Buying an Apartment in Romania

Romania generates interest among quite a few Israelis: some have family roots there and others are drawn by its proximity to Europe and the idea of an apartment to rent out or use part of the year. As with any purchase abroad, the transaction is governed by local law, not Israeli law, so rules we are used to from Israeli transactions do not necessarily apply. This article explains, from the Israeli side, what to check before committing and which stages are worth knowing in advance.

One point matters above all: Romanian law governs the transaction itself, so it must be reviewed by a local lawyer licensed to practice law in Romania. An Israeli lawyer assists with the Israeli side, coordinates with the local lawyer and prepares your documents, but is not a substitute for local legal advice.

First: a lawyer who acts for you

Agents, developers and sellers often offer "a lawyer we work with". That is not wrong in itself, but whoever represents you should act for you alone. It is worth clarifying in advance:

• Who pays the lawyer, and what the service includes: preliminary checks, contract review, support at signing and registration.
• Which languages the lawyer works in and how updates on the progress of the transaction will be given to you.
• What additional expenses are expected. Ask for a written, up-to-date breakdown before you commit.

Checking the property - preliminary checks

Before a deposit is paid, the local lawyer examines the legal status of the property. Common checks include:

1. Ownership and registration. Whether the seller is the registered owner and the details match the local land registry. The local lawyer will explain which registry record you receive and what it means legally.
2. Mortgages and third-party rights. Liens, attachments or rights of others registered against the property.
3. Planning and building compliance. Whether what was built matches the permits, and whether the property's designated use raises any issue.
4. Debts. Local taxes, building-committee dues and utility bills. Ask for proof of payment.
5. Joint ownership. If the property belongs to more than one person, or forms part of an estate, make sure every owner signs and that the authority to sell is in order.
6. Restrictions on foreigners. There may be restrictions on foreign buyers acquiring certain types of property, land in particular. Make sure to clarify this in advance with the local lawyer.

An existing property or one under construction

Buying in a project that is still being built resembles buying from a developer in Israel, and similar questions arise:

• Who owns the land, and is it mortgaged to the financing bank.
• What happens to the money you paid if the project is delayed or stopped, and what security exists to protect it.
• When delivery is expected, whether the contract provides a mechanism for compensation for delay, and what the binding specification is.
• Which permits were issued and who is responsible for completing registration in your name.

The usual stages of the transaction

The exact structure varies, but the process generally looks like this:

• Preliminary checks by a local lawyer, before a financial commitment.
• A preliminary contract. In many cases a preliminary contract is signed and a deposit paid. It is important to understand beforehand what happens in the event that either side withdraws and what the conditions precedent are (such as mortgage approval).
• Signing the sale contract and completing registration in the buyer's name. The local lawyer will specify which local official is involved in the signing and which documents and deadlines apply.
• Taxes and charges. Rates and costs vary by property type and circumstances. Do not rely on general tables online or on what the seller says. Request a written, current breakdown from the local lawyer or the competent authority.

Notarial power of attorney and apostille

If you cannot travel to Romania to sign, it is possible to appoint a representative to sign for you. The usual route is a notarial power of attorney, and in Israel the process generally runs as follows:

1. The local lawyer approves the wording and the powers required.
2. You sign in Israel before a notary, who verifies your identity and signature.
3. The document receives an apostille, a certification that allows an Israeli public document to be used in a country that is party to the Hague Convention.
4. A certified translation of the document into the local language is sometimes required.

Define precisely in the power of attorney what the representative may do, for which property and to what extent, and set an expiry. An overly general power of attorney is an unnecessary risk. More on the process in the article Notarial Power of Attorney and Apostille for a Transaction Abroad, and on the field in general on the International Law page.

The Israeli side: reporting and taxation

Buying property abroad is not only a one-off matter. As an Israeli resident you may have duties in Israel, such as reporting assets and income from abroad, depending on Israeli law and your circumstances. Rental income or a future gain on sale may be taxable in both countries, with mechanisms to prevent double taxation. Do not assume it will "sort itself out". Consult an accountant or tax adviser familiar with both systems before the purchase, not after.

Financing and moving the money

In large transactions, banks in Israel and abroad ask for explanations of the source of funds. Keep documentation of the source of the money and of every transfer. If you are considering a local mortgage, check in advance whether the bank lends to non-residents and on what terms.

Status and immigration

Buying property does not automatically grant status in the country. Rules on entry, residence and immigration are set by the Romanian authorities and change over time. Such questions should be checked in advance with a local lawyer and only against current official sources.

Inheritance and planning ahead

A property in Romania forms part of your estate, and proceedings may be needed in both countries. It is worth planning for this at the time of purchase. The general aspects are covered in the article Inheritance and Property Abroad, and in such a case it is advisable to consult a local lawyer as well.

Common mistakes

• Paying a deposit before the property has been checked.
• Relying on a lawyer or agent acting for the seller.
• Signing a preliminary contract without understanding what happens in the event that the deal does not close.
• Signing an overly broad power of attorney.
• Ignoring the Israeli side: reporting, tax and estate planning.

In summary

Buying an apartment in Romania runs smoothly when it is accompanied by the right checks, a local lawyer who acts for the buyer, and well-prepared documents in Israel. If you are considering such a purchase, you are welcome to contact us for support and review of the purchase agreement on the Israeli side of the transaction, including notarial power of attorney, apostille and coordination with a local lawyer.

The information in this article is general, is not legal advice, and does not replace a review of Romanian law with a lawyer in that country.