities is either in their public or private domain.

Starting with Romania’s accession to the European Union on 1 January 2007, European Union citizens and companies, who receive Romanian residency status, are allowed to acquire ownership rights over land similar to those of Romanian citizens and companies.

Since 1 January 2012 it has been possible for European Union non-resident citizens and companies can own land in Romania for secondary residences or branch offices purposes. The acquisition of agricultural and forestry land by such entities has only been permissible from 1 January 2014. Also, foreign nationals may inherit land in certain circumstances. Furthermore, foreign nationals can acquire land by creating a 100% held company incorporated in Romania.

Natural and legal persons, whether Romanian or foreign, may rent property in Romania.


Ownership of property in Romania is either public or private.

Public ownership belongs to the state and the administrative-territorial units (communes, towns, municipalities and counties). Public property cannot be sold, seized or acquired by virtue of occupation. It may, however, be occupied under concession or leased, typically following a public tender procedure.

Public property includes property for public use (such as parks, squares, streets, which are accessible to any person) or of public interest (such as schools, theatres, museums, which although being of limited access are allocated to activities of a social nature).

Romanian law distinguishes between exclusive ownership and co-ownership of land and buildings. This means that a condominium style ownership is permitted where, for example, a person may be exclusive owner of a part (unit) of a building and co-owner with other unit owners of the common areas, the structure and the land on which the building stands. Alternatively, more than one person may own the whole of a building and/or plot of land. In each case, the co-owner is said to have an „ideal“ share (percent) in the common parts or the whole of the building or land plot.

In Romania, like other countries, where a natural person owning land dies without heirs, or where a company is wound up without its land (and any other properties) being transferred to a third party, the land will automatically pass to the State as “res derelictae”.

Aside from ownership rights, another important right in real property is the usufruct, which provides the right to possess and use a property and receive any income from the property, but without conferring the right to sell it. Usufruct rights are not common in Romania.

Long term leases (maximum 49 years) giving the tenant rights of occupation and use are also available.

After 1990, a large number of claims for restitution were made against the Romanian State and the public authorities by former owners (or their successors) of property confiscated by the communist regime. Subsequently, a number of laws instituting administrative restitution procedures came into force, all of which purported to establish a time frame beyond which no further claims could be admitted. Although many of these were prolonged, it is now becoming more firmly established that none remain open and it appears that new restitution claims may no longer be filed based on special restitution laws. However, restitution claims could be still filed based on the Civil Code, in certain circumstances.

As the number of applications was high and the process of their analysis is slow, the title to a large number of apparently public properties still remains unclear. In many cases, there is little possibility of checking whether restitution claims over certain types of property remain pending, although public authorities sometimes make information public about restitution claims. Where the restitution laws enabled a person legally to acquire a property, then the title acquired is granted some protection. However, each case needs to be reviewed on its own merits.

2. Interests – What types of interest in real estate are sold?

Romanian law does not operate a classification of property as either freehold or leasehold.

Freehold would be similar to the Romanian concept of ownership, i.e. a perpetual real right (a right in rem) that gives to its holder the power to possess, use and dispose of a property.

Leasehold would include leases, although in practice leasehold could also be regarded as including usufructs, superficies rights (i.e. the right to build and own a construction on a plot of land owned by a different entity) or concessions, which are limited in time (usufructs enjoyed by companies – 30 years, superficies rights – 99 years, with renewal option at the expiry of the initial term and concessions – 49 years, with one renewal option for no more than half of the initial term).

There is exclusive and common ownership. Common ownership can be temporary or perpetual, the latter being similar to a condominium interest.

Other property interests that are recognised under Romanian law include:

  • Options and pre-emption rights – rights to buy or first refusal
  • Easements – such as rights of way or for the use of services which are contractual or legal rights to use land for limited purposes such as to site telecommunications equipment (easements are deemed to be servitudes, i.e. real rights over property owned by a another person)

Currently, all real estate rights and leases must be registered in the Land Book.

