In Whose Name to Register Property in Romania: One Spouse, Both of You or the Children, and What Really Determines Ownership

1Which registration options exist in Romania?

Four main ones, and each affects the mortgage, the future sale and the succession differently:

The question usually comes up in the week before the notary. It is worth raising it much earlier, because it is also connected with the source of the money, the financing and the family plan.

2Does the name in the extract determine to whom the property belongs?

Not necessarily. Alongside the registration, weight is given to the law governing the spouses' matrimonial property regime, and for an Israeli couple this is usually Israeli law.

Romania is not among the states that apply European Regulation 2016/1103 on matrimonial property regimes: Council Decision 2016/954 lists 18 participating states, and Romania is not among them. A notary or court in Romania therefore turns to the Romanian Civil Code (articles 2589 to 2592):

1. If you chose a law, the law you chose applies.
2. If you did not choose, the law governing the effects of the marriage applies: first the law of the common habitual residence, then the law of the common nationality, and then the law of the state in which you married.
3. For a couple who married and live in Israel, the result is usually Israeli law, and the date of the wedding does not change this.

It is also possible to choose a law in advance in a written agreement, signed and dated by both of you: the law of the state in which one of you habitually resides, the law of the nationality of one of you, or the law of the first common habitual residence after the wedding (articles 2590 and 2591). If you did not choose a law and moved together to another country, the law of the new common residence applies to the matrimonial property regime only from that date onwards (article 2596).

3What does Israeli law say about property registered in the name of one spouse?

The Spouses (Property Relations) Law applies to those who married from 1.1.1974. During the marriage each spouse holds his or her own property, and on dissolution of the marriage a balancing of resources is carried out in which each is entitled to half the value of the joint assets. That is, property in Romania bought with joint money and registered in the name of only one of you may be included in the balancing.

4What changes day to day when registering together?

• Equal shares by default (article 634). If you invested in unequal proportions, for example 70/30, register this in the extract.
• All co-owners sign (article 641). One co-owner cannot sell or mortgage the property alone.
• Right to partition (article 669). Every co-owner may apply for partition at any time, unless partition has been suspended by law, agreement or court decision.
• Spouses under the Romanian community regime (article 346). A sale or encumbrance of joint property requires the consent of both.

5How does registration affect the mortgage?

The name in the extract also determines who will sign with the bank. In Romanian financing the mortgage is registered against the property, so every registered owner is in practice required to be a party to the mortgage contract. At the same time, the bank assesses repayment capacity according to the income of the borrowers. A gap between who is registered as owner and who brings in the income will usually lead to inquiries and additional requirements.

The correct order of steps is to ask the bank who needs to be the borrower and who the mortgagor, and only then decide on the registration.

6Is it worth registering the property in the children's name?

• A minor child. The purchase itself is simple: the parents sign on the child's behalf. The difficulty comes on exit. Article 144 of the Civil Code makes any sale or encumbrance of property belonging to a minor conditional on the prior approval of the guardianship court, and approval will be given only if the act serves a need of the child or is clearly beneficial to him or her. In practice, the application is submitted with a valuer's report, a draft contract and details of a bank account in the child's name into which the proceeds will be paid. Anyone thinking of selling or refinancing in a few years will need to convince a judge.
• An adult child. From the moment of registration the decisions pass to the child: a sale, a lease or a mortgage are in his or her hands, and the child's creditors can reach the property. On the positive side, under Romanian law property that came to a child as a gift from the parents remains, as a rule, his or her separate property and does not become joint property with his or her spouse, unless otherwise provided.
• Registration in your name and transfer later. A legitimate option, with tax consequences in both countries that should be examined in advance.

7What does registration change on succession?

Joint registration is not a substitute for a will. When one of the owners dies, his or her share passes through a succession procedure before a Romanian notary, and the applicable law is determined under the European Succession Regulation. The practical advantage is that the surviving spouse is already the owner of his or her share and can manage it without waiting for the procedure to end.

8Which questions will help you decide?

1. Where did the money come from: joint savings, an inheritance of one of you or a gift from the parents?
2. Who will submit the mortgage application, and who needs to be registered for the bank to approve it?
3. Do you have a prenuptial agreement, and does it refer to assets abroad?
4. What is the long-term plan: living there, selling in a few years or transferring to the children?
5. Is there a will that refers to the property in Romania?

9What to do before signing and how we assist

There is no single registration that suits everyone; there is a registration that suits the source of the money, the financing and the family plan, and the decision should be made before the notary. We review these questions with the spouses under Israeli and Romanian law, and coordinate with the bank and with a family law lawyer where needed. Registration in the land register and the drafting of documents under Romanian law are carried out by notaries and lawyers licensed in Romania.

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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.