As discussed last week the sale and purchase of agricultural land became an issue in Romania after January 2014. I think the issue of Romanian land and land ownership will be issues for many years to come.
Even now I am surprised how often I am asked, “Is it now the right time to buy land in Romania”. Unfortunately, I do not have a crystal ball and cannot say when or if a foreigner should buy land in Romania. The reasons for which people buy land are many and complex and sometimes I do not understand them. What I can say! I can say that now there are more developments of apartment blocks and houses starting than previously in Romania. Also new office blocks appear on the market.
Buying and selling of land in Romania is relatively straight forward. Romanian lawyers or foreign international law firms do not necessarily become involved except in the structuring of a transaction and clarifying issues. The actual transfer of the land is dealt with by the notaries who draft the sale purchase agreement, attend to its signature, record the transaction and the sale purchase agreement and ensure a clear title and registration in the cadastral registry.
Lawyers in Romania do in our opinion need to be involved in the transaction in checking other matters to give the clients peace of mind.
For instance ensuring that the land can be used for the purpose which you the buyer are purchasing it. It is possible in Romania to buy agricultural land which is intra-villan. What does this mean? It means that before you can build on the land you have to have the land taken out of the agricultural circuit and reclassified as non- agricultural. This will take time and money especially if the land is designated “as of good quality agricultural land”. I personally know of one instance where a client bought adjoining plots of land one designated as agricultural and one designated as non-agricultural, both plots being inside a town. The cost of changing the destination of the land was considered too high. When it came to building on the land we had to ensure that the office building was on the non-agricultural land and that the landscaped garden area was on the piece of land designated as agricultural. This way we avoided fines and having to demolish a non-conforming user building on the agricultural land.
Let’s say you want to buy an old building (Castle or Villa). You need to check to see if it is classified as an ancient monument in the local registry. If it is then the seller must first offer it to the State for them to buy it if possible. If they do not, then the seller is free for the rest of the year to sell the property at the price it offered to sell it to the Government. If you go into another calendar year the process has to be repeated.
This process will have to be repeated when you come to sell the property. Until the law is changed, not many people want to own a property where they first have to offer it to the State. At the moment this is academic as the state is not buying in those properties, but it is still a valuation aspect that needs to be considered.
In a previous blog I mentioned how people use the term “property” and “land” as interchangeable especially if you are a foreigner. When you buy a piece of land ensure that all the buildings on the land are registered at the land registry. You do not want to get a nasty surprise and find out you have bought the land and another person has rights over a property “building” on the land of which you are not aware.
I have quoted these examples to show that whilst the buying and selling of property may seem simple, the use of Romanian lawyers who are versed in the ways of the land law and commercial transactions is a necessary evil. As the society becomes more developed I think that lawyers in Romania will continue to be used in this way. As for many people the purchase of a property is their major investment in life other than their marriage and it makes sense to take all necessary precautions.
:: The source: Romania Law Blog
Guest writer. Senior Partner of BWSP Hammond Bogaru & Associate