3. Employees – What employment issues affect real estate acquisitions?

Transfer of undertakings (“TUPE”) is likely to be the most significant employment issue under Romanian law.

TUPE applies when an undertaking or business (or part of one) is transferred from one party to another.

The broad effects of TUPE are that:

  • With effect from completion of the transfer, the buyer assumes responsibility for employees working in the business transferred
  • Accrued continuity of employment is preserved
  • Dismissal for a reason connected to the transfer is automatically unfair
  • If the buyer changes terms and conditions by reason of the transfer, these changes generally are ineffective, even where the employee‘s agreement is obtained
  • Employees‘ elected representatives must be informed and consulted about the transfer
  • Any attempt to circumvent the effect of TUPE is void

Although the legal effects of TUPE cannot be avoided, it is possible to apportion TUPE liabilities by agreement between the seller and the buyer. For instance, the seller could agree to be responsible for all claims and liabilities relating to employees up to the date of transfer, and the buyer could take on all post-transfer employment liabilities.


Redundancies may become necessary on the closure of a business or part of a business or where there is a reduction in the number of employees required, for example, on the merger of two businesses or a TUPE transfer. As mentioned above, dismissal for a reason connected to the transfer is automatically unfair; care should therefore be taken to ensure that the redundancies are carried out in a procedurally fair manner, with particular regard to any applicable collective consultation requirements.

Terms and conditions of employment

An employer may decide to change or harmonise terms and conditions of employment on the acquisition of a new business. Such change may be implemented only with the employee’s prior consent and on terms and conditions equivalent or better for the employee. This can be a difficult process, especially where there has been a TUPE transfer (see above).

4. Procedure – What are the steps in a sale and purchase transaction?

Real estate business transactions formally start when proposed heads of terms are drafted, negotiated and agreed by the brokers for the seller and the buyer. The heads of terms (or memorandum of understanding) set out the principal terms agreed between the parties and are generally expressed to be “subject to contract” and not legally binding. They might be accompanied by a (legally binding) exclusivity and confidentiality agreement.

The seller’s lawyers will usually collate all information relating to the property and send it to the buyer’s lawyers. The buyer’s lawyers will undertake general due diligence investigations. The buyer’s lawyers usually prepare the form of the sale agreement. The scope of the due diligence and the draft of the sale agreement will vary according to whether the property being sold is under construction or already built and the extent to which leases to tenants have already been granted, as well as whether the transaction will be structured as a property deal or a share deal.

If a property has not been registered in the Land Book, its sale will trigger an obligation to complete the cadastral registration, meaning (amongst other things) that certified surveyors must produce detailed and definitive plans to be approved by the territorial Cadastral and Real Estate Publicity Office and subsequently submitted to the relevant Land Book. There is a resulting time and cost implication for transactions of this type, which (depending upon the nature and use of the land concerned) may prove to be significant.

The notary authenticating the transfer agreement is bound to verify the power of the corporate bodies and their signatories and that there are no impediments to the sale. Updated Land Book excerpts and certificates issued by the fiscal authorities (stating that there are no outstanding debts) also need to be presented to the notary on authentication. The real estate publicity fee and notary fees (see below) need to be settled in full. Following this, the notary is able to register the buyer’s interest in the contract against the property in the Land Book.

Legal completion of the sale and purchase transaction may occur at the same time as the authentication or subsequently, depending on the acquisition timetable. Where the purchase is made with borrowed finance, a mortgage over the property (and other security interests) will generally be instituted at the same time as the authentication.

Following completion, the notary needs to complete final registration of the transfer in the Land Book, in case the transfer of title has not already occurred and been registered upon authentication. Registration of other documents (e.g. security documents) in other relevant registries (e.g. the Electronic Archive for Secured Transactions) may also be necessary. Where financing is involved, the disbursement of the price will generally be made only after the security interests have been appropriately recorded, in order to protect the financier’s ranking.

