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A kept promise

Victor MAIER

The legislative package on property includes provisions on the drafting and enforcement of legislation on: restitution of real estate assets abusively seized in March 6, 1945 - December 22, 1989, restitution of landed property and encouraging agriculture development. 



Principles of the law

 

The core principles of the legislative package on the modification of the real estate property regime does not affect tenants' interests, as the legislative framework for tenant protection was preserved intact. Law no. 10/2001 set out a number of restrictions on property restitution. Thus, excepted from restitution were political party offices, school or hospital buildings. The new package regulates however all these cases. The goal was to eliminate exceptions from the principle of restitution in kind, to the effect that restitution of buildings hosting political party offices, embassies and public institution became possible. For public institutions, schools and hospitals in particular, up to five year periods have been stipulated for the maintenance of the buildings destination. Novelties are also related to the global property regulation (including owners or heirs of owners who did not enrol in collective farms and have not transferred land to the State, and who can be released ownership documents under the Law), introduction of clear-cut obligations and sanctions for mayors and members of Enforcement Commissions in case of law violation, the step up of legal proceedings involving landed property and establishment of cadastre offices in each county. The legislative package introduces the annuity as a means to stipulate the grouping up of tracts of land: for each land owner over 62 years of age who owns max. 10 hectares, a budget of Euro 100 /year/ hectare, throughout the owner's life, in exchange for his selling the land, and Euro 50 /year/hectare if the land is leased. 

Provisions have been introduced, regarding the restitution in kind of both tracts of land without buildings, affected by approved investment works of public interest (unless their implementation has been started or approved works have been abandoned), and of tracts of land on which, further to the abusive seizing, authorised buildings have been erected which are no longer necessary to the owner. Buildings sold in breach of legal provisions, subject to judicial decisions cancelled under final and irretrievable Court rulings, notified under Art. 21 paragraph (1) of Law no. 10/2001, will be returned in kind. 

Explicit provision is made that judicial decisions regarding the sale, lease, association, mortgage, location, any rental or sub-rental operation to the benefit of a new tenant, change of destination of the real estate asset - land or / and building, notified under Law no. 10/2001, can be challenged in Court.

 

Restitution in kind vs. compensation

 

Former owners who cannot be returned their assets in kind will be granted compensation, in the form of bonds listed with the Stock Exchange. Thus, the compensation level cannot be subject to a ceiling, while assessment of the assets that cannot be returned will be conducted against the actual asset value. Within 30 days since the Law comes into force, "Proprietatea" Fund will be established, in view of financing the compensation related to real estate assets abusively seized. The issue of bonds is estimated to start in early 2006. Within one and a half years since endorsement of the law, compensation beneficiaries will be able to sell the bond. 

Furthermore, property reconstruction is completed on the old location, unless they are legally owned by a third party; land merger can be completed, into one or several lots, of the same category as the abusively seized tract wherever possible, including on State-owned tracts of land; ownership certificates obtained prior to the endorsement of Law No. 18/1991 and the existence of old locations are absolute proof of ownership, binding landed property commissions to validate the application of ownership right reconstruction; entries in agriculture registries dating 1945 to 1990, applications for admission former collective farms, documents in public archives regarding the land ownership, when not accompanied by ownership certificates, have a declarative importance as to the asset ownership; if no written evidence of ownership can be produced, witness testimonial is satisfactory to reconstruct ownership rights, if delivered on the old locations, and the witnesses are neighbouring owners or heirs on all sides of the tract of land for which reconstruction was applied for; entities with joint land ownership will be returned in full the area owned and one collective certificate will be issued, upon the request of a legal representative of the entity; members of joint ownership entities cannot sell or lease quotas of the owned land to persons outside the entity.

 

Property, a prerequisite for EU

 

The laws to modify the ownership regime in Romania concern not only the application of a core principle of Liberalism, but also the occurrence of alarming phenomena: over one million lawsuits involving landed property and several hundred thousand suits in the real estate sector. The concept of private property has gained strong roots in Romanians' hierarchy of values. Over 97% of the buildings in Romania are privately owned. The starting point in the final regulation of the private ownership regime was the principle that it is not what the State believes to be good for the citizens that matters, but what the citizens believe to be good for themselves.

Settlement of the ownership issue is in fact one of the essential conditions that Romania must meet in view of the European Union accession. Private ownership is well known to be at the heart of market economy stimuli. Without private ownership, there is no interest in turning revenue into capital, and without capital there is no responsibility. Property restitution is one of the elements that would lead to the development of private ownership, to construction of a business environment favouring the small and medium entrepreneurs and to foreign investors.

 

Principles

The key principles of the legislative package for the regulation of the property regime are as follows:

- The rule of restitution in kind of all tracts of land and buildings owned by the State upon endorsement of the Law;

- The granting, only in exceptional cases, of fair and correct compensation; the compensation will not be subject to ceilings;

- In the case of real estate assets, a fund will be established for the financing of related compensation payments;

- In the case of nationalised buildings, the tenants' interests are not affected, as the legislative framework on tenant protection is fully maintained;

- Simplification, bureaucracy elimination and transparency in the restitution of the concerned land and buildings;

- Quick and fair settlement of the dozen thousands lawsuits regarding the restitution of nationalised assets or of assets abusively confiscated by the former Communist regime.

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