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  • Tudor Cristina

Real Estate Investment Opportunities in Romania: Legal Considerations.

Updated: Jan 15


Why invest in Romanian Real Estate Market: A Comprehensive Guide for Foreign Investors.


real estate


Nowadays, Romania, with its increasing economy, has turnded up as an attractive destination for real a estate investment, attracting both national and international investors.


With its strategic position in Eastern Europe, belonging to the European Union since 2007, and a cost-effective living environment, this country provides a wealth of opportunities for both national and international real estate investors.


Anyway, before diving into this encouraging market as a foreign investor, you need to analyze the legal considerations that impact your real estate investment in Romania.


This article will highlight the economic advantages of investing in Romania's real estate sector and the legal framework that foreign investors need to know before jump into this market sector.


Summary:

  • Short overview of the Romanian market. Real Estate in Romania.

  • Legal Framework. Investment Structures. Legal Considerations for Foreign Investors

  • Which business form is needed for real estate investments?

  • Due Dillingence and Legal Compliance

  • Contracts and Financing


 


Section I. Romanian Real Estate Market Overview


A few yers ago, there was a trend of getting up the real estate prices in main cities, such as Bucharest and Cluj-Napoca.


This increase was triggered by some factors as a growing economy, more foreign investments and urbanization.


However, recent events like the COVID-19 pandemic have introduced uncertainties into the market, causing a shift in this trend.


Nevertheless, Romania continues to capture the attention of foreign investors, particularly in commercial properties and residential developments. These investments were engaging to the expansion of modern infrastructure and luxury housing options.


Section II. Legal Framework. Legal Considerations for Foreign Investors


The rights and restrictions associated with owning real estate


Foreign investors can be the owners of the Romanian properties, under principles similar to those applicable to Romanian citizens, as per the conditions required by the international regulations.


This principle is reflected in the Romanian Constitution, which guarantees the right to have private property.


However, there are some restrictions, as are the following:


  • Agricultural lands located in Romania cannot by acquired by some categories of foreign investors, such as the non-residents (non-EU citizen or non-SEE citizens).

Also, the agricultural lands located outside the village may be aquired by the Romanians, only after they fulfill a preliminary procedure that can affect the validity of the sale purchase agreement.

  • Hostorical and Cultural building needs a special permit for aquisitions.

The Romanian authorities may ask to fulfill some conditions if you want to offer for sale this kind of building.

The acquisition of a historical bulding requires the approval of local and national authorities, including the Ministry of Culture. It is a bit complex process that involves the assessment of the impact and historical value of the monument.


If you need to acquire a cultural building there may be restrictions regarding modifications you can make to it.


  • The lands and buldings situeted in protected natural areas may face restrictions as well.

Before proceeding with any real estate investment in Romania, we strongly recommend consulting a local attorney who can provide guidance tailored to your specific property and its location.


If you have any questions or need legal advice regarding the above-mentioned, you can contact us by e-mail: office@cristinatudor.ro or by phone at (+40)766.706.561.


Land Acquisition. Romania Property Investment


Foreign investors generally have the right to acquire and own real estate in Romania, but certain rules apply, especially regarding agricultural land and forests. Legal experts can help navigate these regulations effectively.


The procedure of acquiring a building in Romania consists of a deed that need to be executed before a public notary.


The more important are the legal analysis of the documents and the legal requirmnents for the real estate specifics that should be assessed in advance.


Section III. Business forms for Real Estate Investments


Both national and international investors have several legal business forms to choose from, for property ownership in Romania, including :

  • Individual Ownership: Foreign investors can directly purchase and own property in Romania.

This is a straightforward option for those looking to buy residential properties. This may involve implications, from a tax point of view and face some restrictions, as mentioned above.

  • Joint Ventures: Foreign investors can set up joint ventures with Romanian partners or other entities. This approach can be beneficial when they are following wide-ranging projects.

  • Limited Liability Companies (LLC): Foreign investors can set up LLCs in Romania to manage real estate. This is a common approach for commercial real estate investments.

  • Real Estate Investment Funds (REIFs).


Section IV. Due dillingence and legal compliance


Before finalizing a real estate transaction in Romania, conducting due diligence is crucial. This procedure involves:

  1. Verifying the legal Ownership – Legal Anlaysis: Scanning the private and public records to confirm the property's legal ownership and Ensuring that the property's is free of any constraints.

  2. Understanding Land Use Regulations: Be aware of the property's land use restrictions to assess its development potential.

  3. Assesing Environmental Factors: Assess any environmental matter that may affect the real estate.

  4. Clarifying tax obligations and liabilities: Point out any outstanding liabilities or other taxes attached to the real estate.

  5. Ensuring all necessary licenses and permits are in place: Be aware that the property has all the nedeed licenses and permits and for its intended service.


Section V. Contracts and Financing


Real estate transactions in Romania typically involve several agreements, including:

  1. Preliminary Sale-Purchase Agreement: This document outlines the main terms and conditions of the sale purchase agreement.

  2. Sale-Purchase Agreement: The final contract which transfers ownership of the real estate from the seller to the buyer.

  3. Lease Agreements: If you are going to lease the property, make sure that lease agreements comply with Romanian law.

  4. Construction Contracts: For development projects, full secured construction agreements the key.

If you are a foreign investor interested about the financing options available, please note that mortgages and loans are the main common solutions.


To use this solutions, please note that the first step needed is to incorporate a romanian company. More details are available here.


It's essential to work with a local legal advisor who can guide you navigate the tax landscape and confirm the legal compliance.


If you have any questions or need legal advice regarding the above-mentioned, you can contact us by e-mail: office@cristinatudor.ro or by phone at (+40)766.706.561.


Conclusion


Romania presents a compelling landscape for real estate investment, with its growing economy and attractive market.


However, to maximize these opportunities, it's crucial to navigate the legal requirements effectively.


Thorough due diligence, understanding ownership limitations, and seeking legal assistance are essential steps for a successful and compliant investment in the Romanian real estate market.


By taking these measures, foreign investors can tap into Romania's potential for growth and prosperity.


If you're considering real estate investments in Romania, don't hesitate to contact our experienced team of legal advisors for expert guidance here: office@cristinatudor.ro

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