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Advice Page

Buying a property In Romania

-A Simple guide-

Some Comments/Recommendations from recent property buyers (feel free to mail us your own advice, comments or recommendations):

"Many of the property developers and 'expat estate agents' in Bucharest will try to keep the processes involved in the purchase of a Romanian property secret. Some will charge outrageous amounts of money (one asked me for 300 GBP an hour!!) to tell you information that any ethical agent with local knowledge, or even a well-informed Romanian, will tell you for free. An agent should be paid for his ability to locate properties suitable for your needs and for carrying out the necessary paperwork on your behalf. We recommend that you avoid these 'shysters' who are trying to capitalise of the foreign investors' fear of foreign markets and choose an agent who operates a open policy towards the country's law." - J.D.Lawson, Chester

"With the large number of agents in Bucharest you can easily find a good one. We used an agent located in the area where we wanted to buy a flat. The lady we dealt with was polite and explained the law clearly to use and went through all the Romanian documentation explaining its purpose and need. She didn't charge us extra for this. Once we had chosen the property she also recommended a notar who spoke English and who could also explain the signing proceedure to us. All in all the whole deal went through smoothly and with no hiccups. Buying in Romania isn't as scary as people lead you to believe and if you are reasonably smart there is no need to pay overblow fees to third parties claiming to be experts." - Mary Cowell, Colchester

"We used an English agent to help us find land to invest in. He did a lot of the leg work for us, explained the various ways of buying land and the legalities involved, prepared many sites for us to see prior to our arrival, and then drove us around to see them all. He did a lot of work to convince us and make us feel at ease and at no extra cost and with no 'hidden fees for legal advice'. In the end his commission was also very competitive." - J. Mohamedzai, London

Finding a property.

It's probably best to use an agent. They'll be able to show you a lot of properties and if they are a good sized outfit they'll check all the paperwork is in order.

Things to look for: Check on the notice board in the lobby for the monthly utility bills to get an idea of monthly outgoings. Check the age of the building – there was a large quake in 1977 so you should be sure that if the building was build before then that it wasn't damaged (and the damage subsequently covered up). Other than that, just proceed exactly as you would when buying a property at home.

Pre-contract

Once you have decided on a property you can prepare the pre-contract. This establishes the amount of deposit that is to be paid, that it has been paid, when the final sum is required and how much it is and when the owner is obliged to vacate the apartment. It'll also set out the penalty clauses in case the deal falls through. This pre-contract should normally be signed and witnessed by a notary clerk.

Service-contract

At this point you'll also sign a service contract with the agent establishing their fee (up to 3%) and what their obligations are. These obligations involve checking that all the paperwork for the house is in order and also that they'll complete all the necessary follow-up paperwork. You'll probably pay an advance on their fee and this should be including in the contract along with the outstanding balance. The agent will also issue you with a receipt for the advance (normally around 15-20%).

The signing

Documents:

The agent will go to the local authorities and receive a document that proves the property has no debt, outstanding claims to ownership, mortgages or other such impediments on it. This document is valid for only 5 days from the time it is removed from the offices. During this period the office will not release other copies of this document to other parties (thus avoiding the property being sold to more than one person - an old scam that has fortunately all but disappeared now).

The agent will also secure a document from the block's administration stating that the previous owner owes nothing on the apartment.

You should also request that the agent receives all the latest phone, electricity, gas, cable and other such bills from the previous owner so as to ensure there are no nasty surprises after you take control of the property.

Finally, you should ask for a draft copy of the final sale contract so as to allow you to check it over thoroughly before the signing and preferably to get a trusted lawyer to check that everything is above board.

The signing will take place at the notary clerk's office. As the buyer YOU have the right to choose which notary clerk will oversee the deal. The notary clerk's fees should also be around 2-3% and that will include all the necessary fees for documentation and processing of the deal with the land registry.

Note: If the agent and the notary clerk are NOT covering all this fees in their percentage and are NOT dealing with all the red tape and documentation and registering of the property, its sale and change of owner then they are NOT doing their jobs. Notary clerks in Romania earn vast sums of money and it's extremely difficult to obtain one of the limited positions as a notary clerk, so they will not cheat. It simply isn't worth their risking a jail sentence to earn a few extra euros when their income is already extraordinary. The agent, however, could be good and professional and be genuinely interested in working well with you…or could be just looking for an easy buck. Therefore we recommend you work with a large established company, preferably on a recommendation.

The signing itself

You will probably meet at the notary clerk's offices. The notary clerk will check that all the documents are there and above board. The contract will be prepared and you will be required to show your passport for the record. If you don't know Romanian you will need to have authorized translated copies of all the documents too, and a translator so the notary clerk can be sure you understand what is happening. If you know some Romanian you'll be required to sign something stating you understood the proceedings.

The payment

Payment can be made in cash or by transfer. If you withdraw the money from a Romanian bank you'll typically be required to pay a 0.5% charge, along with any fees for receiving the transfer from abroad. The notary clerk normally requires that the money come from the purchasers account. The safest way to do the cash payment is to go to the bank along with the notary and the seller and to withdraw the money there, in front of the notary, who will then sign off on the deal and leave no possibility for subsequent complaints of no payment from the seller. Once the money has changed hand/been transferred the notary will ask both parties to sign six copies of the contract and then the property is yours. You'll then pay the notary clerk and he or she will issue you with a receipt, as will the estate agent for the outstanding payment on their services.

After the signing

The agent, if he is worth his salt, should then process your documentation. Within a few weeks he should contact you with a new document from the authorities which states that you are now the registered owner of the property. You should also receive something called the ‘impozit' which is something like a council tax. This is pretty cheap (30 Euro a year for a small flat) however and can be paid at any post office.

Services (assuming you are going to live there)

You should (in a block) visit the administration to register yourself. Basically you just give them your name and tell them how many people are going to be living their so they can calculate your share of the general utilities.

If you want a land line you should visit the local RomTelecom store. If there is already a line installed you can simply transfer the number to your number, but beware, any unpaid bills from the previous owner will also be transferred (hence it being a good idea to check the bills at the pre-signing).

The electricity board should also be notified at some point so they can install a new meter, take a reading and you can give them your estimated monthly usage (they only read the meter once in a while so it's good to have an accurate estimate).

Cable TV can be received from several providers (Astral/UPC or RDS for cable, RomTelecom for satellite).

And I think that's about it! The buying process isn't so hard if you have a decent agent. The hardest part is finding a decent property according to your needs. Good luck!

With thanks to Reeves & Co for contributing this guide