In brief
Most problems in Romanian real estate transactions repeat themselves, and they stem from a single detail that was not checked at the right time: reliance on a broker, unpermitted alterations, rentals without a proper contract, restitution claims from the communist era and a defective power of attorney. All of them are preventable through independent due diligence and legal accompaniment before signing an Antecontract.
Key takeaways
- 1A broker and a lawyer are two different functions - relying on a broker without an independent legal check is the first mistake.
- 2Altering or dividing an apartment without a building permit makes a property hard to sell and to finance.
- 3A property that looks clean may carry a legal history from the communist-era nationalizations, so the chain of ownership should be checked back to its root.
- 4A power of attorney must be checked independently, and if someone refuses direct contact with the owner, that is a red flag.
- 5The pitfalls are avoided not through paranoia but through legal accompaniment before signing an Antecontract, not after it.
Which pitfalls recur in real estate transactions in Romania?
Most of the problems we have encountered in real estate transactions in Romania repeat themselves. They are not the result of bad luck - they are the result of a single detail that was not checked at the right time. Below are pitfalls from the field: some we accompanied directly, and in others we conducted the legal proceedings around them.
Altering or dividing an apartment without a building permit makes a property hard to sell and to finance.
What happens when you rely on a broker without an independent check?
Five mistakes can be chained into a single story. Identifying details were changed, but the story happened: a client bought an apartment in Bucharest near the city's main railway station, Gara de Nord. The broker presented the area as central, it sounded good, and the client relied on this without checking in depth. On the advice of the same broker, he also divided the apartment into two small units without a permit.
The tenants changed at a high rate. In Romania there is no bank guarantee from the tenant, and at most one month in advance is received, and when a tenant leaves and leaves debts behind, there is nothing to collect and no one to collect it from. The promised yield did not arrive. And when the client wanted to sell, he discovered that the proportionate share of the common land attached to the apartment had been registered in the name of a third party without adequate legal arrangement, and the third party demanded payment as a condition for the sale.
The five mistakes in the story:
- Relying on a broker without an independent check by a lawyer - these are two different functions.
- A marketing misrepresentation of a “central area” that was not replaced by a site visit.
- Alteration and division without a building permit, which makes a property hard to sell and to finance.
- Managing a rental remotely without a contract with clear protection mechanisms.
- A common-land structure that was not settled in advance in a detailed agreement.
What are restitution claims from the communist era, and why do they matter to a buyer?
Restitution claims (restituire) are proceedings in which properties that were nationalized during the communist era are returned to their original owners, and some of them are still not closed. Romania went through a broad process of nationalization, and after 1989 the restitution proceedings were opened.
We conducted legal proceedings against tenants who refused to vacate an apartment that had been returned to its original owners in an official restitution procedure. The tenants claimed rights, and the proceedings dragged on for a long time. A property that looks clean may carry a legal history that does not appear in a superficial check, and checking the chain of ownership back to its root is what prevents such surprises.
Why is a transaction through an unsettled power of attorney dangerous?
In our experience, this is one of the most dangerous pitfalls, because it is impossible to know who is really behind the sale if the power of attorney is not checked independently.
We negotiated the purchase of an apartment where it was claimed that the seller was abroad and her father was selling by virtue of a power of attorney. When we examined the power of attorney, we discovered that a critical detail was missing: the bank account to which the money was to be transferred was not specified. We asked for this to be corrected, or to speak directly with the owner. The father refused, and at the same time demanded that the money be transferred to an account in his name and not in his daughter's name. We stopped the transaction.
When there is a power of attorney, check its validity and scope independently. If someone refuses to allow direct contact with the owner, that is a red flag that must not be ignored.
How do you prevent these pitfalls before signing?
The common denominator of all the pitfalls is that they are preventable - not through paranoia, but through independent due diligence and legal accompaniment before signing an Antecontract, not after it. It is worth going through the checks in the order of the transaction, and checking in particular the chain of ownership, the status of the permits, and the validity and scope of every power of attorney.
The content of this article is general information only and does not constitute legal advice, tax advice or an investment recommendation. Laws in Romania may change, and specific circumstances may affect their application to a given case. Before any investment decision or legal action, it is advisable to seek individual advice.
Frequently asked questions
Can a real estate broker in Romania replace a lawyer?
No. A broker and a lawyer are two different functions. Relying on a broker without an independent check by a lawyer is one of the common pitfalls in transactions in Romania.
Why is altering or dividing an apartment without a permit a problem?
Alteration and division without a building permit make a property hard to sell and to finance. It is therefore worth checking the building permits before the purchase.
What are restitution claims in Romania?
These are proceedings that were opened after 1989 to return properties that were nationalized during the communist era to their original owners. Some of them are still not closed, and a property that looks clean may carry a legal history. Checking the chain of ownership back to its root prevents surprises.
What should you do when the seller acts through a power of attorney?
Check its validity and scope independently. If they refuse to allow direct contact with the owner, or demand that the money be transferred to the account of another party, that is a red flag that must not be ignored.
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