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ROMANIA’S NEW CIVIL CODE – OVERVIEW
PART I – THE LAND BOOK REGIME |
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Introduction
After 146 years, Romania’s old Civil Code was finally retired on the 1st
of October when the new Civil Code (hereinafter the “NCC”) became
effective. After years of debates and assiduous work on developing a new
civil code, Romania finally has a modern code to meet the needs of a
modern society – along with the task of implementing a host of new legal
provisions and training its personnel to understand them.
The adoption of the NCC was essential for the emergence of Romania as a
modern society unconstrained by the rigid civil law institutions created
under the former civil code two centuries ago. Furthermore, the
necessity to harmonize Romania’s civil law institutions with those in
other European Union countries was another imperative demanding the
adoption of the new law. The NCC brings a unitary vision to private law,
with many significant changes to the private law including in
matrimonial law, the land book regime, the system for warranties, and
other provisions applicable to agreements. Indeed, no civil law based
operation may now take place without a prior thorough analysis of the
applicable provisions of the NCC. The significance of the restructuring
of the former civil law system has resulted in administrative
difficulties in applying the provisions of the NCC for staff employed at
the offices of cadaster and land registration. Training is obviously
required for all those who are called to implement the new civil law
provisions, be it judges, lawyers or officials active in public
institutions, since they all must have a common and unitary
understanding of the reasoning behind what is actually written in the
NCC so as to ensure a common approach and a singular implementation of
the new legal provisions.
As previously mentioned, the amendments put in place by the NCC to the
former civil code are vast. Out of these, through a short series of
articles we will draw your attention to issues which are particularly
significant for business, commencing with this article concerning the
land book regime. |
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Overview |
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Published in the Official Journal of Romania in July 2009, the NCC
became effective two years later, on October 1st, 2011. The NCC is
implemented based on the provisions of Law no. Law 71/2011 for the
implementation of the NCC, in force since June 2011. Attention should
also be given to the new Civil Procedure Code, since the NCC actually
amends part of its provisions. Published in the Official Journal of
Romania in July 2010, the new Civil Procedural Code is to become
effective in July 2012. |
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Retroactive Application of the NCC |
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The Romanian Constitution which establishes that the only law which may
be made retroactive is one that is more favorable and concerns criminal
offences or other non-criminal contraventions. The NCC confirms this
constitutional principle stating that the civil law must be applied as
long as it is in force, and it will not be retroactive. Basically, the
former civil code continues to be applicable to the deeds and facts
generating, modifying or terminating legal situations fully finalized
before the effective date of the NCC, as well as to the effects
generated prior to such effective date of the NCC. On the other hand,
there are additional situations, such as legal matters that are underway
on the effective date of the NCC, which are to be governed by the NCC.
The provisions of Law no. 71/2011 for the implementation of the NCC
clarifies all such situations in which the applicability of the NCC may
be questionable, and this is why any interested person should firstly
assess the applicability of the NCC before submitting a claim. |
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Land Book |
General aspects
The land book is one of the institutions which have been significantly
changed by the NCC. Until the adoption of the NCC, the land book regime
in Romania was entirely regulated by Law no. 7/1996 regarding cadaster
and land book registrations. According to these latter legal provisions,
the registration of rights in the land book only had effect on third
parties, meaning that basically rights were acquired based on the
parties’ consent, and their registration with the land book was only
meant to inform third parties. There were only a few exceptions to this
principle as, for instance, in the case of sale-purchase agreements
having as their object plots of land – deeds which had to be concluded
in authenticated form, before a public notary for a valid transfer of
the ownership over the respective plots.
The newly introduced land book system has an entirely new interpretation
of the land book regime in the sense that rights in rem will no
longer be acquired based on the parties’ consent, but only through and
at the moment of their registration in the corresponding land book of
the immovable property. Since symmetry of deeds is required, rights
in rem are terminated only through and at the moment of their
de-registration form the corresponding land book.
However, it is important to note that the provisions of the NCC
regarding the land book regime are applicable only to the legal acts and
facts concluded or performed after the effective date of the NCC. Also,
the provisions of the NCC are in full force and effect only after the
finalization of the cadaster for each administrative – territorial unit
in Romania and after the opening of land books for all immovables in the
country. Until such date, which is uncertain, the registration of rights
in the land books shall continue to be effective only with respect to
third parties.