5. Contract terms – What provisions does a real estate contract contain and what is implied by law?

Provisions of the contract

An agreement for the sale and purchase of property must be in writing and, if it involves land and/or buildings must be authenticated by a Romanian public notary, contain or clearly refer to all main terms and conditions (e.g. the purchase price) and be signed by both seller and buyer.

It is common for the sale and purchase agreement to provide for a deposit of between 5–10% of the purchase price payable on exchange of agreements. The deposit can be placed in an escrow account opened with a Romanian bank.

Contracts for sale of property subject to occupational interests such as leases will include clauses to cover ongoing management matters, and provide for apportionment of occupational income and outgoings on completion of the transfer of ownership in the property.

Terms implied by law

Two of the most significant are as follows:

  • Title guarantee – in a transfer of property there are various statutory obligations on the part of the seller in relation to the quality of the title being sold. The seller is under an obligation to guarantee to the purchaser that he will not be evicted by any third parties and may be called into court proceedings as a respondent if the title of the purchaser is challenged by such third parties
  • Misdescription and misrepresentation – in cases of misrepresentation or misdescription of facts made by the seller to the buyer which have the effect of inducing the buyer to enter into a transfer of land, damages may be payable to the buyer or the buyer may be entitled to rescind the transaction

6. Due Diligence – What investigations does the buyer normally make?

Pre-exchange of agreements

The prudent buyer is likely to commission a survey of the building and in appropriate cases, soil and geological investigations, plant and machinery tests, and environmental investigations. There are two limbs to the pre-exchange due diligence by the buyer’s lawyers.

Firstly, title to the property and existence of any encumbrances or restrictions will be investigated. The buyer’s lawyers will consider the entries in the Land Book, the cadastral documentation and historic title documents. Where title to the property is not registered in the Land Book, the buyer’s lawyers will advise the buyer to enter into a pre-sale or an option agreement pending completion of the cadastral documents and Land Book registration, as no sale is permitted in cases where the property is not registered. The buyer’s lawyers will also make enquiries of the local authorities where the land is located or other institutions involved to obtain information regarding any restitution claims affecting the property and their current status. In cases where any claim was rejected by such authorities or institutions, the search will also be pursued with the courts of law having relevant jurisdiction in order to assess the status, impact and/or potential outcome of court proceedings. Where the property is leased, or is subject to other occupational interests (such as usufructs, superficies or concessions), the terms of the relevant occupational documents need to be considered carefully to ensure they are not contrary to the buyer’s intentions for the property. The buyer’s lawyers will also need to check whether these documents reveal that consent for the transaction is required from any third party.

The buyer’s lawyers will undertake general due diligence, which will include conducting various searches to check the position regarding municipal and zoning consents, environmental matters, utilities serving the property, financial encumbrances etc. Where the seller is a company, the buyer’s lawyers will also conduct searches against the seller’s name at the Trade Registry to ascertain whether the company is solvent and therefore able to dispose of its assets freely. A search referring to moveable security will be undertaken on-line by the buyer’s lawyers with the Electronic Archive in Security Interests to obtain confirmation that there are no moveable security interests in any way affecting the envisaged transaction.

Reporting to the client

Before completion of any agreement the buyer’s lawyers usually report their due diligence findings to their client, raising any matter of particular importance or concern.

7. Registration and Notarisation of real estate – What are the basic requirements?

Romania is in the process of implementing a unified cadastral and land book system. The system is run by cadastral and real estate publicity offices, one for each county of Romania. Registration of land is compulsory throughout Romania and to the extent that land is unregistered, it must be the subject of an application for first registration before it can be sold.

Land Books are created at municipality level and also for every immovable asset which is identified by an individual number. Therefore, a new land book entry will be created each time a new property is required to be registered.

The system of cadastral and real property publicity is designed to make public through registration all of the real rights that are transferred, created, modified, terminated or erased pursuant to juridical acts and facts or events related to immovable assets, and certain other items of information relating to immovable assets.

Registration gives constructive notice to third parties (making certain registrations binding on them).

