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					Chapter




Romania                                                                                                  Ana Maria Goga




Pachiu & Associates                                                                                 Maria Cecilia Badea




     1 Real Estate Law                                                   ownership of foreigners and stateless persons over buildings.
                                                                         With respect to the ownership right over land:
1.1    Please briefly describe the main laws that govern real            a.     the European citizens and the stateless persons domiciled in
       estate in Romania. Laws relating to leases of business                   an EU country and the companies established under the laws
       premises should be listed in response to question 10.1.                  of an EU country, which are resident in Romania, may
       Those relating to zoning and environmental should be                     acquire land in Romania (except for agricultural land, forests
       listed in response to question 11.1.                                     and forester land) immediately after Romania’s accession to
                                                                                the EU (i.e. from 1 January 2007), under the same conditions
The main principles governing the real estate regime in Romania                 as Romanian citizens and companies.
are provided by the Romanian Constitution.                                      By exception, the farmers exercising independent activities
                                                                                who are citizens of an EU country and residents of Romania
Other important laws that govern the real estate regime in Romania              or the stateless persons domiciled in an EU country and
are:                                                                            resident in Romania are entitled to acquire agriculture land,
a.     the Romanian Civil Code;                                                 forests and forester lands as of the date of Romania’s
b.     Law No. 18/1991 on Lands;                                                accession to the EU.
c.     Law No. 7/1996 Regarding Cadastre and Real Estate                 b.     the citizens of EU countries, the stateless persons domiciled
       Publicity;                                                               in an EU country or in Romania and the companies
                                                                                established under the laws of an EU country, which are not
d.     Law No. 312/2005 Regarding the Obtaining of Ownership
                                                                                resident in Romania:
       Right Over Land by Foreigners, Stateless Individuals and
       Foreign Companies; and                                                   (i)    are entitled to acquire land in Romania for the purpose
                                                                                       of establishing subsidiary residences /headquarters
e.     special laws regarding the restitution of real estate abusively
                                                                                       only five (5) years as of the date of Romania’s
       taken over during the communist regime.
                                                                                       accession to EU (i.e. starting with January 1st of
                                                                                       2012); and
1.2    What is the impact (if any) on real estate of local common               (ii)   are entitled to own agricultural land, forests and
       law in Romania?                                                                 forester land within seven (7) years as of the date of
                                                                                       Romania’s accession to the EU.
The Romanian legal system is civil law based, therefore, in our          c.     the foreign citizens who are not Members of EU countries,
country the local common law has no impact on real estate.                      the stateless persons and the companies from a state that is
                                                                                not an EU Member State are entitled to acquire land in
                                                                                Romania under the terms of international treaties and subject
1.3    Are international laws relevant to real estate in Romania?               to reciprocity, or by means of legal inheritance.
       Please ignore EU legislation enacted locally in EU
       countries.
                                                                              3 Real Estate Rights
Generally, the international laws are not relevant to real estate in
Romania.
                                                                         3.1    What are the types of rights over land recognised in
As an exception, the rules contained in the international treaties              Romania? Are any of them purely contractual between
with respect to the protection of fundamental human rights (e.g.                the parties?
ownership right) signed by Romania have preference over domestic
law.                                                                     Romanian regulation provides for two main categories of property,
                                                                         each having a special legal regime:

     2 Ownership                                                         a.     private property; and
                                                                         b.     public property.
                                                                         The main types of rights over land are:
2.1    Are there legal restrictions on ownership of real estate by
       particular classes of persons (e.g. non-resident persons)?        a.     ownership right;
                                                                         b.     right to use (e.g. lease, use, usufruct, free lease);
Romanian law doesn’t provide any restrictions with respect to the        c.     superficies right (ownership right over the building and a

ICLG TO: REAL ESTATE 2012                                                                                            WWW.ICLG.CO.UK
          Pachiu & Associates                                                                                                               Romania

                 right of use over the land under the building);                    dismemberments of the ownership right, encumbrances, mortgages
          d.     easements (e.g. right of passage);                                 and any rights or claims of third parties over real estate, as well as
          e.     administration right;                                              other facts (e.g. termination of a lease agreement) related to real
                                                                                    estate are to be registered with the Real Estate Register.
          f.     concession right;
                                                                                    In case of non-registration of the real estate rights, they are not
          g.     security rights (e.g. mortgages); and
                                                                                    opposable to third parties.
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          h.     other rights expressly recognised by the law.
                                                                                    However, starting with the date when the cadastral measurements
          The rights over privately-owned land are generally
                                                                                    are completed in the county where the real estate is located, the
          transferred/obtained on a contractual basis. However, please note
                                                                                    transfer of the ownership right or the constitution of a real estate
          that Romanian law provides for specific imperative rules
                                                                                    right (e.g. mortgage, dismemberment etc.) shall be valid only after
          concerning such transfer/establishment.
                                                                                    its registration with the Real Estate Register.
          The public property right has a special and restrictive regime and
          cannot be acquired/transferred on a contractual basis.
                                                                                    4.4    What rights in land are not required to be registered?

