bulgaria/romania joining eu on 1/1/2007

Auto 320, I'll be back in Ireland next week for 10 days with my wife. I'd be very interested to talk to you if you have time. If it's of any interest to you then please PM me.
 
Have to pass on this one -- am in Spain right now and will be here until sometime in November.
 
I post this in having being spurred by a PM from another member. His question was regarding SELLING land in Romania but perhaps it's as useful to explain the procedure from the opposite perspective.

First thing you must bear-in-mind when buying land in Romania is that, as a foriegn national, you are going to need to form a company. Assuming that you have done this (and it's not complicated to do nor expensive) then there are a number of documents which you should ask to see.

(1) Extras de carte funciara

This is literally a copy of the deeds. It should show that the seller is indeed the registered owner. It should also show if there is any loan borrowed against the land or if a deposit has been paid with a view to sale to a third party.

The other piece of VERY important information contained on this document is if it is zoned 'residential' in which case it will show 'Intravilan' for urban sites or 'Intravilan arabil' for sites in the countryside e.g. on the fringes of a village.

If it shows 'extravilan' then beware as it is zoned agricultural and there are significant taxes to be paid to have it re-zoned depending on the 'quality' of the land and its resultant 'banding'. There are four bands which apply to agricultural land in Romania. The first band applies to the poorest of agricultural land and means paying 120% of the contact value to re-zone. In otherwords if you paid 5 Euro a square metre it will cost you a further 6 Euros to re-zone it.

The final band is reserved for Grade 'A' land and imparts a punitive 400% tax over and above the contract value to re-zone.

Never believe the seller when he tells you that you can re-zone for Euro 1000/hectare (as is often claimed). He is partially right. You WILL be able to get the approval of the local Town Hall for such a proceedure, and the payment of the aforementioned sum, but it is not an enduring legal solution. In order to definitively re-zone the land the higher taxes mentioned above will need to be paid and a certificate obtained that the site has been officially 'struck' from the registry of agricultural land in Bucharest.

(2) Schita

This is a site plan and will detail the dimensions of the site (lenght, width etc.) In otherwords it is evidence that the quoted area matches the real area and that it has the frontage to any highway as quoted by the seller. Less than 14 metres and I'd say forget it as it is too close to the legal minimum of 11 to get planning approval. For sites where you wish to parcel up and sell on then the frontage should be no less than 22 - 25 linear metres.

I can explain why to anyone interested.

Again be aware that the zoning of the land should be recorded on this document and match that on the Extras de Catre Funciara.

(3) Plan de amplasament

This is the site location map. It shows the location of the site relative to those around it and provides details such as in which townland it is located. It is the equivalent of an Ordanance Survey Map and to a lager scale.

(4) Certificat Fiscal (though it may have other names)

A document which the vendor should be able to produce to show that the 'imposit' or local authority tax has been paid up-to-date. This is issued by the 'Primaria' or town hall and should be stamped by same.

The final document, whilst desirable, is not totally necessary. It is the "Certificat de mostenire" or inheritance certificate. It is the sellers proof of where he came into possession of the site if he is claiming that he inherited it.

From a buyers point of view it is a nice document to see as it means that the seller is exempt from tax on the sale (to date there is no inheritance tax in Romania although this is set to change) and thus should, in theory anyway, be more willing to negotiate on the price and to put the real value on the Contract of Sale. If the seller has not inherited the site then, i.e. has bought it at and earlier date and wishes to resell, then he is liable for CGT at 16% so often you will find that he wants to put a lower value on the Contract of Sale than that actually paid in order to minimise his CGT liability.

This is illegal and constitutes tax evasion but it DOES happen ALL the time. It has a knock on effect for you as a buyer, too, in that when you come to sell, if you put the real value of the sale on the contract, then you will appear to have made a larger profit than you actually did and, hence, have a larger CGT liability.

At the end of the day always employ the services of a good lawyer, specialised in property to check all these details for you and to ensure that the State has never been involved in the site in question, ie. there are no outstanding claims with regard to title.

Hope this is of help to someone.
 
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