In Romania, the recovery of immovable property when the payment obligations on a loan secured by that property are not performed involves, primarily, a judicial process carried out through enforcement proceedings supervised by the court.

As a rule, the enforcement is initiated by the creditor on the basis of a writ of enforcement (such as a notarial mortgage deed) and is carried out by a court-appointed bailiff. The procedure includes formal notification of the debtor, registration of the enforcement with the competent court, and sale of the asset by public auction. The process is governed by the Romanian Code of Civil Procedure and is subject to judicial control, which includes the possibility for the debtor to contest the enforcement.

Romanian legislation does not recognise a fully extrajudicial enforcement mechanism similar to the systems where creditors can recover and sell the assets without the involvement of the court. Although certain preliminary steps are of an administrative or notarial nature, the actual recovery and forced sale of immovable assets are subject to mandatory judicial control. Consequently, the enforcement regime in Romania can best be characterised as being judicial in nature, with limited procedural simplification, but without genuine extrajudicial enforcement.

Romanian legislation recognises mortgages over the shares of a company that owns real estate. These mortgages are granted by the shareholder of the company that owns the real estate, which is often a special purpose vehicle (SPV), as collateral for the creditor.

The enforcement of a pledge over shares involves primarily a judicial process, carried out through court-supervised enforcement proceedings conducted by a bailiff on the basis of an enforceable title (such as a notarial pledge agreement). The process usually involves the seizure of shares or quotas and their sale by public auction, with the proceeds used to satisfy the secured claim. On a limited basis and if expressly agreed, the enforcement may also be carried out by direct appropriation or private sale, subject to strict legal conditions and debtor protection rules.

Romanian law does not allow extrajudicial enforcement in the strict sense (ie, self-help recovery without procedural oversight). Even where private sale or seizure is contractually agreed, enforcement remains subject to mandatory procedural safeguards and potential court review. Consequently, enforcement against equity interests is best characterised as judicial or quasi-judicial, rather than purely contractual or extrajudicial.

In Romania, enforcement of security over real property is judicial in nature, and there is no self-help or purely non-judicial foreclosure process, so there is generally no non-judicial notice regime applicable to real estate recovery.

Any recovery of property is carried out through court-supervised enforcement, with notice formally served to the debtor as part of the enforcement proceedings.

In Romania, the borrower has the legal right to redeem the collateralised asset by fully paying off the secured debt, including the principal, interest and enforcement costs, up until the moment the asset is adjudicated at public auction. The redemption is carried out through payment, which ends the enforcement procedure and releases the guarantee. Under Romanian legislation, there is no right of redemption after the auction, as soon as the asset has been transferred to a third party.

Furthermore, in addition to the right of redemption, the borrower may dispute the enforcement through legal proceedings. This includes the possibility of challenging the enforceability of the enforcement order (titlu executoriu) and of filing objections to enforcement (contestație la executare), particularly in cases of procedural irregularities. However, such challenges do not constitute a substantive right of redemption and must be exercised within the strict time limits laid down by law.

In enforcement proceedings, the court may authorise several forms of enforcement in favour of the creditor. These may include both the enforcement of the equity (shares) of the entity holding the asset and the enforcement of a mortgage on the immovable property, provided that both guarantees are valid and the debt is due. There is no rule requiring exclusivity between remedies; however, the principle prohibiting double recovery applies, meaning that all amounts recovered must be credited to the same outstanding debt.

Simultaneous enforcement actions do not affect the borrower’s right of redemption, as the borrower may fully repay the debt and extinguish all ongoing enforcement proceedings, at any time prior to the completion of the forced sale. Furthermore, the creditor may bring legal action against the borrower and affiliated entities (such as guarantors or co-debtors) simultaneously with enforcement, without having to exhaust one remedy before resorting to another.

The judicial foreclosure process in Romania (ie, the recovery of immovable property through court-supervised enforcement procedures) usually takes anywhere from six to 18 months, depending on factors such as the court’s volume of work, the complexity of the case, any objections filed by the debtor, and the number of necessary auction attempts. In practice, proceedings may exceed this timeframe if the debtor raises objections to enforcement or if the property is difficult to sell.

