For ten years, the buyers were his cheapest financier. The law did not forbid taking money from them. It only determined where that money goes.
“Look at line 14.”
Yoav shared his screen. A cash flow spreadsheet I have known in various versions for several years, for a small residential project in Ilfov county, near Bucharest. Line 14 read “Buyer advance payments.” In all the earlier versions it was the green line in the sheet, the one everything else leaned on. Now, in the project's first months, it was almost empty.
“In the old model,” he said, “I would start selling before I even had the permit in hand. A nice discount for whoever came in first, the advance payments come in, and from them I pour the frame. What's left goes toward the deposit on the next plot. I built three projects that way.”
He said it without any apology, and rightly so. All the apartments were delivered, some of them late, none was sold twice. Yoav is a civil engineer, ten years in Romania, one of the careful developers I know. But his model, exactly like that of many other developers there, was built on one assumption: the buyers' money in one project is the capital that drives the next project.
Since 11 December 2025 that doesn't work.
He didn't come to me with a question about the model. He came with a question about the contract. “Tell me what to change in the preliminary agreement so that it fits the new law.”
So we went over the changes. A preliminary agreement only before a notary, and only after the permit is registered in the land registry books. From March 2026 also an advance registration of the future apartments, each with its own page. Advance payments into a separate project account, every expenditure approved by the site inspector, up to 25% of the price for the frame and up to 20% for the systems. And not a single euro goes out to another project.
We fixed the contract within a week. That was the easy part.
Because when we finished, Yoav opened the spreadsheet again and understood on his own what it meant. The “presale” stage disappears, because you can't sign before the permit is registered. The advance payments that do come in can't finance the next plot. And the gap between the moment you have to pay the contractor and the moment the buyers' money is available, the gap that for ten years the buyers had closed for him, is now open.
“The law didn't change my contract,” he said. “It changed my bank.”
For three months he rebuilt the project, this time from the financial side. He brought in an equity partner, a private investor from Israel, who came in with forty percent of the equity in return for a third of the profit. He opened a construction credit line with a Romanian bank, and the bank demanded to see the equity inside before its first euro. And he split the project into two phases, so that the capital that must be raised up front would be of a size that can be raised at all.
The negotiation with the partner was the hard part. Not because of the amount, because of the questions. The partner wanted to know what happens if sales in the first phase are delayed, who puts in additional money if the bank reduces the line, and what he gets if Yoav decides to postpone the second phase. These are questions no apartment buyer ever asked Yoav. A buyer pays a deposit and waits for the key. An equity partner wants to know how he gets out.
“All these years I thought the buyers were customers,” Yoav said to me at one of the meetings. “Now I understand they were also my investors. It's just that none of us called it that.”
We drafted a partnership agreement with an exit mechanism, with a staged funding schedule, and with a clause that determines what happens to each side if the second phase doesn't get under way.
There were good surprises too. Yoav was sure that without the big discount for the first buyers, Israelis would not buy. In practice, some of the first buyers asked exactly about this: “Does the money go into the project's account? Who approves the payments?” What used to be a footnote in a contract became a question buyers ask at the first meeting. And a developer who can answer it with confidence sells better.
But the price was real. The start of construction moved by seven months, between the permit registration, the advance registration and the bank. A third of the profit went to the partner. And the plot in Otopeni, the one already marked in the spreadsheet as “the next project,” was sold to someone else. There was nothing to fund the deposit from.
“For the first time in ten years,” he said to me in our last conversation, “my project is financed like a project. And not like a house of cards.”
What interests me in this story is not the law. The law is written, and can be read. What interests me is how many developers still ask how to draft the contract, when the real question is who finances the frame. A developer who built his model on the buyers' money does not need a lawyer to fix a clause for him. He needs a new source of financing.
The question I would ask in your place
- If I cannot take a euro out of the buyers' advance payments outside the project, what exactly does my cash flow rest on?
- How much equity do I really need until the frame is finished, and who brings it?
- What costs me more: giving part of the profit to a partner, or waiting for sales to fund the construction?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית