Foreign land ownership in 2012?

Discussion in 'Romania property' started by frank, Jan 15, 2012.

  1. frank

    frank New Member

    Hi,

    Agents selling appartments to non-Romanian citizens [including myself] in developments in Romania used shell company names to get around the inability of owning the land (or share of) upon which their appartments were being built.

    My understanding is that Romanian law allows foreign buyers to have the name changed in 2012 to their own names. It seems to depend on which agent or notary you discuss this with.

    Has anyone succeeded in doing this yet?

    I imagine it should a simple enough procedure but I can picture the agents and lawyers rubbing their hands with glee already.
     
  2. Mircea

    Mircea New Member

    Hi Frank,

    Even before 2012 non-Romanians could buy land without a company. Basically, the law was as follows:

    Pre-2007 - No foreigner could own land without a shell company. They could, however, own an apartment privately, although they couldn't own the (usually tiny, about a square metre) of land below the block, so they would have to waive their right to own that. Owning the apartment was no problem though. You could even buy a house in your own name, but register the land the house was built on in the company now.

    2007-2012 - EU citizens who had residency in Romania could own land (but not agricultural or forest land) and properties under the same restrictions as Romanian citizens. Non-EU citizens and EU citizens not registered as Romanian residents still had to buy land using a shell company.

    2012 onward - All EU citizens, resident in Romania or not, can buy non-agricultural/forest land (these will become availabe in 2014) in Romania privately. Those EU citizens who had previously bought property in a company name can now sell the house to themselves. However, this will involve the payment of some taxes (both the Romanian 'stamp duty', income tax, and possibly VAT). If you do go down this route, consult a notar and he'll tell you the minimum value that the property can be sold for (based on size, land, area, etc) and then you should sell it to yourself at that price to minimize taxes (and it'll probably be considerably less than the market value of the property).

    That's the legal situation, however, there are some issues of interpretation:

    a) Some notary publics still want EU citizens to demonstrate that they have residency in Romania before allowing them to purchase the property. Solution: get a residency certificate (can be done in a day and costs very little) or find another notary public.

    b) Some property lawyer and estate agents haven't kept up to date with changes in the law and still think you need a shell company to buy a property with land. Solution: find a better lawyer/estate agent.

    c) Some more unscrupulous estate agents will insist you set up a shell company because 'they can sort this out for you' and thus increase their income from the transaction. Solution: find a real estate agent.

    So, it depends on your nationality really. You don't mention where you're from. If you have an EU passport then you shouldn't have any problems transferring the house into your own name. There will be costs, but you certainly don't need to use an estate agent to sell the house to yourself! A lawyer might come in handy, but if you have a good, legally-minded Romanian friend, then you shouldn't really need a lawyer either, after all, you don't really need to do due diligence on yourself, do you?
     
  3. Muresen

    Muresen New Member

    Hi Frank,

    I bought a house here in Romania in July of this year. I had no problems with the notary public. I took along my passport to demonstrate I was an EU citizen and my certificate of residency, which I had just renewed in Feb of this year. I spoke to the notary at some length about the new law and he said that he had received documentation from the Mures County Association of Notaries about the new law and how it had been interpreted and it seems that they agree that an EU citizen may now own one piece of land as a secondary residence. I actually believe that the law states (or intends to state) that EU citizens can own as much land as they like (non-agriculural or forestry land, that is, until 2014) but it's the notary publics' interpretation that's important. Either way, even under their take of the new law, an EU citizen can buy a house with land (one, at any rate) in Romania.

    I didn't use an estate agent, although I did use a local 'house finder', for want of a better word - a guy in the area who knows what's for sale and can hunt out properties for you, more useful to know that most estate agents, to be honest, who seem mostly only interesting in selling stuff off-plan these days for big commissions. I contacted a local lawyer, asked her to state exactly what she would do for her due dilligence fee, but it was no more than I could easily do myself, or what the notar does for you anyway. For example, she wanted a large sum for writing out the buy-sale contract - something which the notar does for you as part of his standard fee. I felt it was a bit of a con and didn't bother in the end, although I should point out I read Romanian well enough to understand contracts. If you are buying something from a developer or one of the off-plan places, then you should almost certainly get yourself a lawyer as there'll be more contracts to deal with than the standard sale contract.

    Regarding changing the deeds from company-owned to privately-owned, this is also possible. I have a friend who bought a house and land back in 2005 and he has now changed it to being owned by himself privately. Don't really know the details or how much it costs to get it done, but it's definitely possible. I would suppose that you'll have VAT to pay (24% now I think) as well as any income tax, but at the same time, you can sell it to yourself at the lowest legally allowable price (which is often much lower than the market value) so you might be able to minimize the taxes.
     
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