The property buying process in Romania
Florian Ionescu, Wednesday, 22 January 2014
This article is part of a series of 8 articles about buying property in Romania. The other articles in the series cover the following topics:
A Detailed Analysis of the Buying Process in Romania
Most foreign investors have no knowledge about the real estate buying process applicable in Romania, but they will find it reassuring to know that the current law has simplified it significantly. In fact, the key of an efficient real estate buying process lies with the property consultant or the real estate agent, the solicitor and the notary. This article takes a closer look at the stages of the real estate buying process under the legal provisions currently in vigor in this country.
Step no. 1: The selection of the property
As expected, the first step with the purchase of any type of goods is the actual selection process. In the case of real estate, the interested party can make their selection based on the surface or the building. The former selection criterion is more flexible in that it allows for the modification of the initial price of the property depending on the variations. In the end, the relevant price is the one per unit and included areas – finishing work, parking lot, gardens, etc. – because this is the most transparent. This aspect should be clarified with the real estate agent from the very beginning.
Once they have decided on the purchase, the investor must demand information on the purchase price, the taxes, on whether the price is calculated per square meter and/or the coparcenary owned share and the price of the extra facilities if any. Real estate agents can provide the best consulting services in the domain, being forced by law to check the origin of the property, its ownership and its mortgage conditions as well as provide guarantees that the investment is lucrative for both the buyer and the seller.
Step no. 2: The verification of the property
It is very important that thorough legal verifications are carried out by a lawyer before the completion of a real estate transaction. Investors interested in new buildings should ask to see their building permits whereas in the case of old buildings, the seller must present the building permit and the project registered with the City Hall in copy.
These legal checks also include a verification of the real estate registers for any mortgages or loan guarantees issued on the property in question. With new buildings whose construction has been financed by banks, the mortgage should lose its validity upon the signing of the sales-purchase agreement and the land register should be unencumbered.
The seller should also be able to guarantee that no debt is owed to the administration. Otherwise, the administration must be indemnified by the seller. The authenticity of the title deed is also to be verified, a written statement being required in the event of multiple owners or property owned by a legal entity. Finally, the origin of the property is to be verified to see if the property in question was the object of a donation or was inherited under the applicable law.
Step no. 3: The preliminary contract and the initial deposit
Once the legal checks have been completed, the buyer can proceed to signing a preliminary contract and making an initial deposit to secure their purchase. This deposit is usually set at 10% of the final purchase price, but it may rise up to 30%. All details regarding further payments will be contained in this preliminary contract.
The details contained in the preliminary contract are the following:
The buyer should only proceed to this step after making sure that all legal verifications have been made by the solicitor and that the property is safe to purchase. Once these aspects have been confirmed, the notary can draw up the full sales-purchase contract and hand it to the buyer to sign. However, they will only be able to do that after paying the remaining 70%-90% of the purchase price.
The full sales-purchase contract is the actual agreement which grants the transfer of the property from one party to the other in exchange for the purchase price. Most often, notaries choose to simplify the property buying process by drawing up the full sales-purchase contract from the very beginning, in which case it replaces the preliminary contract.
The Romanian legislation stipulates that the full sales-purchase contract must be signed in front of a notary or a solicitor for the transaction to be valid and therefore eligible for registration in the Real Estate Register. Finally, the buyer is required to pay the notary fees and the stamp duty for the transaction to be complete.
As for the registration of the transaction in the Real Estate Register, this is carried out in 8 steps within twelve to twenty-five days.
This article is part of a series of 8 articles about buying property in Romania. The other articles in the series cover the following topics:
A Detailed Analysis of the Buying Process in Romania
Most foreign investors have no knowledge about the real estate buying process applicable in Romania, but they will find it reassuring to know that the current law has simplified it significantly. In fact, the key of an efficient real estate buying process lies with the property consultant or the real estate agent, the solicitor and the notary. This article takes a closer look at the stages of the real estate buying process under the legal provisions currently in vigor in this country.