Romanian law does not recognise extrajudicial foreclosure in the form of recovering and selling real estate by one’s own means or outside of court supervision; any enforcement must be carried out through judicial proceedings under the supervision of the court. Consequently, there is no separate time limit for extrajudicial enforcement of immovable property in Romania. Limited mechanisms for extrajudicial enforcement exist only for movable property or equity interests, and do not apply to immovable property.

However, this should not be confused with the granting of priority to multiple guarantees on the same asset. In such situations, the distribution of proceeds from the liquidation of the asset is governed by strict legal rules on priority or privileges.

In Romania, where a foreclosure sale of real estate does not generate sufficient income in order to satisfy the secured debt, the deficit is calculated as the difference between the total outstanding debt (including principal, accumulated interest, fees and enforcement costs) and the amount realised on the sale. Creditors may then pursue the debtor for the remaining balance as an unsecured general claim or foreclose on any other available security or guarantees provided for under the loan agreement, including personal guarantees. There is no legal restriction preventing the creditor from recovering the full amount of the remaining balance, with enforcement of these claims being carried out through the normal legal procedures.

As a preliminary matter, it is important to distinguish between the following two types of joint ventures recognised by Romanian law.

• Participation agreement (Asociere în participație) – a participation agreement is a contract regulated by the Civil Code whereby one party allocates to one or more parties a share of the profits and losses of one or more operations it undertakes. A participation agreement cannot acquire legal personality and does not constitute a separate legal entity distinct from the parties involved, vis-à-vis third parties. Consequently, a joint venture agreement does not create a new company.
• Formation of a project company or a special project vehicle (SPV) – a joint venture may alternatively be established by creating a company specifically designed to act as a project vehicle. In this structure, the company is endowed with the funds and resources necessary to develop and execute a specific project. This form results in the creation of a separate legal entity capable of entering into contracts, owning assets and assuming liabilities in its own name.

The most common form of company used to facilitate joint ventures in real estate transactions in Romania is the limited liability company (LLC). LLCs are preferred due to their flexible structure, the limited liability of shareholders, the relatively simplified incorporation procedure, and the low minimum share capital requirement of RON500 (approximately EUR100), as compared to a joint stock company, which requires a minimum share capital of RON90,000 (approximately EUR25,000). Joint stock companies may be considered for more substantial projects that require a broader investor base, but LLCs remain the most common choice for most joint ventures engaged in real estate development and investment.

Joint ventures in the form of a participation agreement and the creation of a project company both generally require co-operation between partners.

With regard to the participation agreement, the rules are set out in the contract that creates this form of participation from the beginning by the parties. In the case of a project company, the governance of the company is usually established in the articles of association or through a separate shareholders’ agreement.

In both joint venture cases, these agreements usually set out:

• the rights and obligations of each party;
• decision-making procedures;
• capital contributions;
• profit-sharing arrangements;
• governance and management structures;
• dispute resolution mechanisms; and
• exit strategies.

They are designed to ensure the co-ordinated operation of the joint venture and to protect each party’s investment, reflecting both the contractual freedom and the obligations of the partners under Romanian law.

Regarding the participation agreement, the parties holding ownership or profit-sharing rights have obligations defined primarily by the agreement itself, as such agreements do not create a separate legal entity. These obligations generally include:

• acting in good faith;
• providing accurate information about the operations covered by the agreement;
• sharing profits and losses in accordance with the agreed terms; and
• not acting to the detriment of the other participants.

The remedies for breach of these obligations are usually contractual in nature and may include claims for damages, specific performance or accounting for profits.

On the other hand, if individuals who hold shares in a joint real estate company, such as shareholders of a joint company (usually an LLC), are bound primarily by the Romanian Civil Code, the Companies Law (Law No 31/1990, with subsequent amendments) and the articles of association or shareholders’ agreement, such obligations usually include the obligation to:

• exercise their rights in good faith;
• exercise their rights in the interests of the company;
• avoid conflicts of interest; and
• refrain from actions that could harm the company or other shareholders.