          3.2    Are there any scenarios where the right to a real estate           The registration of the ownership right is not required in case the
                 diverges from the right to a building constructed thereon?         ownership right was:
                                                                                    a.     inherited;
          The superficies right confers a right of use over the land and an
                                                                                    b.     acquired through forced sale;
          ownership right over the building constructed thereon.
                                                                                    c.     acquired based on a legal provision, following an
          Generally, this method is used by investors in order to secure the
                                                                                           expropriation procedure or based on a court order; or
          plots on which they intend to perform construction works without
                                                                                    d.     acquired as a result of the adhesion of a real estate property
          acquiring the ownership right over the land.
                                                                                           to another real estate property (for example, this is the case
                                                                                           with a plot of land located by the side of a river which is
               4 System of Registration                                                    disjoined by the water and added to another plot of land).
                                                                                    Nonetheless, please note that the alienation of the ownership right
                                                                                    is always conditioned by its registration with the Real Estate
          4.1    Is all land in Romania required to be registered? What
                                                                                    Register, which shall take place before the conclusion of the sale-
                 land (or rights) is unregistered?
                                                                                    purchase agreement in authenticated form.
          Under Romanian law, all plots of land should be registered with
          cadastre authorities, fiscal authorities and the Real Estate Register.    4.5    Where there are both unregistered and registered land or
          The registration with the Real Estate Register is required in order to           rights is there a probationary period following first
                                                                                           registration or are there perhaps different classes or
          enable third parties to verify the description, location, the owners of
                                                                                           qualities of title on first registration? Please give details.
          the land, and the existence of mortgages, encumbrances or rights of              First registration means the occasion upon which
          third parties regarding such land.                                               unregistered land or rights are first registered in the
          The registration of lands with the cadastre authorities is performed             registries.
          only based on specific measurements executed by authorised
          topographic experts, in order to establish the accurate surface of the    A right in real estate may be registered with the Real Estate
          land, the neighbours and the legal regime (agricultural/                  Register, immediately as of the date of its establishment,
          constructible, located outside/within the city boundaries) of such        irrespective of the nature of the right.
          and in order to attribute a sole identification cadastral number to the   The decision of the Register’s clerks approving or refusing the
          land.                                                                     registration of a right over real estate may be challenged by any
          The main purpose of the land registration with the fiscal authorities     interested party within 15 days from the date of communication of
          is to enable the Romanian State to collect the local tax on land.         such decision to the respective party.
          Regarding the rights that are not required to be registered with the      With respect to the priority of some rights over others based on their
          Real Estate Register, please see question 4.4 below.                      registration date with the Real Estate Register, please see our
                                                                                    consideration from question 4.7 below.
          4.2    Is there a state guarantee of title? What does it
                 guarantee?                                                         4.6    On a land sale, when is title (or ownership) transferred to
                                                                                           the buyer?
          The Romanian State guarantees a title only in case that the title was
          issued or signed by the Romanian State as a party.                        As a rule, starting with the date when the cadastral measurements
          Under specific circumstances, in the case of issuance of a title, the     are completed in the county where the land is located, the
          Romanian State guarantees the validity of such title and the              ownership right over land is transferred from the seller to the buyer
          observance of the legal provisions governing the issuance of such         at the registration date of such transfer with the real estate register.
          title.                                                                    As a rule, in case the cadastral measurements have not been
                                                                                    completed in the relevant county, the transfer of ownership from the
                                                                                    seller to the buyer shall take place at the authentication date of the
          4.3    What rights in land are compulsory registrable? What (if
                                                                                    sale-purchase agreement.
                 any) is the consequence of non-registration?
                                                                                    As an exception, the transfer of the ownership right may occur at a
          According to Romanian law, the real estate rights, such as the            subsequent moment or subject to fulfilment of certain conditions
          ownership right, the right of use, the right of concession,               (e.g. payment of the price).

          WWW.ICLG.CO.UK                                                                                           ICLG TO: REAL ESTATE 2012
Pachiu & Associates                                                                                                               Romania

4.7    Please briefly describe how some rights obtain priority            However, please note that, according to the general principles of
       over other rights. Do earlier rights defeat later rights?          Romanian civil law, any person who suffered damages as a result of
                                                                          the misconduct of another person is entitled to claim compensation.
The priority of some rights over others is established based on their     Therefore, under specific conditions, in case the person in default is
registration date with the Real Estate Register (the first registered     an employee of the Real Estate Register, the employer can be held
rights obtain priority over rights registered later). For example, if     liable for the damages produced by such employee.




