How to avoid swindlers when you plan to buy a new house? IPN Agency’s reporter asked Inga Grecu-Stavila, vice director on registration and legal matters of the state-owned enterprise “Cadastru”, what steps should be taken and what documents the seller must present for the person who intends to buy a house to be sure that this home will be his/hers by law.
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Ownership right appears after transaction is registered with “Cadastru”
Inga Grecu-Stavila said the contract for the sale and purchase of real estate must be authenticated by a notary. Afterward, the buyer must register the ownership right in the Register of Real Estate, at the local cadastral office. Even if the contract was signed in the presence of the notary and the money was paid, the buyer does not become owner of the purchased property until the ownership right is not registered with “Cadastru”. The law does not stipulate an exact period, but it is in the interests of the buyer to register the contract with “Cadastru” as soon as possible so as to legally become the owner. Under the legislation, the notary who authenticates the transaction can also register the deal with “Cadastru”, but this should be better done by the new owner.
Unpleasant cases can happen when the seller has debts and the sold property has been secured and cannot be transferred to the buyer or when the seller is a legal entity that is insolvent or is undergoing an insolvency procedure. To avoid such situations, the buyer can verify if the sold property is not pledged or confiscated for debts through the agency of the notary. All the notaries have access to the database of “Cadastru” and the entire information about the state of the real estate can be obtained with the help of the notary even the day the sale and purchase transaction is performed. This information can be also asked from the owner of the property, which can present an extract from the Register of Real Estate. It is recommended that the money for the property should be given in the presence of the notary, but the best variant is to make a cash transfer.
Forged powers of attorney are a trap for inattentive buyers
Special attention should be paid when the real estate is sold through a representative, based on the power of attorney from the buyer. Increased attention is needed because there are cases when the powers of attorney are forged. Usually, the notaries who authenticate such transactions call the notary indicated in the power of attorney to convince themselves that the given notary authenticated it. The buyer must be vigilant and ask the notary to perform this check if this does not do it.
This is the only security measure in such situations because the powers of attorney are not registered in a common register, especially because there are such documents issued by notaries from the neighboring states that are recognized in our country. They can only phone the given notary to make sure that such a power of attorney exists indeed.
Buying real estate by investment contract
By the investment contract for the purchase of real estate that is to be built, the investor-private individual gives money, while the other side, which is usually a legal entity, promises to erect a building or an apartment and to give it to the investor in the future. If the investment contract is not authenticated with a notary and is not registered in the Register of Real Estate, such a contract is considered null and void. The law obliges the legal entity to register such a contract in the Register of Real Estate within 15 days of the notarial authentication, but this thing can be also done by the private individual. A state tax of about 50 lei is paid for the purpose. The law bans the building company from taking the money from the investor if the contract is not registered with the cadastral office, this being a measure to protect the private individuals.
Before the investment contract is signed, the private individual, who is the potential investor, must make sure that the building company or companies have the right to own or use the land and have authorization for erecting the given apartment building. When the investment contract is registered with “Cadastru”, the company’s ownership rights over the land must be already registered in the Register of Real Estate. There must be also indicated the civil society contract if the apartment building is constructed by a group of companies. The construction authorization can be checked at the mayor’s office or the construction company. The authentication of the investment contract with “Cadastru” guarantees that the construction company will not sign another investment contract for the same apartment. This is another method to protect the private individuals. If there were signed several investment contracts for one apartment, priority will be given to the person whose contract was registered with “Cadastru”.
The person who invests money must make sure that all the legal procedures are obeyed. Regretfully, there are cases when private individuals sign contracts with unauthorized construction companies that do not register such contracts with “Cadastru”. The private persons expose themselves thus to big risks as, if the company becomes insolvent, the investors do not have legal reasons to claim the apartment for which they paid or to get the money back as the contract is considered null and void. The private individuals will have to go to court to prove that they paid the money, but this is a very difficult procedure.
Buying apartments by mortgage
The national legislation allows registering the future housing and the ownership right over future real estate. The given provisions were adopted to enable those who want to buy housing to mortgage the real estate that is to be constructed and to take out bank loans for erecting apartments. In this case, the construction company must present a set of documents to the local cadastral office, including the documents for the land, the construction authorization, the construction project and the condominium statement. Each apartment that is to be built is registered in the Register of Real Estate with a separate cadastral number. Thus, the private individual can sign a contract for the sale and purchase of the future apartment. Through notarial authentication, the buyer becomes lawful owner of the future apartment and can pledge it with a bank so as to be able to take out a loan. The future owner can go to “Cadastru” to check if the apartment is registered or not by paying a state tax of about 40 lei. This is open information and it can also be provided by the construction company. The same information is presented by the notary before authenticating the contract for the purchase of future property.
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According to the General Police Inspectorate, eight criminal cases were started last year over swindling or dispossession of persons of housing. By such offenses, the victims were causes damage to the value of over 5 million lei. In 2010 there were started 32 such criminal cases, while in 2005 – 87.
Alina Marin, IPN