Rights in rem
 As previously mentioned, after the provisions of the NCC regarding the
land book regime become fully applicable, rights in rem may be
acquired only through and at the moment of their registration with the
corresponding land book of the immovable property. In order to avoid any
misrepresentation regarding the term “immovable”, the NCC defines it as
one or more adjacent plots of land, regardless of their category of use,
with or without construction on them, belonging to the same owner,
located on the territory of one administrative-territorial unit, and
identified through a single cadaster number.
Another significant aspect of the NCC is the fact that the category of
rights in rem has been extended, as compared to the former civil
code. Beside rights such as the ownership right, the superficies right,
or the easement, the NCC has also included in this category rights such
as: the administration right; the concession right; the right of use;
the guarantee right; as well as other rights recognized as rights in
rem by law.
The identification of the rights in rem is extremely important,
considering the new approach of the NCC with regard to the land book
regime. Since, after the finalization of the cadaster in the entire
country, rights in rem will only be acquirable through
registration with the corresponding land book of the immovable property,
the entities intending to acquire such rights must be fully aware of
both the exact nature of the right which they are acquiring, and the
exact manner of registration in the land book, as established by the NCC,
in order to validly acquire the respective right.
Types of registrations in the land book
According to the NCC, there are three types of registrations which may
be done in the land books of immovable property: tabular registrations;
temporary registrations; and notations. The first two categories are to
be performed in relation to rights in rem, such as the ownership
right over an immovable, the superficies or the concession right, while
the third category is applicable to the registration of other rights,
and even to legal facts and relations, expressly mentioned by the NCC or
by other special laws.
(i) Tabular registrations
Since tabular rights are essential, covering the registration of all
rights in rem having as their object an immovable property, the
NCC establishes the types of deeds based on which such registrations may
be performed, namely: deeds authenticated by a public notary; through
final court decisions; and in an heir certificate or another act issued
by administrative authorities in cases where this has been expressly
provided by law. As an exception, such rights may be validly obtained
with no registration in the land book when they derive from inheritance,
natural accession, forced sale, expropriation for public utility
purposes, and in other cases prescribed by law.
In principle, land book registrations shall be effective on the
registration date that the request is submitted to the office for
cadaster and land registration, taking into consideration the date, hour
and minute of such registration. Special attention should be given to
requests for registration of mortgages, since the date of request also
establishes the rank of the mortgage. According to Romanian law, there
are three rankings for mortgages, the 1st rank mortgage having priority
over the others. In the event of two requests for registration of a
mortgage over the same immovable submitted to the office for cadaster on
the same day, the two mortgages shall have the same rank. In case of
disputes between the parties, the court will assess which party’s
mortgage has a prior rank.
There are certain situations which may prove to be problematic in
practice. For instance, in case there are two or more persons entitled
to acquire rights over the same immovable based on deeds concluded with
the same person which are mutually exclusive of one another, the person
who first registered its right with the land book of the immovable shall
be considered as the holder of the tabular right, regardless of the
conclusion date of the deed based on which the right had been actually
obtained.
(ii) Temporary registrations
Although temporary registrations of rights in the land book could also
have been performed under the former civil code, the NCC has extended
the category of situations when temporary registrations of rights are
allowed. For instance, according to the NCC, the following are permitted
to be registered by way of temporary registrations in the land book: a
right affected by a condition, defined as a future and unpredictable
event upon which the mere existence or the termination of the respective
right depends; a right related to or based on which an encumbrance over
a future construction is established; and when both parties to an
understanding agree to the temporary registration of a right in the
corresponding land book.
Temporary registrations may be achieved only with the consent, granted
in authenticated form, of the person against whom such registration has
been performed, or based on a final court decision.
(iii) Notations
As previously mentioned, notations may be performed in relation to
rights other than rights in rem, and also to legal situations and
facts related to the immovable. The situations in which notations are
allowed have also been extended, as compared to the former civil code,
and they are expressly mentioned in the NCC or in special laws. Those
mentioned in the NCC include the notation of the following: a
matrimonial agreement; a statement attesting to the fact that a
particular immovable is a family dwelling; the right to revoke or
unilaterally denounce an agreement; and the intent to alienate or place
a mortgage over an immovable; and the promise to sell/purchase or
transfer another right over an immovable.