In addition, contractual obligations under the shareholders’ agreement may impose specific obligations, such as co-operation in management, capital contributions or compliance with the approved development plans. Where a participant breaches these obligations, there are remedies available under both civil and corporate law, as well as through the shareholders’ agreement, including claims for damages, injunctions, specific performance or removal from management positions. The shareholders’ agreement often includes additional contractual enforcement tools, such as purchase rights, drag-along and tag-along mechanisms, or other exit agreements, ensuring that the parties have agreed on procedures to protect their interests and resolve disputes.

However, in both cases the partners frequently attempt to establish the remedy mechanisms in such a way that the issues can be resolved without recourse to legal proceedings, considering that legal proceedings in Romania can take several years to reach a final resolution.

Whenever an organisation’s governance documents are silent or vague, or allow for a decision-making stalemate, disputes are generally resolved under civil and corporate law rules.

In such cases, the parties may choose to settle the dispute through arbitral proceedings, as previously agreed, or may choose to address the matter to the judicial courts. The implied legal provisions provide some guidance for the interpretation of unclear or conflicting provisions, and courts may intervene to impose the performance of obligations, to interpret the constituent documents, or to order appropriate measures to resolve the stalemate. Furthermore, in the event of a conflict of interest between the legal representative and the represented party, or where the legal entity lacks a duly appointed representative, the court may appoint a special curator to act on behalf of the entity until a legal representative is formally designated.

Since legal proceedings can take several years, it is customary to include dispute resolution clauses, such as mediation or arbitration, in the articles of association, in order to avoid long-running disputes.

The contractual provisions that are meant to enable the automatic registration of a judgment in the event of specific events are not applicable, since all judgments must be issued and formally recorded by a competent court in accordance with civil procedure.

Similarly, provisions that attempt to allow for the automatic granting of preliminary measures, such as court orders or attachments, are also unenforceable, as such measures require judicial approval and are subject to the debtor’s rights to challenge or request a stay of enforcement.

While contracts may accelerate obligations or trigger contractual consequences in the event of non-performance, any enforcement or provisional measures must be obtained through the courts.

In Romania, winding down a joint venture, particularly in real estate, involves several legal, contractual and practical considerations.

In the context of a participation agreement, the termination may occur either at the term specified in the agreement or earlier, in accordance with the agreed-upon clauses, or, in the absence of such clauses, in justified circumstances, such as the impossibility of achieving the common objective. Upon winding up, the assets, profits and losses arising from the joint activity are distributed among the parties according to the agreement or in proportion to each party’s contributions, as stipulated in the participation agreement. Under the applicable legal provisions, the parties may agree that the assets contributed to a joint venture in the form of a participation agreement become joint property, or that they may become wholly or partially the property of one of the participants for the purpose of achieving the joint objective. In the latter case, the parties may provide for the return of such assets in kind upon termination of the association.

Regarding the project company, the process is generally governed by the joint venture articles of association or shareholders’ agreement, and also by the Romanian Companies Law (Law No 31/1990, as subsequently amended) and, where applicable, the Civil Code. Key considerations include the allocation of remaining assets, the settlement of liabilities, and compliance with corporate formalities, including shareholder approvals and updates to the company’s statutory registers.

In Romanian real estate financing, there are several ways to secure a bank loan or other type of financing, including:

• a mortgage over land and buildings;
• mortgages over the shares of the financed company;
• a mortgage over bank accounts; and
• even personal guarantees.

In the context of bank financing specifically, banks will typically require mortgages over all or almost all financial assets capable of securing full repayment of the loan, including all of the aforementioned for a single financing procedure. It is the lender’s key protection, giving a direct right over the asset and priority if the borrower defaults. This approach is firmly embedded in market practice and applies equally to development projects and to the purchase of existing commercial or investment properties. The legal framework is set by the Romanian Civil Code and the relevant banking regulations, and in practice the mortgage remains the backbone of real estate lending in Romania.