                                                                                                                                                    Romania
an owner illegally sells the same real estate to two different buyers,
the new owner of the asset shall be the buyer who registered his
right with the Real Estate Register first (even if he is the second       5.5     Are there restrictions on public access to the register?
buyer).                                                                           Can a buyer obtain all the information he might
                                                                                  reasonably need regarding encumbrances and other
In the case of mortgages established over a real estate property, the             rights affecting real estate?
registration date also provides for the rank of each mortgage. The
creditor with a first rank mortgage (i.e. the mortgage first              The legal provisions in force do not provide for restrictions on
registered) shall have priority in obtaining restitution of its           public access to the register. The main scope of the real estate
receivables.                                                              publicity system is to provide information regarding real estate to
                                                                          any interested party.
  5 The Registry / Registries                                             However, in practice there are difficulties in obtaining such
                                                                          information, the presentation of specific documents being required
                                                                          (e.g. registration ruling etc.).
5.1    How many land registries operate in Romania? If more
       than one please specify their differing rules and
       requirements.                                                            6 Real Estate Market
Before the issuance of Law No. 7/1996, two (2) real estate publicity
systems operated in Romania:                                              6.1     Which parties (in addition to the buyer and seller and the
                                                                                  buyer's finance provider) would normally be involved in a
a.    a transcription and inscription system applicable in South-                 real estate transaction in Romania? Please briefly
      East Romanian provinces (a record kept on each owner of the                 describe their roles and/or duties.
      real estate); and
b.    a real estate register system applicable in North-West              a.      Real estate agents (or intermediaries)
      Romanian provinces (a record kept on each real estate).
                                                                          (i)     Monitor the real estate market.
Law No. 7/1996 aims to establish the Real Estate Register as the
                                                                          (ii)    Establish a connection between the seller and the buyer.
sole publicity system in Romania. Presently, in Romania, all new
registrations are operated in the new Real Estate Register.               b.      Lawyers
                                                                          (i)     Draft the transaction documents.
                                                                          (ii)    Assist and represent the parties during the negotiation
5.2    Does the land registry issue a physical title document to
                                                                                  process; and
       the owners of registered real estate?
                                                                          (iii)   performing a due diligence on real estate.
Upon the registration with the competent real estate register of a        c.      Notaries
real estate right, the Office for Cadastre and Real Estate Publicity      (i)     Authenticate the transaction documents (pre-sale purchase
shall issue to the owner of the aforementioned real estate a                      agreement, sale-purchase agreement, mortgage agreement
registration ruling with regard to the approval of the registration and           etc.).
a real estate register excerpt for information purposes confirming        (ii)    Verify the identity of the parties, their capacity to sign the
the performance of such registration.                                             agreement, and the validity of the seller’s ownership right
                                                                                  over the real estate.
                                                                          (iii)   Ensure that the transaction documents are in accordance with
5.3    Can any transaction relating to registered real estate be
                                                                                  the parties’ free will.
       completed electronically? What documents need to be
       provided to the land registry for the registration of              (iv)    Obtain an authentication excerpt from the Real Estate
       ownership right? Can information on ownership of                           Register regarding the real estate to be acquired and block
       registered real estate be accessed electronically?                         the performance of any registration in the register, for a
                                                                                  period of five (5) business days following the registration
                                                                                  date of the request for the issuance of the above-mentioned
Currently it is not possible to electronically register a real estate
                                                                                  excerpt.
transaction or to electronically obtain information on a certain real
                                                                          (v)     Collect from the parties the taxes due for the transaction, and
estate from the Office for Cadastre and Real Estate Publicity.
                                                                                  later transfer such amounts to the State budget and to the
The documents that need to be provided to the land registry for the               budget of the National Cadastre and Real Estate Publicity
registration of the ownership right are different from case to case.              Agency.
As general rule, for the registration of the ownership right, the
ownership title and the cadastral documentation shall be required.
                                                                          6.2     How and on what basis are these persons remunerated?

5.4    Can compensation be claimed from the registry/registries           The real estate agents and the lawyers shall receive a fee mutually
       if it/they makes a mistake?                                        agreed with their clients.
                                                                          The notaries public shall receive a fee calculated with the
Romanian law does not expressly stipulate the right of third parties
                                                                          observance of the minimal notary fees stipulated by law. Such fee
to receive compensation in the event of a mistake being made by the
                                                                          is usually paid by the buyer.
Register’s personnel.

ICLG TO: REAL ESTATE 2012                                                                                            WWW.ICLG.CO.UK
          Pachiu & Associates                                                                                                               Romania

