Whether it relates to an apartment, a house or a land plot, selling or buying real estate properties is an extremely widespread topic on the market. In addition to checking "technical" characteristics - location, surface, configuration - the potential purchaser must carry out a series of preliminary checks in order to make an informed decision. At the same time, the owner must prepare a complete file for the property, containing ownership documentation, as well as other specific documents, necessary for the valid conclusion of the transaction.
In order to have a full picture over the transaction costs, the purchaser must also know the value of the notary fees and land book registration fees to be paid in addition to the purchase price.
This article summarizes the general steps that parties must follow when concluding a sale-purchase agreement for a real estate property in order to anticipate the practical implications of such a transaction.
- Preliminary checks
A real estate acquisition involves more than only identifying the property that meets purchaser's requirements and then negotiating the price with the owner. Once the functional and commercial aspects are met, the property must also be subject to legal and technical checks.
On the technical side, before deciding to acquire a real estate property, the purchaser should carefully check its defects in order to avoid unpleasant surprises after the property is taken over. For the legal part, if the purchaser does not opt for legal assistance, he/she should at least verify the status of the real estate property as indicated in the Land Book excerpt and in the ownership title of the seller, possibly with the help of the notary who will authenticate the sale-purchase agreement.
Examining the property
The purchaser should carefully examine the property in order to identify its apparent defects and flag them to the owner for the latter to remedy. From a practical perspective, such an examination is required especially when purchasing new apartments or houses directly from the developer, as such usually come with pre-approved packages of finishes and equipment, and compliance with these packages must be carefully checked by the purchaser. For example, aspects such as (i) tiles, wood flooring, (ii) sanitary equipment and other facilities or (iii) any other problems that can be identified through a simple inspection of the property (dampness, deterioration, damage) must be reported to the owner / developer as soon as possible, preferably before concluding the sale-purchase agreement, in order to be remedied. Otherwise, the purchaser will not be entitled to later make claims against the owner on these defects.
If the purchaser discovers a hidden defect after the conclusion of the sale-purchase agreement, he / she will be entitled to specific legal remedies such as remedying the defects at the owner’s expense, price reduction or even rescission of the sale in severe cases. A defect is considered hidden if it couldn’t have discovered by a prudent and diligent purchaser without specialized assistance at the time the real estate property was handed over. The prudent and diligent purchaser criterion will be applied on a case-by-case basis, obviously more strictly in the case of a professional purchaser.
Even if the law provides for certain means of protection of the purchaser in case of such defects, these may involve court actions and long-standing litigation. It is therefore advisable for the purchaser to verify the property as carefully as possible before concluding the sale-purchase agreement.
For example, a defect commonly encountered in practice is that of rainwater infiltrations, so it is recommended to have this in mind when examining the property one considers purchasing.
Legal status of the property
As a minimum requirement, one should request a recent Land Book excerpt for the real estate property to verify both its description – surfaces, layout, regime – as well as whether the seller is registered as the current owner of the property. Also, it should also verify whether encumbrances in favour of a third party are registered with the land book (i.e. mortgages set in favour of financing banks), in order to anticipate and fulfil any specific formalities prior to completing the transaction.
With the help of a lawyer or of a public notary, the purchaser should also review the ownership title of the seller, the documents related to previous transfer(s) and, depending on the property, whether there are any claims filed by former owners.
2. Documents file for the sale-purchase agreement
The owner must obtain several documents for the valid conclusion of the sale-purchase agreement, such as:
Fiscal certificate for the property
The fiscal certificate must confirm payment of all monetary obligations due by the owner to the local public administration authorities. The certificate is valid for 30 days, therefore the formalities for obtaining it must be organized around the signing date of the sale-purchase agreement. Irrespective of the type of real estate property to be transferred, the sale-purchase agreement concluded in absence of such fiscal certificate is null and void.
It should be noted that the purchaser will have to pay property tax starting with the year following the one when the purchase takes place, the seller being the one who pays the tax for the entire current year.
Energy performance certificate for the property
If the sale-purchase agreement refers to a building (or part thereof), the owner must provide to the potential purchaser a copy of the building/space's energy performance certificate before the sale is concluded. Sale-purchase agreements concluded without fulfilling this obligation can be cancelled. Moreover, when the sale-purchase agreement is concluded, the owner must provide this certificate to the purchaser in original.
Certificate from the homeowners’ association
When transferring properties that are part of condominiums within which a homeowners’ association is formed, the owner must obtain a certificate from the homeowners’ association attesting up-to-date payment of all related expenses of the association as well as public utilities’ costs. If there are any outstanding debts, the notary will not authenticate the sale-purchase agreement unless the purchaser expressly accepts to take over such debts.
Similar to the fiscal certificate, the homeowners’ association certificate also has a 30-day validity term as of its issuance date; therefore, its obtaining must also be organized around the date of signing the sale-purchase agreement.
Sale-purchase agreements concluded in absence of such certificate can be cancelled.
Utility invoices
The law provides that the public notary will not authenticate property transfer documents without payment proof of public utilities services issued by the utilities providers (for example, electricity, natural gas, etc.). In this respect, the owner must provide both utility invoices, as well as the related payment proof(s). Even if in practice the notary does not always require the seller to provide such documents, it is advisable that they are requested and verified by the purchaser.
Other documents
In addition to the documents specified above, upon conclusion of the sale-purchase agreement, the owner should hand over to the purchaser the complete file of ownership documents of the property, in original, as well as, generally, any other documents related to the respective property, including the corresponding cadastral documentation.
3. Costs. Final formalities
Transfer of property involves two main costs, computed by reference to the property value: notary fees for the authentication of the agreement, as well as land book registration fees. These costs will be in the vast majority of cases borne by the purchaser.
The minimum notary fee is computed as a percentage of the value of the property, according to certain thresholds.
By way of illustration, we note below some examples considering different property values in order to compute the minimum notary fees:
- For a property valued at EUR 95,000 (RON 450,000), the minimum notary fee will be approximately EUR 860,00 (RON 4,105) + VAT.
- For a property valued at EUR 190,000 (RON 900,000), the minimum notary fee will be approximately EUR 1,300 (RON 6,400) + VAT.
- For a property valued at EUR 315,000 (RON 1,500,000), the minimum notary fee will be approximately EUR 1,900 (RON 9,040) + VAT.
As for land book registration fees, they amount to 0.15% of the property value for natural persons, respectively 0.50% of the property value for legal persons.
As a final formality regarding payment of the price, if the sale-purchase agreement does not clearly state that payment has been performed by the purchaser, it is advisable for the purchaser to make sure that, after the sale is concluded, the seller provides a statement in notarized form attesting full receipt of the price and lack of any further claims related to the payment of the price. It should be also noted that, unless parties agree differently under the agreement, the purchaser may under certain conditions be required to pay interest on the price from the day of acquisition of the property or from the day of its delivery.
Having knowledge over all the steps described above, as well as on the documents required to conclude the sale-purchase agreement can help parties save time and make an informed decision. We note nevertheless that, when confronted with more complex real estate projects, an in-depth analysis of the above steps and of other specific matters is required.