Vol. XVI No.8
November 2011


Romania’s New Civil Code – Overview
Part I – The Land Book Regime


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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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
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.

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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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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