The Importance of a real estate due diligence when purchasing an asset
Everyone purchases an asset (house, apartment, land) at least once in a lifetime. Because the costs of such a procedure are very high and the importance of such a step is crucial, when it comes to foreign people purchasing assets located in other countries, the issue must be dealt with extremely careful.
When it comes to assets located in Romania, things become even harder than in other countries because the ownership right in Romania is guaranteed by the Constitution and it was first reglemented in accordance to the modern law in the Civil Code from 1865.
Because it is such an important right, the task of proving that you are owner of a real estate asset is complicated (sometimes almost impossible) in the sense that the present owner must prove that his ownership right was transferred only from owner to owner - i.e. he/she must show all ownership titles on the respective asset from the first owner till the last - as much as it can be shown back in time. This is called THE HISTORY OF THE OWNERSHIP and it must be checked thoroughly before buying an asset because if one of the titles in the history of the ownership did not observe the regulations at the time it was done, it cancels all the subsequent titles.
Theoretically a notary does all verifications, but practically a notary is generally satisfied with the last authenticated title because according to the notary law, if a notary authenticated a title then it means it checked all the others from the past. Useless to say that this doesn't happen all the time and sometimes mistakes are done, mistakes which can lead to a long and expensive law suit.
The need of an attorney performing a due diligence on the asset to be purchased is also recommendable because of the numerous socio - politico changes that happened in Romania in the modern history, entailing a very accurate interpretation of the laws that thus changed:
The Communist regime prohibited ownership holding on the lands;
At the level of the years 1950 - The Communist regime also overtook thousands of assets from their rightful owners, especially big assets.
After 1989, the Government passed several laws which entitled former owners to get back the assets that were abusively taken over by the communist regime in the 50s (see above). If a judge's decree passed on such laws is the ownership title over an asset, an extremely detailed due diligence must be performed in order to see if all special regulations imposed by the special restitution laws were observed.
This is a punctual enumeration of examples of how history changed the laws and why you need a specialist in order to see if the ownership title is void.
An attorney also checks special aspects of assets, which are not in connection with the structure of the ownership right:
Where the asset is located - if it is located in what is called "protected architectural area" then there are special administrative regulation that the client should be aware of;
If the asset is a historical monument - because in such a case there are administrative restrictions to be observed
If the asset has an earthquake risk - also in such case there are some administrative and legal aspects that must be observed.
The main conclusion would be that Romania is a country with a very colorful history, it has also a quite complicated position on the map and all these aspects influenced in time the sequence of laws. This is why a specialist's due diligence is highly recommended for foreign people who wants to acquire ownership over an asset in Romania.