In brief
In Romania there is no trustee holding buyers' money in the project's name, as happens in Dubai. The protection is built in layers: a notarial preliminary contract registered in the land book, a dedicated project account in the developer's name with spending caps by stage, and a payment schedule set in the contract. Payment through the notary and a bank guarantee are not mandatory under the law, so they are a matter for negotiation.
Key takeaways
- 1Advance payments under the preliminary contract go into a separate account of the developer, dedicated to the project. The account is in the developer's name, and it is not an escrow (Article 422(10) of Law 169/2026).
- 2The developer may spend up to 25% of the price on the structural frame and then up to 20% on the building systems, only with a "bun de plată" approval from the site supervisor.
- 3Using the advance payments for another purpose is prohibited and attracts a fine of 1% of the developer's turnover in the previous year, if the act is not a criminal offence (Article 422(11)).
- 4The caps limit the developer's spending, not your payments. The payment schedule is set by the contract.
- 5A bank guarantee is an irrevocable and unconditional undertaking by the bank (Civil Code, Article 2321). The law does not require it.
Israelis who have invested in projects in Dubai in the past, or who have heard about the market there, often ask about the "escrow account" in Romania. The answer surprises many: no such mechanism exists in Romania. There is no bank appointed as trustee holding buyers' money in the project's name.
This does not mean the money is unprotected. Romania chose a different structure: it does not require the money to be deposited with a third party, but it restricts the way in which the developer may use it. Everything else depends on your contract.
Is there an escrow account in an off-plan purchase in Romania?
Not in the sense familiar from Dubai. Under Article 422(10) of the Planning and Construction Code, Law 169/2026, advance payments made under the preliminary contract go into a separate bank account of the developer, dedicated to the project. The account is registered in the developer's name, and there is no trustee. Money may be spent from it only on that project, and only with the "bun de plată" stamp (approved for payment) of the site supervisor (diriginte de șantier).
These rules came from Law 207/2025, the "Nordis law", and since 25 August 2026 they are found in Article 422(6) to 422(11) of the Code.
The developer may spend up to 25% of the price on the structural frame and then up to 20% on the building systems, only with a "bun de plată" approval from the site supervisor.
How does Romania differ from Dubai?
In Dubai, Law No. 8 of 2007 on escrow accounts requires buyers' payments to go into an escrow account in the project's name, with a trustee accredited by the Land Department. In Romania the law restricts spending from an account of the developer.
| Subject | Dubai (Law 8/2007) | Romania (Article 422 of Law 169/2026) |
|---|---|---|
| Where the money goes | An escrow account in the project's name, with an accredited trustee (Article 7) | A separate account of the developer, dedicated to the project (Article 422(10)) |
| Use of the money | Only for the construction of that project, a separate account for each project (Article 9) | Only for that project, up to 25% for the structural frame and then up to 20% for the building systems, with the supervisor's approval |
| Misuse | Imprisonment, a fine of at least AED 100,000, or both (Article 16) | A fine of 1% of turnover in the previous year, if the act is not a criminal offence (Article 422(11)) |
| After construction is completed | The trustee retains 5% for one year from registration of the units (Article 14) | No retention of funds set by law |
| If the project is not completed | The trustee, in consultation with the Land Department, acts for completion or refund (Article 15) | No completion or refund mechanism in the law. The developer is responsible for completion (Article 422(6)) |
| Registration of the contract | The buyer may request an update of the plot's registration (Article 8) | A notarial preliminary contract sent for registration by the next business day (Article 422(7) to (8)) |
| Bank guarantee | Not required by law | Not required by law. It can be negotiated |
In Dubai the law determines where the money is deposited. In Romania the law determines how it is spent, and your contract must complete the rest.
Which layers of protection exist in Romania, and what do you check in each?