          6.3     How has the real estate market in Romania recovered or            7.2    Is the seller under a duty of disclosure? What matters
                  reacted following the global credit crunch and worldwide                 must be disclosed?
                  recession in 2008/2010? What were the most important
                  real estate transactions in Romania in the past year?             The Romanian law does not expressly stipulate the seller’s duty of
                  Please include both local and international investors in          disclosure. However, according to the principles of Romanian civil
                  your answer.
                                                                                    law, the seller has to act in good faith and to provide the buyer with
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                                                                                    all the relevant information regarding the ownership title, the legal
          Although the real estate market in Romania is still affected by the       regime of the real estate, the encumbrances, the litigations etc.
          global crunch and worldwide recession, in 2011 the real estate
          market has started to recover, especially with respect to business
          leases.                                                                   7.3    Can the seller be liable to the buyer for
                                                                                           misrepresentation?
          The following consequences are notable on the Romanian real
          estate market, as arising out of the global credit crunch and
                                                                                    The seller may be held liable to the buyer for any misinterpretation,
          worldwide recession: (i) fewer real estate transactions (as regards
                                                                                    especially in case the seller has acted in bad faith.
          plots of land and/or buildings); (ii) the decrease of the price per
          sq.m. of the plots of land and of the buildings in the notaries grid;
          (iii) the entrance into bankruptcy of several developers, which           7.4    Do sellers usually give contractual warranties to the
          blocked several real estate projects.                                            buyer? What would be the scope of these? What is the
                                                                                           function of warranties (e.g. to apportion risk, to give
          However, the value of the rents in the commercial spaces is still
                                                                                           information)? Are warranties a substitute for the buyer
          high and the investors show a lot of interest in agricultural land and           carrying out his own diligence?
          in commercial spaces.
          Some of the most important real estate transactions in Romania in         According to the Romanian Civil Code, the seller has the legal
          2011 are as follows:                                                      obligation to warrant before the buyer the quiet and undisturbed
          a.      a surface of land of 350,000 sqm located in Bucharest has         ownership of the real estate (warranty against eviction) and the
                  been sold by S.C. Chimopar S.A. to Maveco Holdings                proper use of the real estate (warranty against defaults). However,
                  Limited for the price of 18 million Euro;                         the seller usually gives more contractual warranties to the buyer.
          b.      the copper mine Baita has been sold by S.C. Mineral Mining        The main scope of the seller’s warranties is to guarantee the buyer’s
                  S.R.L. to ElDore Mining Corporation Limited for the price         proper and undisturbed use and ownership of the real estate and to
                  of 15 milion Euro.; and
                                                                                    hold the buyer harmless against loss of ownership.
          c.      a surface of land of 20,000 sqm located in Bucharest has
                                                                                    The major function of the warranties is to apportion risk. Although
                  been sold by S.C. Baduc S.A. to S.C. Ikea Romania S.R.L.
                  for the price of 13 million Euro.                                 the warranties may provide the buyer with important information,
                                                                                    the buyer has the obligation to act diligently and to perform its own
                                                                                    due diligence regarding the real estate.
          6.4     Is there a trend in Romania towards the investment in
                  retirement homes / nursing homes due to the increased
                  ageing of the population?                                         7.5    Does the seller warrant its ownership in any way? Please
                                                                                           give details.
          To the best of our knowledge, in Romania there is no trend towards
          investment in retirement homes or nursing homes.                          The seller has to warrant that it is the sole owner of the real estate
                                                                                    and that no third party holds any right over the real estate. The
          However, during the last few years there have been several
                                                                                    seller has the legal obligation to inform the buyer about any
          retirement homes or nursing homes built and an increase of interest
                                                                                    circumstances that may affect the validity of its ownership right. In
          in this area can be noticed.
                                                                                    such case, the parties shall jointly decide the apportionment of risks.

               7 Liabilities of Buyers and Sellers in Real Estate                   7.6    What (if any) are the liabilities of the buyer (in addition to
                 Transactions                                                              paying the sale price)?


          7.1     What (if any) are the minimum formalities for the sale and        The buyer has the obligation to take over the real estate and to pay
                  purchase of real estate?                                          for all the costs implied by the transaction (notary fee, registration
                                                                                    taxes etc.), except if the parties agree otherwise.
          The transactions regarding real estate have to be concluded in
          written form and authenticated by a notary public.
                                                                                      8 Finance and Banking
          At the authentication of the sale-purchase agreement, the seller has
          to present to the notary public a fiscal certificate attesting the fact
                                                                                    8.1    Please briefly describe any regulations concerning the
          that all the local taxes with regard to the land have been paid.
                                                                                           lending of money to finance real estate. Are the rules
          The real estate that forms the object of the sale-purchase agreement             different as between resident and non-resident persons
          has to be previously registered with the competent Office of                     and/or between individual persons and corporate entities?
          Cadastre and Real Estate Publicity and Fiscal Authorities, otherwise
          the transfer of ownership may not be registered.                          The main regulation concerning the lending of money to finance
          In case the real estate has a special regime (e.g. the real estate is a   real estate is Law No. 190/1999 regarding mortgage credits. The
          historical monument) specific formalities might be required.              credit is granted for the performance of real estate investments or
                                                                                    for the reimbursement of a previously contracted mortgage credit.
                                                                                    Currently, under Law No. 190/1999, the rules do not differ between

          WWW.ICLG.CO.UK                                                                                          ICLG TO: REAL ESTATE 2012
Pachiu & Associates                                                                                                             Romania


borrowers that are residents or non-residents, individuals or                9 Tax
companies.
Another statute concerning the lending of money to finance real         9.1    Are transfers of real estate subject to a transfer tax? How
estate is Government Ordinance No. 51/1997, regarding the leasing              much? Who is liable?
operations and the leasing companies.




                                                                                                                                                  Romania
                                                                        Transfers of real estate are subject to notary fees and fees of
8.2   What are the main methods by which a real estate lender           registration with the Real Estate Register.
      seeks to protect itself from default by the borrower?             The notary fees and fees of registration with the Real Estate
                                                                        Register are established subject to the value of the transaction.
The main method by which a real estate lender seeks to protect          The transfer tax is in charge of the buyer, unless otherwise agreed
itself from default by the borrower is by the establishment of one or   by the parties to the transfer deed.
more securities, such as:
a.    first rank mortgages over the financed real estate or over
      other real estates;                                               9.2    When is the transfer tax paid?
b.    pledge/mortgage established over the borrower’s assets (e.g.
      shares, bank accounts), including floating charges; or            The transfer tax must be paid upon the conclusion of the transfer
                                                                        agreement.
c.    personal guarantees (in this case a person, other than the
      borrower, guarantees with its assets the borrower’s
      performance of the obligations under the loan agreement).         9.3    Are transfers of real estate subject to VAT? How much?
                                                                               Who is liable? Are there any exemptions?
8.3   What are the common proceedings for realisation of
      mortgaged properties? Are there any options for a                 As a general rule, the transfer of real estate (including buildings and
      mortgagee to realise a mortgaged property without                 land) is VAT exempt without credit (without deductible right). By
      involving court proceedings or the contribution of the            exception, the transfer of a building deemed to be new, of a part of
      mortgagor?                                                        such building or of constructible land are taxable operations for
                                                                        VAT purposes.
A mortgage agreement concluded in observance of all the legal           The delivery of a new building represents the delivery of a building
formalities represents an enforceable title.                            performed until December 31 of the year following the year when
For a creditor to enforce the mortgaged real estate without             the building was used for the first time. A building is deemed to be
involving court proceedings or the contribution of the mortgagor,       new also if the cost of the transformation works undertaken exceeds
the debt has to be certain, due and enforceable and the mortgage        50% of the market value of such building, exclusive of VAT, and of
agreement has to be concluded in authenticated form and registered      the value of the land below, after the transformation.
with the relevant real estate register.                                 The transfer of a real estate is exempt from VAT if it is performed
                                                                        under a transfer of business (e.g. sale, merger, spin-off) and the
8.4   What minimum formalities are required for real estate             beneficiary of such transfer is a taxable person.
      lending?                                                          If no exemption applies on the transfer of real estate, the transaction
                                                                        shall bear the standard VAT rate of 24%. The liability for paying the
The minimum formalities required for real estate lending are as         VAT to the state budget liaises with the seller of the real estate.
follows:
a.    the lender studies the documents presented by the borrower
                                                                        9.4    What tax or taxes (if any) are payable by the seller on the
      and evaluates the risk of the loan;
                                                                               disposal of a property?
b.    the lender establishes the provisions of the loan agreement
      and the securities required under the loan agreement,             Transfers of real estate are subject to tax on the income resulting
      depending on its evaluation;
                                                                        from real estate located in Romania.
c.    the parties conclude the loan agreement and the security
      agreement that secures the loan; and                              The tax is the responsibility of the seller and is: for
                                                                        corporations:,16% profit tax; and for individuals:
d.    the borrower insures the financed real estate and assigns in
      favour of the lender all his rights arising from the insurance.   a.     in case of any constructions with the afferent lands and in
                                                                               case of any land without constructions, acquired within a
                                                                               term of three (3) years inclusively: (i) 3% until the amount of
8.5   How is a real estate lender protected from claims against                RON 200,000 inclusively; and (ii) for the amount exceeding
      the borrower or the real estate asset by other creditors?                RON 200,000, the amount of RON 6,000+2% of the amount
                                                                               exceeding RON 200,000; and
The real estate lender may protect itself from such claims by           b.     in case of any constructions with the afferent lands and in
establishing a first rank mortgage over one or several real estate             case of any land without constructions, acquired within a
properties.                                                                    term exceeding three (3) years: (i) 2% until the amount of
                                                                               RON 200,000 inclusively; and (ii) for the amount exceeding
Such mortgages must cover the entire amount of the loan and must
                                                                               RON 200,000, the amount of RON 4,000+1% of the amount
be registered with the Real Estate Register so as to become                    exceeding RON 200,000.
enforceable to third parties.
                                                                        As regards the transfer of land performed by companies, only the
                                                                        gains representing the difference between the purchase price and
                                                                        the selling price of such land are considered taxable income.



ICLG TO: REAL ESTATE 2012                                                                                          WWW.ICLG.CO.UK
          Pachiu & Associates                                                                                                                  Romania

          9.5       Is taxation different if ownership of a company (or other          lease agreements concluded for more than one year, the rent is
                    entity) owning real estate is transferred?                         usually re-negotiated subject to the inflation rate.
                                                                                       c)     Tenant’s right to sell or sub-lease
          Under this question, the following scenarios may arise:
                                                                                       Under Romanian law the tenant may sell or sub-lease, if such a
          a.        if the seller is a Romanian company, the gains by the sale of      possibility is not prohibited under the lease, and if the conditions of
                    the shares in another company are deemed as capital gains
                                                                                       the sale/sub-lease do not contradict the provisions of the lease.
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                    and taxed at 16%;
                                                                                       It is customary, however, under lease agreements, that the tenant
          b.        if the seller is an individual, 16% on the capital gain for
                    shares held in a Romanian company; or                              may sell/sub-lease only with the prior approval of the landlord.
          c.        if revenues are obtained in Romania by a non-resident              d)     Insurance
                    company, such transfer is taxed at a 16% tax rate, unless a        Parties usually include clauses regarding their obligation to
                    more favourable rate is established by the relevant Double         conclude insurance policies as regards the leased premises, the
                    Tax Treaty concluded between the two countries.                    equipment located in the leased premises and third party liability
          Certain transactions like mergers, spin-offs, transfers and swaps of         insurances.
          assets performed between two companies of two or more distinct EU            e)     (i) Change of control of the tenant
          Member States, should not trigger profit or income tax liabilities.          No such provision is provided under Romanian law. According to
          The transfer of real estate is exempt from VAT if it is performed            Romanian law, the lease agreements can be terminated in case the
          under a transfer of business (e.g. sale, merger, spin-off) and the           obligations undertaken by the parties are not observed.
          beneficiary of such transfer is a taxable person.                            In practice, the landlords usually include in the lease agreements
                                                                                       specific conditions with respect to the change of control of the
               10       Leases of Business Premises                                    tenant.
                                                                                       e)     (ii) Transfer of lease as a result of a corporate
                                                                                                   restructuring (e.g. merger)
          10.1 Please briefly describe the main laws that regulate leases
               of business premises.                                                   The landlord’s right to terminate the lease in the case of the tenant’s
                                                                                       corporate restructuring is frequently provided for under lease
          The main law that regulates lease agreements is the Civil Code,              agreements.
          which regulates aspects such as: (i) the rights and obligations of the       Under Romanian law, however, the lease is transferred to the
          parties to a lease agreement; (ii) the circumstances in which a lease        company that takes over the patrimony of the restructured
          may be terminated; and (iii) the enforceability of the lease to third        corporation.
          parties, etc.                                                                f)     Repairs
          Some specific rules are regulated by the legislation regarding the           Under Romanian law, unless otherwise provided under the lease
          companies (e.g. a location may serve as premises for two                     agreement, the tenant undertakes to perform all the repairs, except
          companies only if such companies have at least one shareholder in            for the “major repairs”, which rest with the landlord.
          common, or if the structure of the real estate allows the functioning        The normal wear and tear of the leased premises is borne by the
          of several companies in different rooms or if at least one of the            landlord.
          shareholders is the owner of the real estate).