 As previously mentioned, the system put in place by the former civil
code also allowed the notation of certain rights in the land book of the
immovable property. The most common situation was the notation in the
land book of the promise to sell/purchase or transfer another right over
an immovable. The NCC has maintained this possibility, but details the
conditions in which it may be exercised. According to the provisions of
the NCC, the promise to sell/purchase or transfer another right over an
immovable may be noted only provided that the following conditions have
been cumulatively fulfilled: the promissory-seller is registered itself
as holder of the right which is the object of the respective promise in
the land book of the immovable; and the promise mentions the term in
which the actual agreement, sale-purchase or otherwise, is to be
concluded. The promise may be noted with the land book anytime within
the term set for its conclusion, but not later than six months after its
expiration date. In case the agreement has not been concluded during the
established term within the promise, the interested party may ask the
court to render a decision which will have the power of the agreement
itself. In case the agreement has not been concluded during the term set
within the promise, and in case the interested person has not submitted
such a claim to court, then the promise may be deregistered by request
prior to the expiration of a six-month period from the end of the term
provided for the conclusion of the agreement.
Beside the notation with the land book of the promise to sell/purchase
or transfer another right over an immovable, which is a common
situation, the NCC has also included other new situations which may now
be registered in the land book by way of notation. One of these new
situations refers to the possibility to register the intent to sell or
create a mortgage over an immovable.
After three-months have elapsed since the registration of the intent,
then the notation of the intent to alienate or to create a mortgage over
the immovable will lose its effect. As regards the registration of the
intent to create a mortgage, the amount corresponding to the obligation
must also be noted in the land book of the respective immovable. Also,
if the immovable is actually encumbered with a mortgage during the
three-month term since the notation of the intent to create a mortgage,
then the respective mortgage shall have the rank of the registration
request.
Changes brought to the immovable
Other significant aspects refer to registrations in the land book for
merge or de-merge operations performed to the immovable property, and
especially when the immovable is mortgaged. The merge or de-merge of an
encumbered immovable may be performed only with the consent of the
persons in whose favor the respective encumbrance has been established.
Their refusal, however, cannot be abusive, and a court of law is
entitled to censure such refusal.
In case the mortgagee has agreed with the merge or de-merge of the
immovable, as well as with the merge of the mortgaged immovable with
another immovable, then, except for the case when the parties have
agreed otherwise in writing, the rank of the mortgage shall be the one
of the immovable to which the merge has been performed. However, if the
parties agree otherwise through a convention, then the amendment of the
rank of the mortgage is allowed, meaning that the role of the convention
is significant, and their thorough and accurate analysis is extremely
important when intending to enter a transaction.
Formalities
As far as deeds concluded in authenticated form are concerned, there are
certain formalities which should be considered by the parties to the
respective understandings. The public notary which has prepared the deed
based upon which a real estate right is transferred, modified, created
or terminated, is obliged to request ex officio the registration of the
respective right in the land book of the immovable on the conclusion
date of the respective deed or on the next day, at the latest. At the
authentication of the deeds mentioned above, the notary must request a
land book excerpt which is valid for 10 business days following the
registration date of the request. During this validity period of the
excerpt for authentication, the registrar hired at the office for
cadaster and land registration will not be allowed to perform any
registration in the land book, except for the one for which the
respective excerpt has been initially issued. |
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Conclusion |
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As detailed above, the land book system has been significantly amended.
The large number of registration requests which will be transmitted to
the offices for cadaster will undoubtedly trigger staff problems which
need to be recognized, managed and resolved in due time, so as not to
endanger acquisition of rights. However, the fact that these provisions
of the NCC regarding the land book regime are to be in full force and
effect only after the finalization of the cadaster throughout the entire
country and the opening of land books for all immovables in Romania,
leaves room for timely resolving these potential problems. Also, since
the acquisition of rights has become a more complex process, parties
intending to enter transactions and do business in Romania should look
closely for specialized counsel so as to properly conclude negotiations
and the transaction in full compliance with the NCC. Our upcoming
articles on the NCC, regarding agreements and the guarantee system, will
demonstrate that much more attention should be paid now to both the
negotiation, as well as to the actual conclusion and enforcement of
agreements and warranties. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2011 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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RUBIN MEYER DORU & TRANDAFIR
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E-Mail:
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VISIT OUR WEB SITE:
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