Nevertheless, lenders rarely rely on the mortgage alone; additional security is usually required, especially in transactions involving professional investors or developers. This commonly includes security over the shares or equity interests in the borrowing company, along with promissory notes (bilete la ordin), often supported by an aval.

Romanian law does not currently recognise the non-recourse loan as a standalone legal concept, and there is no specific statutory mechanism that expressly provides for it. That said, Romanian law does give parties sufficient flexibility to replicate the economic effect of a non-recourse loan by relying on existing contractual tools.

Although non-recourse financing is not expressly regulated, the parties may agree to limit the borrower’s liability under the general principle of freedom of contract, provided mandatory legal rules are respected. In practical terms, this means that a lender may accept to look solely to the secured asset for repayment. In reality, however, such arrangements are rarely absolute. Lenders will typically insist on a number of carve-outs to protect themselves. These usually come into play in cases of fraud or misrepresentation, intentional wrongdoing, breaches of key obligations, or certain insolvency-related actions attributable to the borrower. Where this happens, the agreed limitation no longer applies and the borrower becomes personally liable notwithstanding the original non-recourse structure.

In Romania, completion guarantees are widely used in construction and real estate financing to ensure that contractual obligations are fulfilled. When enforcing such guarantees, it is essential to carefully examine the terms of the guarantee itself, the underlying contract, and the circumstances of performance. Courts and enforcement authorities will closely assess whether the guarantee has been validly triggered and whether any procedural or formal requirements have been met.

Unconditional or absolute guarantees are generally enforceable under Romanian law, provided they comply with formal requirements and do not violate mandatory rules. For example, claims arising from fraud, abuse or public policy violations cannot be enforced, and Romanian courts will not uphold guarantees intended to circumvent these protections.

Waivers of defences in guarantees are recognised and enforceable to a large extent, particularly in the case of autonomous or on-demand guarantees. Parties can contractually waive most procedural or substantive defences, including the requirement to pursue the principal debtor first. However, waivers cannot override statutory protections against fraud, gross misconduct or matters contrary to public order. In practice, this means that, while guarantees provide a robust tool for risk mitigation, careful drafting and compliance with mandatory legal safeguards remain critical to ensure enforceability.

One of the principal instruments in this regard is the interim injunction, which functions similarly to a preliminary injunction and aims to secure monetary claims and prevent the dissipation of assets. In cases involving disputes as to whether a guarantor holds sufficient assets or adequate substitute collateral, Romanian courts have established that such matters may appropriately be resolved through the interim injunction procedure.

Where the guarantor’s obligation has its origin in a document that qualifies as a writ of enforcement under Romanian law, enforcement may also be carried out directly through a court-appointed bailiff. For example, the High Court of Cassation and Justice has clarified that a bank guarantee letter constitutes an executory title only when it is expressly linked to an underlying loan agreement. In such circumstances, the creditor is not required to initiate ordinary court proceedings on the merits and may proceed directly to enforcement measures, such as attachment of bank accounts or seizure of assets, through the bailiff.

In addition to personal guarantees, Romanian law recognises security interests such as pledges (gaj) over movable assets. Once registered, a properly perfected pledge allows the creditor to enforce the secured asset efficiently and, where agreed, even through out-of-court mechanisms such as private sale or appropriation.

Romanian law imposes certain statutory limits on the enforcement of guarantees and security interests – namely, the benefit of objection or, where multiple guarantors exist, the benefit of division, unless these rights are expressly waived. For pledges and mortgages, enforcement must respect proportionality, protect third-party rights, and comply with registration and public notice requirements. In addition, all enforcement actions are subject to statutory limitation periods, which may be interrupted by formal enforcement measures.

In Romania, arbitration clauses are increasingly common in large-scale projects, particularly in the infrastructure sector, where this mechanism is often the preferred method of dispute resolution in real estate and construction contracts.

Moreover, arbitration is more frequently used in complex commercial real estate transactions, especially in cross-border or high-value deals where parties seek confidentiality, specialised decision-makers and enhanced procedural flexibility. Commercial leases and contracts for development frequently include such arbitration clauses, and usually direct disputes to the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania.

