All questions

Introduction

i Ownership of real estate

The Roman law system distinguishes between rights in rem, as rights over or in connection with real estate, and rights in personam, as personal rights on performance of obligations.

Ownership is a right in rem and grants its holder the full right to use and dispose of the real estate. The other rights in rem (i.e., superficies, usufruct, easements, usus and habitatio) grant their holders only part of the attributions of full ownership.

The superficies right is of particular importance to investors and, starting with the New Civil Code (which entered into force as of 1 October 2011),2 enjoys unitary regulation. The superficies right entitles its owner to erect and to own a building on a third party's land, with the owner of the building obtaining the right of use on the land. The superficies right can be obtained for free or for a fee and is available for a maximum of 99 years, with the possibility to be extended repeatedly.

The ownership may be public or private. Public ownership belongs solely to public entities (the state, counties or localities) and operates on real estate regulated by law as being publicly owned. Private ownership may belong to public or private entities and operates on any real estate that is not subject to public ownership.

There are several forms of private ownership:

  1. exclusive ownership: granting free use and disposal of the real estate to a single entity;
  2. co-ownership by share quotas: real estate owned by more than one entity on ownership quotas, usually as pro-rata shares; and
  3. joint ownership: real estate owned by more than one entity without determining their quotas (usually in wedlock).

A recent institution under Romanian law is the fiduciary agreement,3 which creates the possibility for any person to transfer rights (including ownership) to one or more fiduciaries (e.g., credit institutions, investment companies, management companies and insurance companies) to exercise full prerogatives of such rights for a specific purpose and period (not exceeding 33 years) and for the benefit of one or more beneficiaries (constitutor, fiduciary or third person).

In Romania, there is no leasehold ownership. A lease is a right in personam and provides its holder only the personal right to use the property in exchange for the payment of the rent during the contractual period.

ii Registration system

Romanian real estate is registered with the land registry operated by the National Agency for Cadastre and Land Registration. The land registry is publicly available and ownership information can be obtained by requesting a land book excerpt. An online system for accessing land registry services was recently implemented and accelerated in 2020 owing to pandemic restraints.

The land book excerpt consists of three parts:

  1. the real estate description (surface, location and use type);
  2. ownership information (owner, title and relevant documents); and
  3. encumbrances (e.g., mortgages, easements, interdictions and litigations).

The registration of real estate with the land registry was given constitutive effect as of 1 October 2011. As a general rule, the rights in rem over real estate registered with the land book may only be transferred by registration with the land book, based on the valid title on the real estate. Similarly, rights in rem may be cancelled solely by removal from the land registry, based on their holder's written consent or a final judgment.

Nevertheless, this general rule will only be implemented after completing the cadastral measurement formalities within each territorial unit, envisaged for the years to come.4

Until then, all formalities with the land book registry only have an opposable effect, so failure to register real estate operations with the land book registry does not affect their validity, but deprives the parties from legal protection against third parties who are not bound to observe these operations.

iii Choice of law

Real estate transactions must observe certain rules to be effective in Romania, such as authentication of the transfer deed by a notary public, registration with the land book registry, price payment in local currency (for legal persons) and a fiscal certificate being attached.

Generally, parties to a transaction on real estate in Romania are free to choose the law applicable to contractual matters to the extent that the chosen law does not prejudice the Romanian legal provisions that cannot be exempted. Should the parties fail to choose a governing law, Romanian law (lex rei sitae) will apply.