Step no. 1: The selection of the property
As expected, the first step with the purchase of any type of goods is the actual selection process. In the case of real estate, the interested party can make their selection based on the surface or the building. The former selection criterion is more flexible in that it allows for the modification of the initial price of the property depending on the variations. In the end, the relevant price is the one per unit and included areas – finishing work, parking lot, gardens, etc. – because this is the most transparent. This aspect should be clarified with the real estate agent from the very beginning.
Once they have decided on the purchase, the investor must demand information on the purchase price, the taxes, on whether the price is calculated per square meter and/or the coparcenary owned share and the price of the extra facilities if any. Real estate agents can provide the best consulting services in the domain, being forced by law to check the origin of the property, its ownership and its mortgage conditions as well as provide guarantees that the investment is lucrative for both the buyer and the seller.
Step no. 2: The verification of the property
It is very important that thorough legal verifications are carried out by a lawyer before the completion of a real estate transaction. Investors interested in new buildings should ask to see their building permits whereas in the case of old buildings, the seller must present the building permit and the project registered with the City Hall in copy.
These legal checks also include a verification of the real estate registers for any mortgages or loan guarantees issued on the property in question. With new buildings whose construction has been financed by banks, the mortgage should lose its validity upon the signing of the sales-purchase agreement and the land register should be unencumbered.
The seller should also be able to guarantee that no debt is owed to the administration. Otherwise, the administration must be indemnified by the seller. The authenticity of the title deed is also to be verified, a written statement being required in the event of multiple owners or property owned by a legal entity. Finally, the origin of the property is to be verified to see if the property in question was the object of a donation or was inherited under the applicable law.
Step no. 3: The preliminary contract and the initial deposit
Once the legal checks have been completed, the buyer can proceed to signing a preliminary contract and making an initial deposit to secure their purchase. This deposit is usually set at 10% of the final purchase price, but it may rise up to 30%. All details regarding further payments will be contained in this preliminary contract.
The details contained in the preliminary contract are the following:
- The identification data – names of the parties involved, date and birthplace, fiscal identification number and residence for natural persons and names, fiscal identification number, headquarters, working points, etc. for legal persons
- The description of the property – plans, category, borders, construction year, mortgage details, compliance with the urban development area, whether it is inhabitable or not, administration debt, availability (whether occupied by the seller or tenants)
- The price and payment methods
- The notary to conclude the sales-purchase agreement
- The release conditions if the property is occupied by the seller
- Mortgage details
The buyer should only proceed to this step after making sure that all legal verifications have been made by the solicitor and that the property is safe to purchase. Once these aspects have been confirmed, the notary can draw up the full sales-purchase contract and hand it to the buyer to sign. However, they will only be able to do that after paying the remaining 70%-90% of the purchase price.
The full sales-purchase contract is the actual agreement which grants the transfer of the property from one party to the other in exchange for the purchase price. Most often, notaries choose to simplify the property buying process by drawing up the full sales-purchase contract from the very beginning, in which case it replaces the preliminary contract.
The Romanian legislation stipulates that the full sales-purchase contract must be signed in front of a notary or a solicitor for the transaction to be valid and therefore eligible for registration in the Real Estate Register. Finally, the buyer is required to pay the notary fees and the stamp duty for the transaction to be complete.
As for the registration of the transaction in the Real Estate Register, this is carried out in 8 steps within twelve to twenty-five days.
All types of property for sale in Romania by private sellers and estate agents. Find your perfect apartment, house or farm on the Black Sea coast or in the Carpathian Mountains.
One cannot imagine today’s real estate market without the help, both for the buyer and for the seller, of real estate agents. Of course, there are
still plenty of people in Romania who prefer to make this type of transaction independently, without the help of a real estate agent, because of the
commission. Truth be told, there are plenty of real estate agents/brokers on the market and there is room for negotiation, so collaborating with them
may mean closing a very good deal.
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