Real Estate Law

Property rights in Romania are mainly regulated by the Constitution, the Civil Code and other specific normative acts.

Over time, there have been various changes to the legislation that regulates the acquisition of real estate, the documents based on which the transfer of ownership is carried out, their form, as well as the conditions for acquiring some real estate. Also, with the advancement of technology, the means of determining land surfaces or constructions have become much more precise; this is a positive fact, but not without undesirable effects in many situations, such as the differences in the surface of the land resulting from making measurements with much more accurate technical means.

These things are relevant as a general observation regarding the importance of awareness of prevention when you want to purchase real estate.

Due Diligence

It refers to the procedures considered absolutely necessary in order to safely purchase a property in Romania. We recommend Romanian citizens, as well as foreign persons, to perform the due diligence procedures when purchasing any type of real estate property in this country (industrial, residential, commercial) and to request legal advice on the sale contract.

The most diligent thing that someone can do when they want to buy a property is to check the legal situation of that property. This preliminary legal check is called, quite intuitively, “due diligence”. It is a welcome check on both the legal situation of the buildings and the land because it can reveal aspects that prevent the purchase of the property or the buyer’s achievement of the desired goal regarding that property. In any case, a clarification of the legal situation of the transacted property leads to a negotiation in the knowledge of the cause, which reduces the risk of the actual transaction and the probability of subsequent litigation.

The most “famous” example of this type is the very way in which the Romanian state kept records of real estate. Until the appearance of Law no. 7/1996, land registers only existed in Transylvania and Bucovina (the regions that belonged to the former Austro-Hungarian Empire) so that in the rest of the country a complete history of a building (who owned it, with what title, if was or was not affected by easements, etc.) is very difficult to obtain. On the other hand, precisely because of the age of this system, in the respective regions the cadastral measurements, especially in rural areas, are often very old, made with the technical means existing at the beginning of the 20th century (sometimes even in the 19th century) and as such quite imprecise.

The due diligence operation, like any verification, is all the more useful the more complete it is; in its basic form, it consists primarily in the verification of the seller’s property documents, thereby analyzing and comparing the most important details of the property documents with current information.

From the analysis of the property documents, the lawyers who carry out the verification can deduce if certain aspects raise questions and additional investigations of other documents, adjacent to the property documents, are required.

Another aspect that should be checked is the existence or non-existence of disputes that could affect the ownership right itself or its dismemberment (for example, the existence of a dispute regarding the building and which could limit the right to use it).

In any case, the verifications must include all those aspects that are relevant for the potential buyer and in this sense good communication (that is, sincere and complete) between the client and the lawyer is essential. The client must explain to the lawyer in as much detail as possible what is the purpose pursued by purchasing the property, and the lawyer must communicate to the client what checks are required to find out if the property in question corresponds to the purpose.

Real estate litigation

We are specialized in complex real estate litigations. Our team of Romanian lawyers is prepared to represent natural persons and legal entities involved in real estate litigation cases, but our attorneys can provide legal advice on other types of litigation cases that can occur in any type of deals. 

Assistance & negotiation

We provide assistance and representation in the negotiation stage and public notary procedures involved with real estate purchases. We can offer consultancy services on the documents that have to be signed with the Romanian public notary, as well as on the compulsory provisions that have to be included in any real estate purchase.

Due diligence, from a legal perspective, means the process of collecting and evaluating all legal documents and information related to a civil/commercial transaction or the activity of a company. Through the due diligence service, the Legality team offers clients, through its professional experience and thorough knowledge in civil and commercial matters, the possibility to analyze the legal risks of a transaction in which the client wishes to engage.

For example, if a client wants to buy a property, implement a securities acquisition or real estate development project or participate in a merger, it is useful and, most of the time, necessary to hire a legal consultant because the risks assumed by participating in these operations to be reduced to a minimum.

What is followed by due diligence?

Due diligence seeks to reduce the risk inherent in a transaction or to avoid the occurrence of damage by materializing the risk.

In general, any civil/commercial operations assume the assumption by the participants of some risks. These risks can come from the history of a real estate property, from the way in which the activity of a company involved in the merger/acquisition process was conducted, essentially from any legal situation prior to the transaction that is intended to be concluded after the due diligence process.

Why is due diligence important?

Many times the risks taken by concluding some transactions can be more expensive than the transaction itself.

That’s why we draw attention to the fact that a transaction with a history, no matter how simple it may seem at first glance, can hide risks that even the parties involved may not be aware of!

The preventive, diligent attitude can save the parties from unwanted litigation, unpleasant financial consequences or even effects that can be more serious, ranging from financial losses to insolvency.

What are the types of due diligence? How is due diligence performed?

The due diligence service can be restricted or extended.

The employment of the legal assistant for the due diligence is decided by the lawyer and the client based on a prior diagnosis provided to the client by the lawyer. If, following the preliminary analysis of the case, the lawyer considers that the transaction may involve the assumption of some risks by the client, he will inform him that due diligence is useful and even necessary for the protection of his patrimony and will suggest to him several verification methods. The client will be the one to decide on the scope of the due diligence verification.

Due diligence is a long process involving several parties and phases. Due diligence legal assistance can include, for example, the following:

1. verification of the property documents of a building or goods that are the object of a procurement project;

2. verification of the legal documents concluded by a company participating in the merger or sale of shares, in a determined period, immediately prior to the conclusion of the transaction;

3. verification of the existence of litigations or enforced executions that will affect the transaction in the future;

4. cross-checking of legal documents, by providing specialized legal assistance with checks of financial and accounting records performed by accounting experts or financial auditors;

5. extended verification through the collaboration of the lawyer with other specialists from various areas of activity, with the purpose of providing the client with a complex report regarding the transaction in which he wishes to participate.