Once the cadastral registrations for each administrative-territorial unit are finalized (this process is currently incomplete) and all the Land Books for immovable assets are open, registration in the Land Book is required for the valid transfer of the relevant right, both as between the parties to the transaction and against third parties. This means that the Land Book registration will constitute a solid proof of ownership and sellers will be protected against nullity of title or eviction, being considered a “buyer in good faith”.

There are three types of registration in the Land Book:

  • Registration of a real property right (this is the primary registration)
  • Provisional registration of a real property right on condition that it will be confirmed at a later date
  • Notification of other juridical relationships, including status, capacity and incapacity, certain personal rights, claims and appeals, and measures taken for making an immovable asset in the Land Book unavailable for further encumbrances

The registration of a real property right establishes the rights obtained through a property title transfer, a final judicial ruling, a heir certificate or the decision of an administrative authority.

Provisional registration operates for those rights granted subject to conditions, or for a determinable period. This type of registration may be useful for investors/financial institutions that are financing a transaction or the erection of buildings and are interested in making their rights binding upon third parties pending completion (i.e. the moment when the registration becomes definitive).

The title registration for a particular property all over Romania comprises the:

  • Property register, which gives a description of the property
  • Proprietorship register, which gives details of the registered owner of the property, the ownership title over the real estate, easements and other registrations related to the ownership rights
  • Charges register, which lists all recordable matters that encumber the property such as rights benefiting other property, covenants, financial charges, contracts, leases and, where appropriate, special entries that restrict the registered owner’s ability to deal with its title without obtaining the consent of another person

There is a validity requirement for notarisation of any deed for acquisition/disposal of ownership of land and/or buildings, as well as for granting real rights (e.g. superficies, usufruct) over such land or building. The same validity requirement applies to mortgage deeds.

8. Permits – What permits are required for the use and occupation of real estate and are they personal?

Before performing operations involving real estate (especially regarding construction), it is recommended and in certain cases compulsory to obtain a planning certificate from the local government authority responsible for controlling the use and development of land in its area (county councils and city halls). This planning certificate provides information regarding legal, economic and technical issues with respect to the land or construction. This certificate is issued upon request to any interested person, and within the legal time limit of 30 days.

The planning certificate (certificat de urbanism) generally also indicates a number of other authorizations and endorsements (e.g. environmental permits, public safety and health permits, permits from the fire prevention service and public utilities providers) required in order to subsequently undertake building or construction works. Subject to fulfilment of the required conditions, a building permit (autorizaţie de construire) will be issued by the local government authorities (usually from the city hall) within 30 days from the date of application (such application should include the complete underlying documentation).

Generally, a building permit will be required for the construction of a “new build” property, work that is proposed for refurbishment of an existing building, and where an existing use (for example office space) is to be changed to another distinct use (for example retail premises). Under the planning legislation the terms “develop” and “development” have a much wider meaning than the construction or replacement of buildings; minor building works or simple changes of use may amount to “development” requiring planning permission and a building permit.

Special approvals from the competent Ministry are required when it is proposed to do work to historically or architecturally important buildings.

In addition to a building permit, at the end of construction, the building must obtain approvals confirming that construction has taken place in accordance with plans and applicable regulations.

The Government, through the Ministry of Regional Development and Public Administration, coordinates the activity of territory arrangement and urbanism at a national level. Locally, the county councils or local councils draw up urbanism plans to supplement national activities and policies.

There are three different kinds of urbanism plans: (i) General Urbanism Plan (“PUG”), one for each administrative-territorial unit (ii) Local Urbanism Plan (“PUZ”), providing detailed regulations for a specific area (e.g. districts of Bucharest) and (iii) Detailed Urbanism Plan (“PUD”), required only in certain cases and referring to one plot in relation to the neighbouring plots. In relation to the application of the relevant regulations on territorial arrangement and urbanism, urbanism plans are issued by county councils and city halls.

Planning permissions and building permits benefit the land. In the case of a transfer of a development project, the building permit and all underlying documentation and approvals are transferred automatically together with the transfer of ownership of the land.