                                                                                       10.4 What taxes are payable on rent either by the landlord or
          10.2 What types of business lease exist?                                          tenant of a business lease?

          The following types of business lease exist:                                 The tax payable on lease revenues by the landlord is:
          a.        leases concluded between private individuals/entities, based       a.     16% profit tax, for corporations; and
                    on a lease agreement;
                                                                                       b.     16% tax on net income for individuals.
          b.        leases concluded between public authorities in their capacity
                    as lessors and private individuals/entities in their capacity as   In case the landlord is a company registered for VAT purposes,
                    lessees, with regard to public or private real estate property     rental operations involving immovable goods are VAT exempt
                    belonging to the Romanian State or to the local                    (without credit), with very few exceptions. However, the option to
                    municipalities; and                                                tax such operations is also available.
          c.        leases concluded between a leasing company and an
                    individual/entity, based on a leasing agreement.                   10.5 In what circumstances are business leases usually
                                                                                            terminated (e.g. at expiry, on default, by either party
          10.3 What are the typical provisions for leases of business                       etc.)? Are there any special provisions allowing a tenant
               premises in Romania regarding: (a) length of term; (b)                       to extend or renew the lease or for either party to be
               rent increases; (c) tenant's right to sell or sub-lease; (d)                 compensated by the other for any reason on termination?
               insurance; (e) (i) change of control of the tenant; and (ii)
               transfer of lease as a result of a corporate restructuring              The main circumstances in which business leases may be
               (e.g. merger); and (f) repairs?                                         terminated are:
                                                                                       a.     upon reaching the expiry date;
          a)        Length of term
                                                                                       b.     upon unilateral termination, with the observance of a notice
          Lease agreements for business premises of recently incorporated                     period, only in the case of leases concluded for an
          companies are generally concluded for a period of one or two years.                 undetermined period of time;
          b)        Rent increases                                                     c.     upon termination in case of default; or
          The law does not contain any provisions in this respect. Under               d.     upon the written agreement of both parties.


          WWW.ICLG.CO.UK                                                                                             ICLG TO: REAL ESTATE 2012
Pachiu & Associates                                                                                                               Romania

Lease agreements may be prolonged either by written or by                 public utility cause required to realise certain objectives of national
unspoken agreement of the parties (the landowner allows the tenant        and local interest.
to use the premises after the expiry date) until the date when one of     Expropriation may only be applied for a public utility cause, based
the party notifies the other with respect to the termination of the       on a compensation, which consists of the actual value of the land
lease agreement.                                                          and the damages incurred on the owner. The amount of the
Either party may be compensated in case of faulty termination of          compensation may be agreed upon by the owner of the land and the




                                                                                                                                                    Romania
the lease agreement.                                                      State or in case of disagreement, such amount shall be established
                                                                          based on a court order.
10.6 Does the landlord and/or the tenant of a business lease
     cease to be liable for their respective obligations under            11.3 Which bodies control land/building use and/or occupation
     the lease once they have sold their interest? Can they be                 and environmental regulation? How do buyers obtain
     responsible after the sale in respect of pre-sale non                     reliable information on these matters?
     compliance?
                                                                          The following bodies control land/building use and/or occupation
The landlord and/or the tenant remain, in principle, liable for the       and environmental regulation:
obligations undertaken in the lease agreement which have matured          a.     the National Agency of Cadastre and Real Estate Publicity,
and not been fulfilled prior to the alienation of their interest.                the central authority in the fields of cadastre and real estate
Furthermore, the landlord and/or the tenant remain liable for                    publicity;
compliance with their obligations under the lease agreement until         b.     Local Councils, local public authorities that authorise the
the alienation of their interest.                                                Urban Plans;
                                                                          c.     City Halls, local public authorities that issue the building
                                                                                 permits for land located under their jurisdiction; and
10.7 Green leases seek to impose obligations on landlords
     and tenants designed to promote greater sustainable use              d.     the Ministry of Environment and Water Management, the
     of buildings and in the reduction of the "environmental                     main authority in the field of environmental and water
     footprint" of a building. Please briefly describe any "green                protection.
     obligations" commonly found in leases stating whether                Buyers may obtain information on real estate by consulting the Real
     these are clearly defined, enforceable legal obligations or          Estate Register.
     something not amounting to enforceable legal obligations
     (for example aspirational objectives).                               Information on environmental issues may be obtained by consulting
                                                                          an environmental report generally performed with the seller’s
To the best of our knowledge, the lease agreements concluded up           approval.
until the present moment in Romania are “traditional” ones, without       Information on the construction regime of real estate may be
mentioning “green obligations”.                                           obtained under a certificate of urbanism issued with regard to such
                                                                          real estate.