Registration in the land book. The developer may promise the sale of a future home only after the building permit has been noted in the land book (Cartea Funciară) and a sheet has been opened for the future unit (Article 422(6)). The preliminary contract is signed only before a notary, who applies to register it on the day of signing or at the latest on the next business day (Article 422(7) to (8)). A notation in the land book makes the contract enforceable against third parties (Civil Code, Article 902). Check an extract for the unit before signing, and a new extract a few days afterwards.
The dedicated account. Ask in writing for the name of the bank, the name of the account holder, the account number as it appears in the contract, a letter from the bank confirming that the account exists, and the name of the site supervisor.
The payment schedule. The law restricts the developer's spending, not how much you pay and when. A good schedule ties each payment to a stage the supervisor can approve, and not to a calendar date. If part of the price is financed by a loan from a Romanian bank, the contract should specify at which stage the bank transfers its part and to which account.
Payment through the notary. In the final contract, some buyers ask for the price, or the balance, to be paid through the notary and transferred to the seller only after the sale has been registered. The law does not require this and not every notary offers it, so ask the notary in advance how they hold the money and when they release it.
Bank guarantee. A letter of guarantee is an irrevocable and unconditional undertaking by the issuer, usually a bank, to pay an amount to the beneficiary in accordance with the terms of the letter (Civil Code, Article 2321). It is independent of the sale contract. The law does not require a developer to provide a guarantee, so it is a matter for negotiation. If you are offered a guarantee, your lawyer should check when and against which documents it can be called.
What does Romanian law not give you?
- A completion guarantee: the developer is responsible for completing the project (Article 422(6)), but the law does not require a guarantee or insurance for advance payments.
- A cap on your payments: the 25% and 20% caps apply to the developer's spending, not to what you transfer.
- Retention of funds after completion: there is no mechanism like the 5% retention for one year in Dubai.
- A special solution in insolvency: what happens to a buyer's contract if the developer becomes insolvent is determined by the insolvency law and its conditions.
Which questions should you ask the developer in writing?
- At which bank is the project's dedicated account held, and in whose name?
- Is the account number identical to the number written in the preliminary contract?
- Who is the site supervisor who signs off each expenditure?
- Is the building permit registered in the land book, and is there a sheet for my unit?
- To which construction stage is each of my payments linked?
- What security is there for my money beyond the law: a bank guarantee, payment through the notary, or none?
Pass the answers to a Romanian lawyer who represents only you. The developer's lawyer represents the developer.
What to do before signing, and how we accompany the transaction
Each layer of protection works only if you have checked it. Before signing for an off-plan home in Romania, compare the answers to the six questions with the documents you have received: the extract, the draft contract and the bank letter. We help Israeli buyers understand the Romanian structure, compare it with what they know, and formulate requests for additional security where needed. The signing, the registration and local representation are carried out by a notary and a lawyer licensed in Romania.
The above is general information and is not legal or financial advice. The rules are based on the text of the legislation as presented in the source, as at October 2026. The description of Dubai is general and based on an English translation, and the Arabic text is binding. For a specific project, consult a local lawyer.
Frequently asked questions
Who holds my advance payment until handover in Romania?
The developer, in the project's dedicated account. It may spend up to 25% of the price on the structural frame and then up to 20% on the building systems, with the site supervisor's stamp. Using the money for another purpose attracts a fine of 1% of the developer's turnover in the previous year.
Must a developer in Romania provide a bank guarantee?
No. Romanian law does not require a bank guarantee for advance payments. A letter of guarantee under Article 2321 of the Civil Code can be negotiated, and your lawyer should check the terms for calling it.
Can the notary hold my money in Romania?
In the final contract, some buyers ask for the price to be paid through the notary and released after the sale is registered. The law does not require this and not every notary offers it, so ask in advance.
How is escrow in Dubai different?
Under Law No. 8 of 2007 in Dubai, buyers' payments go into an escrow account in the project's name with an accredited trustee. The trustee retains 5% for one year after registration of the units, and if the project is not completed it acts to complete it or refund the money.
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The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.