9. Insurance and Risk – What insurance will the parties effect and when does the insurance risk pass at the time of sale?

Before a sale is contemplated, insurance is generally the responsibility of the owner of the property. However, where the property is subject to a lease, the terms of the lease will determine which party has responsibility to insure. It is common for owners of long leases in commercial properties to insure rather than the landlord. Whatever the length of the lease, the tenant will generally insure the contents of the property belonging to the tenant and in some cases certain parts of the property for which the tenant is contractually responsible.

The insuring party should have a fully comprehensive buildings insurance policy to protect the structure and fixtures and fittings of the property in the event of damage or destruction by any of a comprehensive list of insured risks, such as storm, lightning, fire, earthquake and water damage. The policy may also cover additional special heads of cover such as subsidence, heave and, if available, terrorism.

Generally it is the buildings, and not the land, which are insured for the reinstatement cost rather than the reinstatement value.

Insurance policies may either comprise a single policy for one particular property or a block policy designed to cover a portfolio of properties.

Owner-occupiers generally have separate policies to cover the contents of the property, especially if the property includes costly plant and machinery.

Policies for defects in title to property are also available on the Romanian market. Certain foreign title insurance companies offer policies on a case-by-case basis, particularly for properties of significant size or value.

Insurance policies are generally personal and not transferable on sale.

Romanian legislation is currently imposing on the owners of residential buildings, situated either in the urban or the rural zone, a duty to take out insurance policies against natural disasters such as earthquakes or floods, for certain specified amounts according to the type of construction materials used in the dwelling.

The insured risk is any form of deterioration arising directly or indirectly from the occurrence of a natural disaster.

10. Environmental – What are the common environmental issues?

Real estate may be contaminated as a result of current and former uses. Primary legal responsibility follows the “polluter pays” principle: the person who spilled, released or discharged a substance will normally be liable for any ill-effects it causes.

All activities with a potential adverse impact on the environment should be carried out only on the basis of authorizations or permits issued by the relevant authorities.

For certain specified activities (present or future) which have a significant impact on the environment and are identified by an order of the Ministry of Environment and Climate Changes, it is necessary to obtain an environmental authorization (autorizatie de mediu).

Upon the sale of a majority stake in a company, of a disposal of an undertaking or unit, or in case of a merger or spin-off, or of a new development, owners or investors in real estate that perform activities with a significant impact on the environment must obtain an environmental approval (aviz de mediu), based on an environmental survey report (bilant de mediu).

The responsibilities of the acquirer or the developer are laid down in an environmental conformity plan (program de conformare), the terms of which are negotiated between the acquirer/developer and the environmental authority. These may refer to both reduction and rehabilitation measures.

11. Pricing/Valuation – What sets the price/valuation of real estate?

Pricing of real estate investments is a combination of the aggregate rent being paid by occupational tenants of the property and the value that investment buyers consider that a property of the specific type and location is worth at the time of valuation, taking into account that income.

The rent for a particular property is likely to be assessed by multiplying the area of the property by the market rental value per square metre. The market rental value will take into account factors such as the location of the property, its type and condition, and the length of the lease term. The area of the property will be calculated by reference to Gross Internal Area (used, for example, in relation to warehouses and industrial buildings) and Net Internal Area (used, for example, in relation to offices and shops).

In the case of retail shops, it is common for the rent of the property to have differential values according to the positioning of the floor space – that nearest to the frontage is the most valuable and will be described as “Zone A”. The rental values of the various areas will be added together to provide an overall rental value for the property.

Investment properties are commonly referred to as being sold on a particular yield, meaning the investment return that will be gained from the capital sum which it is necessary to pay to buy the property. For example, where a property with an aggregate rent of RON 1m is sold for RON 2m, it will have a yield of 5%. Conversely, the interest can be said to have been sold at a YP (years’ purchase) of 20.

12. Taxes and Costs – What are they and who pays them?

Revenues obtained from the sale by individuals of real estate properties are taxed as a percentage of the sale price. For properties sold less than three years from their acquisition, the tax is 3% if the purchase price is less or equal to RON 200,000 or RON 6,000 plus 2% of what exceeds RON 200,000. For properties sold after three years from their acquisition, the tax is 2% if the purchase price is less or equal to RON 200,000 or RON 4,000 plus 1% of what exceeds RON 200,000.

Some exemptions to the tax apply, for example in the case of property donated by close relatives, as defined in the Fiscal Code.

A company’s income from direct and indirect sales of properties (the sale of shares in a property holding company) will be taken into consideration in the calculation of a general profit tax of 16%.

The ownership transfer publicity fee (replacing the formerly so-called “stamp duty”) is payable at the rate of 0.15% of the value of the transaction for individuals and 0.5% of the value for legal entities.

The publicity fee is collected by the notary and paid to the cadastral authority on the date of the authentication of the sale and purchase agreement.

Notary fees are due on the authentication of the deed of transfer of the ownership over real estate by a public notary.

The following taxes are additionally due:

  • Tax for issuing planning certificates: RON 14 + RON 0.01 for each sqm exceeding 1,000 sqm (for urban areas). This is reduced to half for rural areas
  • Tax for issuing the construction authorization: 1% of the authorised value of the works (without VAT). For buildings intended to be used for living, the tax is 0.5% of the authorized value of the works. The authorized value of works does not include VAT
  • Public utility permissions: these permissions should generally be listed in the planning certificate. Also generally the taxes for such permissions are low (fixed nominal values), but public utility providers might request feasibility studies and the issue of the permission is in practice conditional upon paying the fees for such studies. Costs associated with the preparation of a PUZ/PUD (urbanisation plans) may also need to be considered
  • Tax to be paid to the state construction inspection (ISC) by investors or owners: 0.7% of the authorised value of the works
  • Tax for state control over the construction works (also to be paid to the ISC on communication by the investor of the commencement of the authorized works): 0.1% of the authorised value of the works
  • Order of Architects tax of 0.05% of the authorised value of the works

The sale of shares owned by a natural person in a property holding company is subject to an income tax of 16%. Value added tax may also be payable, except (broadly) where the property is sold by an individual or a non VAT-paying company.

The VAT quota for the transfer of ownership over certain so-called “social policy dwellings”, including the ownership over the appurtenant land, has been reduced to 5%. This category includes residential properties having a maximum 120sqm usable area excluding any annexes, which are built on a plot of land (in case of houses) or where the corresponding co-ownership quota over the land (in case of a apartments located into a condominium) does not exceed 250sqm and their value, including the value of the land on which they are built, does not exceed RON 380,000.00 (approx. EUR 90,000). The purchasers of such dwellings can benefit from the reduced VAT quota, if individually or as a family, they have not previously acquired another dwelling subject to the reduced VAT quota.

During the due diligence for the acquisition, the buyer will also pay the costs of conducting searches, including in particular at the local authority (which includes zoning matters, building regulations and general municipal consents, notices etc) and, if relevant, companies providing utilities etc. The buyer will also pay for any valuations and surveys of the physical state of the property and any environmental audits or desktop studies.

The seller will generally pay the commission of any land agent or broker employed to find a purchaser, but in many cases commissions are charged to both seller and purchaser.

Occasionally, the negotiated heads of terms for a transaction will provide for one or other party to pay the other’s costs. Generally each party pays its own expenses.

The purchaser will be responsible for the payment of the Land Book fees associated with registration of the transfer to the purchaser.

For property transactions concluded in a notarised form, a notary fee is payable. These fees may vary between 0.5% and 2% of the transaction value, depending on several mandatory thresholds applied by the notary to ownership transfers. Such criteria are provided by an official notary fees grid which is approved by the Ministry of Justice, which is subject to periodic reviews. The percentage decreases as the value of the transaction increases.

Depending on the size of the transaction, other fees may be triggered, such as fees of valuers, legal counsel and other professionals. There are no rules regarding who pays what, but generally notary fees are paid by the buyer and each party pays its own incurred fees.