24 November 2003 (Invest Romania)

Under the significant development of the Romanian real estate market expected for the coming years, a series of important amendments have been made to the legal framework governing the constructions’ authorization and execution.

The new adjustments have been brought through the Law no. 401/2003 (on the amendment and completion of Law no. 50/1991 concerning the constructions’ authorization and execution), published in the Official Gazette at the end of October. A sixty day term has been however provided before the new law to come into force at the end of this year.

The new law extends the cases wherein the obtaining of the town-planning certificate is mandatory. Apart from the cases already established by the Law no. 50/1991 (i.e. land concession), the new regulation provides as similar cases the lawsuits and notary public operations regarding the real estate circuit having as object apportionments or aggregations of land plots needed in view of carrying out construction works. The town-planning certificate became also mandatory to be obtained in case of creation of passing easements/servitudes on a particular real estate. Failure to observe the mandatory town-planning requirement entails nullity of the act pertaining to the respective real estate operation.

It should be noted however that the town-planning certificate has only an informative nature and does not grant the applicant the right to execute the construction works. Its legal purpose is to make the applicant aware of the legal, economical and technical regime of the land plots and existing buildings at the application date, to establish the town-planning exigencies which should be met depending on the characteristics of the real estate. It is also intended to present the applicant the list of legal permits and approvals required in view of obtaining the construction authorization.

The execution of construction works may be performed only based on the construction authorization, which issuance is consequently conditioned by the prior issuance of the town-planning certificate and the fulfilment of the obligations established therein as well as by the provision of all the other legal documents (evidence of the legal title over the land plots and/or the buildings, the project of works’ execution authorization, etc) and by the payment of the relevant taxes.

A new completion brought to the former regulation envisages the situation where, during the execution of the construction works based on an already issued authorization (but only within the validity period of the construction authorization), occur theme modifications with respect to the authorized construction implying its amendment. In such a case the law provides for the construction authorization holder to request for a new authorization.

The holder will not be bound to apply for a new town-planning certificate but, in order to obtain a the new construction authorization, he will have to submit a special documentation, subject to compliance of the new proposals with the provisions contained in the already approved town-planning documentations. The new proposals should also frame within the limits of the permits and approvals obtained for the initial authorization.

With respect to the finalization of the constructions, the new regulation reiterates the general and previous practice in the field establishing that the constructions executed without or in disregard of the construction authorization’s exigencies, as well as those not having fulfilled the receipt procedure at the works’ finalization are not to be considered completed and should not be registered with the land registry. The new provisions are also applicable in case the construction works have been performed by the holder himself.

One of the most important amendments brought to the legal regime of construction works is the pronouncement as being of public utility of all the works concerning the constructions that can not be finalized according to the construction authorization provisions, including the relating land plots. The construction works, along with the assets, subsequently declared of public utility, might be expropriated for public purpose cause, according to the law, upon the proposal of local public administrative authorities.

Last but not least, the new law intends to clarify the legal problems frequently occurred during the latest years with respect to the taking out procedure of the land plots from the agricultural circuit. The previous wording of Law no. 50/1991 provided for a taking out procedure carried on upon the construction authorization. The interpretation on a large scale of such stipulation, based on the principle that obtaining the construction authorization should be enough to change the technical regime of land, has triggered lots of abuses in practice. The purpose was in fact to avoid the payment of the duties levied for taking out the land plots from the agricultural circuit.

Although the legislation applicable to real estate has undergone important improvements so far, the positive aspects of the legislation in force need to be confirmed in practice, by the every day application of the newly adopted regulations.



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