     11      Public Law Permits and Obligations
                                                                          11.4 What main permits or licences are required for building
                                                                               works and/or the use of real estate?
11.1 What are the main laws which govern zoning and related
     matters concerning the use and occupation of land?
                                                                          The main permit required for building works is the building permit.
     Please briefly describe them and include environmental
     laws.                                                                No permit or licence is required for the use of a real estate.
                                                                          Other permits such as environmental, sanitary, water management,
The main laws in the fields of zoning and related matters are:            and fire protection permits are required for the use of already
a.        Law No. 350/2001 regarding the organisation of territory and    erected buildings and for conducting specific commercial activities.
          urbanism, which regulates certificates of urbanism and urban    However, the right to use real estate which forms part of the public
          plans;                                                          domain may be obtained only with the prior approval of the
b.        Law No. 50/1991 regarding the authorisation of construction     competent public authorities.
          works, which regulates the works for which a building
          permit is required, the documents and procedures required
          for the issuance of building permits, etc.;                     11.5 Are building/use permits and licences commonly obtained
                                                                               in Romania? Can implied permission be obtained in any
c.        Law No. 213/1998 regarding public property and its legal
                                                                               way (e.g. by long use)?
          regime, which regulates the legal regime of public property;
          and
                                                                          Building permits are commonly obtained in Romania, especially for
d.        Emergency Government Ordinance No. 195/2005 regarding
          environmental protection, which regulates the obligations of    the erection of new constructions.
          individuals/corporations in the field of environmental          The erection of buildings without a building permit is considered a
          protection and the authorities with involvement in this area.   felony and is sanctioned under Romanian law.
                                                                          Implied permission may be obtained when the competent
11.2 Can the state force land owners to sell land to it? If so            authorities do not issue the building permit within the legal term,
     please briefly describe including price mechanism.                   despite the investor having complied with all the legal
                                                                          requirements. However, a court decision in this respect has to be
The State is entitled to force land owners to sell their land, based on   obtained by the investor.
the expropriation procedure provided under Law No. 33/1994 on             However, new constructions cannot be registered with the Real
expropriation and under Law 255/2010 on expropriation for a               Estate Register without a building permit. Consequently, the Real


ICLG TO: REAL ESTATE 2012                                                                                            WWW.ICLG.CO.UK
          Pachiu & Associates                                                                                                             Romania

          Estate Register may not register the investor’s ownership title over     11.10 Please briefly outline any regulatory requirements for the
          the building based only on an implied permission, except for the               assessment and management of the energy performance
          case when the investor has obtained a court decision in this respect.          of buildings in Romania.

                                                                                   The regulatory requirements for the assessment and management of
          11.6 What is the appropriate cost of building/use permits and
                                                                                   the energy performance of buildings are provided under Law No.
               the time involved in obtaining them?
Romania




