Real-estate development - everything you need to know?

The real-estate development sector in Romania remains one of the most dynamic areas of the economy. From residential and commercial schemes to mixed-use or industrial developments, investor appetite continues to grow. Behind every property project, however, lies a complex legal framework that must be handled properly in order to avoid delays, disputes or financial losses.

For developers, investors and entrepreneurs alike, a firm grasp of the legal issues is essential. A project that is soundly structured in legal terms can make the difference between success and failure.

At Buju, Stanciu & Associates, we have advised clients on real-estate development projects, providing full legal support - from the acquisition of the land through to the management of legal risks, including in sensitive matters involving inspections and economic or customs offences.

Yet behind the ever-changing urban landscape and the properties under construction lies a complex web of laws, regulations and legal procedures. This article sets out to bring that essential dimension of the property industry to the fore.

What real-estate development means from a legal perspective

From a legal standpoint, real-estate development means a process that involves:

acquiring and carrying out due diligence on the land;
obtaining the necessary permits;
the construction works themselves;
selling or letting the property;
managing the contractual relationships.

Each stage is governed by specific legislation, and compliance is mandatory.

Real-estate development involves numerous stages and activities, such as:

Market research: Analysing the market in order to understand demand, supply, trends and client preferences. This helps developers make informed decisions about the type of projects likely to succeed.
Land acquisition: Identifying and acquiring land suitable for development. This step may involve negotiating with the current owners, obtaining the necessary approvals and assessing environmental factors.
Urban planning: Preparing the plans and designs for developing the land, having regard to local planning rules and urban development plans.
Design and construction: Preparing detailed architectural designs and carrying out the actual construction of the buildings or properties.
Project financing and management: of the funding required to cover development costs and managing the project's budget, timetable and risks.
Marketing and sales: de: Promoting and selling or letting the developed properties.
Property management: estate: Managing the properties over the long term, including maintenance, tenant administration and optimising the value of the investment.
Legal compliance: estate: Complying with local, regional and national regulations, laws and policies so that the development is carried out lawfully and ethically. For further details, see the legislation on real-estate development

At “Buju, Stanciu & Associates”, we provide specialist advice throughout the entire real-estate development process. Instruct a law firm with genuine experience in the property sector and put the legal worries this process can bring behind you!

Who may carry out this activity?

The real-estate development legislation also specifies that this type of activity is carried out by property developers, defined as follows: “(2) A property developer means the legal person carrying out all property operations with a view to the construction, completion and handover to beneficiaries of the dwellings within the development, as well as the coordination of the funding sources required to carry out those operations”

The following may also take part in this activity:

Investors: estate: Property investors, including individuals or real-estate investment funds, may finance development projects in return for a long-term return from the sale or letting of the properties.

Builders and property developers: estate: Construction companies and developers specialising in the planning and delivery of property projects.

Property promoters: estate: These are individuals or companies that facilitate property transactions, bringing together sellers and buyers, or landlords and tenants.

Banks and financial institutions: estate: Through direct financing or by granting loans for property projects, banks and financial institutions play an important role in supporting real-estate development.

Architects and designers: estate: Professionals in architecture and design provide design and planning services for property projects.

Property consultants: estate: They provide advice and expertise on various aspects of real-estate development, such as market research, property valuation, urban planning and legal matters.

Property management: Once the development is complete, the properties may be managed by companies specialising in property management, which handle letting, maintenance and day-to-day operations.

Government and municipal authorities: estate: Local and municipal authorities play a significant role in regulating and approving property development projects through urban planning and the issuing of permits.

What are the rights and obligations of a property developer?

As a property developer, you have both obligations and rights - rights which must not, however, infringe upon people's rights and freedoms.

1. Rights

Under Article 13 of the property development law: “Art. 13 The rights of the property developer are stipulated by contract and may not derogate from the general provisions relating to public order and good morals, nor from those relating to consumer protection.”

2. Obligations

Some of the most important obligations of a property developer are:

Compliance with legal and urban planning regulations: The developer must comply with local, regional and national regulations on property development, including urban planning schemes, building standards and environmental regulations.

Obtaining the necessary permits and approvals: The developer must obtain all permits and approvals required for the project, such as the building permit, environmental approvals, utility agreements and so on.

