Your Guide to Purchasing Off-plan Property
Foreign investors are now entitled to purchase Romanian property. The buying process is routine and straight-forward, can be completed within one month (except the final Deeds of Sale) and follows a very similar course to buying a freehold property in the UK or Rep. of Ireland.
The four steps of the buying process are: (1) Reservation Agreement, (2) Conveyancing, (3) Preliminary Contract and (4) Deeds of Sale.
(1) Reservation Agreement
Upon deciding which property to purchase, it is necessary to (a) sign a reservation agreement with the seller and (b) pay a reservation deposit (typically €3,000). The seller is subsequently obliged to remove the property from the market. The signed agreement (equivalent to an “option” contract in the U.K. and Ireland) is your proof that the property is available for your purchase at the set price.
(2) Conveyancing
Following signing of the reservation agreement, a lawyer(s) acting on your behalf has 28 days to gather information on the property regarding the land register and other legal matters. For example, the lawyer must ascertain whether the person selling the property is authorised to transfer their ownership and whether the title deeds for the property are satisfactory. In addition, the lawyer must determine that the property is free from outstanding charges such as a mortgage or other debts. Successful completion of the legal checks is a prerequisite for drawing up the preliminary contract.
If the property is in the construction phase, the lawyer will ensure that the developer meets all appropriate legal requirements. This involves (a) checking the building licence in the architectural department of the relevant municipality and (b) carrying out a land survey to ensure the work is taking place on regulated land.
(3) Preliminary Contract
The Preliminary Contract can be signed once legal checks on the property have successfully concluded. This contract contains information on the buyer and the seller, the description of the property, the price of the sale, the method of payment, the date the contract is formalised, the date you take possession of the property etc. Once both parties have signed the preliminary contract and the deposit has been paid, the contract becomes a legally-binding document.
The amount to pay as deposit at this stage and the structure of further payments prior to construction completion varies depending on the developer. Typically the deposit is in the 25-40% range of the property price.
(4) Deeds of Sale
Ownership of the property is transferred with the Deeds of Sale. This document is signed between the buyer and seller before a public official termed a notary. The duties of the notary include (a) ensuring that all legal requirements have been met, (b) ensuring that the cost of the property has been paid in full and (c) verifying the identifying the buyer and seller. With regards to the latter point, you may authorise another person e.g. a lawyer, with the power of attorney to attend and sign the deeds on your behalf.
Note that in the case of off-plan property the deed of sale is not signed until the development has been completed.
Immediately after the deeds have been signed, the buyer can obtain the property keys and take possession of the property.