                                                                                   372/2005 and the Methodological Norms of August 10, 2007. Such
                                                                                   requirements apply to certain categories of buildings, having a total
          The cost of a building permit is given by the sum of the following
                                                                                   useful area exceeding 1,000 sq.m., in case of new buildings and in
          fees and other expenses:
                                                                                   case of existing buildings on which renovation works are
          a.    a fee for the issuance of a building permit, representing 1%       performed.
                of the estimated value of the building. For buildings
                representing dwellings and household facilities, the tax is
                0.5% of the estimated value of the building;                         12      Climate Change
          b.    a fee for the issuance of a certificate of urbanism, established
                subject to the area of land for which such certificate is
                requested;                                                         12.1 Please briefly explain the nature and extent of any
                                                                                        regulatory measures for reducing carbon dioxide
          c.    taxes on the issuance of the approvals required for the                 emissions (including any mandatory emissions trading
                building permit, established by the competent bodies subject            scheme).
                to their own criteria; and
          d.    other costs, such as for specialists hired to draft the building   In accordance with the Decision of the Romanian Government No.
                project, the authentication of documents, etc.                     60/2008 approving the National Allowance Plan regarding the
                                                                                   greenhouse gas emission certificates for the periods 2007 and 2008-
          11.7 Are there any regulations on the protection of historic             2012, Romania shall have the right to issue a number of 75,944,352
               monuments in Romania? If any, when and how are they                 greenhouse gas emission certificates each year (during the period
               likely to affect the transfer of rights in real estate?             2008-2012). One greenhouse gas emission certificate gives an
                                                                                   industrial installation the right to emit one tonne of carbon dioxide.
          Romanian law provides for a special regime with respect to the
          conservation, restoration, consolidation or performance of any type
                                                                                   12.2 Are there any national greenhouse gas emissions
          of modifications to the constructions classified as historic
                                                                                        reduction targets?
          monuments.
          The transfer of rights over real estate classified as a historic         In accordance with the provisions of the Kyoto Protocol to which
          monument is subject to observation of a pre-emption right                Romania is a party, our country is committed to decrease its
          established by law in favour of the Romanian State.                      greenhouse gas emissions by 8% applicable on 1990 levels by
                                                                                   2012.
          11.8 How can e.g. a potential buyer obtain reliable information
               on contamination and pollution of real estate? Is there a           12.3 Are there any other regulatory measures (not already
               public register of contaminated land in Romania?                         mentioned) which aim to improve the sustainability of
                                                                                        both newly constructed and existing buildings?
          Generally, before concluding a transaction, the potential buyer shall
          perform the necessary tests with respect to the eventual pollution or    There are no such regulatory measures (not already mentioned)
          contamination of the real estate.                                        which aim to improve the sustainability of both newly constructed
          In Romania there is no public register of contaminated land.             and existing buildings.
                                                                                   However, the Romanian Ministry for Environments and Forests
          11.9 In what circumstances (if any) is environmental clean up            approved by Order No. 950/2010 the Financing Guide for the
               ever mandatory?                                                     installation of heating systems using renewable energy, including
                                                                                   the replacement or the supplement of conventional systems. The
          Environmental clean up is mandatory whenever the soil has been           aforementioned guide includes provisions regarding: (i) the
          polluted. If the landowner does not take measures against pollution,     programme; (ii) eligibility of the applicants; (iii) purpose of the
          he may be restricted in his right to dispose of his land. For example,   project; and (iv) procedures for implementing and monitoring the
          the building permit may be issued only based on an environmental         project.
          approval. In some cases, the competent environmental body does
          not issue the approval without a thorough study of the
          environmental conditions of the land.




          WWW.ICLG.CO.UK                                                                                         ICLG TO: REAL ESTATE 2012
Pachiu & Associates                                                                                                            Romania


                          Ana Maria Goga                                                        Maria Cecilia Badea
                          Pachiu & Associates                                                   Pachiu & Associates
                          No. 4-10 Muntii Tatra Street                                          No. 4-10 Muntii Tatra Street
                          Sector 1, Bucharest                                                   Sector 1, Bucharest
                          Romania                                                               Romania




                                                                                                                                              Romania
                          Tel:     +40 21 312 1008                                              Tel:     +40 21 312 1008
                          Fax:     +40 21 312 1009                                              Fax:     +40 21 312 1009
                          Email:   ana_maria.goga@pachiu.com                                    Email:   cecilia.badea@pachiu.com
                          URL:     www.pachiu.com                                               URL:     www.pachiu.com

 Ana Maria is a partner within Pachiu & Associates and is currently     Cecilia is an associate within the firm and is a member of the Real
 head of the Real Estate Practice Group.                                Estate Practice Group. Her area of expertise covers mainly real
 Ana-Maria has an extensive legal practice in all kinds of real         estate, labour law and litigation.
 estate operations, assisting major clients in the acquisition,         Cecilia has been involved in a significant number of land
 development and financing process of retail, residential, office       acquisitions, title investigations, rental of commercial spaces and
 and mixed projects.                                                    development of residential projects.
 Her experience includes Greenfield investments, as well as             Cecilia has also extensive experience in assisting the firm’s
 complex acquisition or sale transactions of various significant real   clients with respect to negotiation of construction agreements,
 estate projects. She also has a strong practice in legal operations    due diligence procedures and real estate investments.
 pertaining to agricultural land. Her legal expertise covers real       Cecilia holds a Master Degree in Business Law.
 estate law, building law, environment law, banking law.                Cecilia is fluent in Romanian, English and Spanish and
 Ana-Maria graduated from the Law and European Institutions             conversant in French.
 School of the Romanian – German University. She attended
 various training courses focused on Romanian real estate and
 construction area of expertise.
 Ana-Maria is fluent in Romanian, German and English and
 conversant in French.




 Pachiu & Associates is a medium sized Romanian business law firm.
 Bound by Excellence, our purpose is to offer prompt, effective and personalised solutions to all legal matters which our domestic
 and international clients, regardless of their size, are confronted with in Romania. We believe that knowing and understanding
 each client and its particular business is essential.
 Always ready to create Innovation from Enthusiasm and Value from Expertise, the firm’s partners and associates are all well
 regarded professionals in their areas of practice. They are assigned between the six specialised practice groups of the firm, based
 on their personal competences and natural inclinations: Corporate Practice Group (including Labour, Competition, Insolvency and
 Intellectual Property sub-practice groups), Energy Practice Group, Finance Practice Group (including Tax and Personal Finance
 sub-practice groups), Real Estate Practice Group, PPP and Litigation Practice Groups.
 We deliver our services in English, German, French, Italian and Spanish with the same ease we do in Romanian.
 We may be of assistance worldwide through our membership in the Primerus International Society of Law Firms and Transatlantic
 Law International, as well as based on our collaboration with a Magic Circle firm and many other law firms located in business
 centres around the world.
                                                               www.pachiu.com




ICLG TO: REAL ESTATE 2012                                                                                        WWW.ICLG.CO.UK

				
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