Construction quality: The developer is responsible for ensuring the quality of the construction and of the materials used, in compliance with the safety and quality standards in force.

Informing purchasers: The developer is obliged to provide purchasers or tenants with complete and accurate information about the property, including its features, the associated costs, delivery deadlines and so on.

Warranties and remedial works: The developer must provide warranties for construction defects and remedy such defects within the period specified after completion of the project.

Protecting investors and purchasers: The developer must comply with consumer protection legislation and safeguard the rights and interests of investors or purchasers, including the right to clear information and the right to cancel contracts in certain circumstances.

Property management: Where the developer manages the property on a long-term basis, it must ensure the property is properly administered, including maintenance and the proper functioning of public services and utilities.

The CAEN code for such a company

The CAEN code used for property development (promotion) activity is 4110 - development of construction projects, for residential and non-residential buildings, by bringing together the financial, technical and physical means for carrying out construction projects with a view to subsequent sale

The legal issues you may encounter

The property development process can be complex and involves numerous legal aspects, and developers may encounter a variety of legal issues along the way. Here are a few examples of such issues:

Regulations and permits: Obtaining the permits and approvals required for property development can be a challenge. Changes in local regulations, or differing interpretations of them, can lead to delays or even to the rejection of the project.

Ownership and title deeds: Verifying title to the land acquired is essential. Potential issues include disputed title, rights of access, easements or outstanding debts attached to the property.

Zoning and urban planning: Difficulties in obtaining approvals for a change in land use or in the urban planning schemes can affect the development.

Environment and infrastructure: Property projects may be affected by environmental protection rules, including waste management, the impact on ecosystems or the need to develop appropriate infrastructure.

Contracts and agreements: Issues arising from contracts with subcontractors, suppliers, consultants or clients may occur and can affect the development process.

Rights of access and easements: Rights of access to the land and matters relating to easements can complicate the development and use of the land.

Taxes and duties: Correctly assessing the taxes and duties applicable to the property and to property transactions is important in order to avoid penalties or subsequent disputes.

Consumer rights and sale/purchase contracts: Observing consumer rights in the sale or letting of properties is essential in order to avoid potential complaints or disputes.

Construction issues: The quality of the construction, the warranties and any defects or damage can lead to disputes between the developer and purchasers or tenants.

Expropriation rights: In certain cases, the government or local authorities may wish to expropriate parts of the land for public developments, and such situations can involve negotiations or disputes over compensation.

Why work with a lawyer specialising in real estate?

The law firm Buju Stanciu & Associates can provide valuable assistance and advice in the property development process. We help developers navigate the complexity of the legal aspects associated with carrying out property projects in Romania. Here is how our firm can assist you in the property development process:

Obtaining permits and approvals: Our firm can assist you in obtaining the permits and approvals required for the development, making sure that your project complies with the regulations and legal rules in force.

Verifying title deeds: Our lawyers can carry out thorough searches to verify title deeds and to identify any potential legal issues or disputes that may affect the development of the project.

Property contracts and transactions: Our firm can assist you in drafting and negotiating contracts with subcontractors, suppliers, clients and other parties involved in the development, ensuring that your rights and interests are protected.

Tax matters and levies: Our lawyers can advise on the most efficient tax structures and assist in assessing the taxes and duties attached to the project, helping to optimise the financial side of the development.

Consumer protection: Where the development involves selling or letting properties to consumers, the firm can help you comply with consumer rights and avoid potential legal difficulties.

Litigation and disputes: Should any litigation or dispute arise in connection with the real-estate development, our lawyers can represent your interests before the courts or other competent authorities.

Environmental protection and environmental regulations: The firm can help you comply with environmental protection rules throughout the development process and avoid potential fines or penalties.

General assistance throughout the development process: Our lawyers can advise and assist you at every stage of the real-estate development, from the acquisition of the land through to completion of the project and the subsequent management of the property.

Conclusions

The field of real-estate development offers significant opportunities, but it comes with a complex legal framework. Every stage - from the acquisition of the land to the final sale - involves risks that must be properly managed.

Compliance with the law, a sound understanding of the contracts and working with specialists are essential to success.

At Buju, Stanciu & Asociatii, we provide full legal assistance for real-estate development projects, including in complex matters involving tax, commercial or even criminal aspects. Our experience allows clients to develop their projects safely, efficiently and in accordance with the law.