While interest in arbitration within the real estate sector is clearly growing among international investors and Romanian corporate actors, especially for large and complex transactions, the prevalence of arbitration clauses is still lower than litigation and tends to be concentrated in commercial, cross-border or high-value contracts, rather than across the entire Romanian property market.

Advantages of using arbitration in real estate transactions include the following.

• Speed and efficiency: the timeframe for submissions and hearings can be set by the parties, resulting in a more predictable and efficient schedule.
• Qualified decision-makers: the parties can appoint arbitrators who possess certain knowledge and specific expertise related to real estate, construction or commercial law, which may add value to the quality and relevance of the decisions made.
• Confidentiality: arbitration is a non-public form of proceedings and arbitration awards are not published, whereas court awards and proceedings are generally public.
• Flexibility: the arbitration procedure can be tailored to satisfy the need of the parties, such as language, rules of procedure and the governing laws.
• Enforceability: arbitral awards against Romanian debtors can be enforced with relative ease, typically by presenting the award to a bailiff without the need for additional formalities.

Disadvantages of using arbitration in real estate transactions include the following.

• Costs and expenses: these are particularly relevant in cases where the dispute is quite complex and requires several hearings and the presence of experts. The parties to the agreement have to pay the costs of the arbitrator’s fees, administrative expenses and legal representation.
• Limited grounds for challenge: arbitral awards are generally intended to resolve disputes conclusively, but they are not final and binding, as they can be challenged by an action for annulment (acțiune în anulare) brought before the competent court.
• Limited procedural remedies: compared to court cases in Romania, arbitration provides a more limited discovery mechanism. It may also restrict the parties’ ability to thoroughly investigate and substantiate their claims in arbitral proceedings.

Mediation is an alternative form of dispute resolution between two or more parties who wish to reach an agreement, with the help of a third party, specialised as a mediator.

In Romania, mediation is governed by Law No 192/2006 on mediation and organisation of the profession of mediator. It constitutes one of the recognised alternative methods of resolving a dispute and may be applied to civil lawsuits, commercial lawsuits and property-related disputes. Although the applicable Romanian laws encourage its use, mediation is mandatory in neither property transactions nor property lawsuits.

In practice, mediation plays a marginal role in Romania’s real estate sector. Real estate transactions tend to be the result of direct negotiation between parties, without professional intermediaries, and formal mediation is rarely used. Mediation is more commonly considered in the context of real estate disputes, such as landlord–tenant conflicts, inheritance-related issues, boundary disputes or unclear property titles. However, even in these situations, parties generally prefer to initiate court proceedings.

The parties may resort to mediation either before or during legal proceedings. Any settlement agreement reached through mediation may subsequently be authenticated by a notary public or approved by a court, thereby acquiring enforceable status.

In Romania, provisional remedies in real estate disputes include provisional attachment (sechestru asigurător) and the registration of the pending lawsuit in the land registry (notarea litigiului în cartea funciară).

A lender may request a sequestration of the property to prevent its sale, transfer or encumbrance during the pendency of a dispute. Simultaneously, the creditor may request the court to order the registration of the pending dispute in the land registry, which serves as a public notice to third parties that the property is subject to dispute.

Both measures must be approved by the court, and the debtor can contest them, thereby ensuring procedural safeguards while protecting the creditor’s interests.

In order to obtain a provisional remedy such as a provisional attachment (sechestru asigurător) or the notation of a pending lawsuit in the land registry (notarea litigiului în cartea funciară), the creditor must file an application to the court or competent authority, as appropriate.

Regarding provisional attachment, once the court has verified that all the essential conditions for enforcing such a measure have been met, it will require the applicant to provide a guarantee in the amount determined by the court. If the guarantee is not provided within the time limit set by the court, the provisional attachment will be automatically revoked. The imposition of such a measure is strictly subject to a court decision.

Registration of the dispute in the land register may be carried out by submitting an official application to the competent cadastral office, accompanied by supporting documents attesting to the dispute and proof of payment of the fee set by the cadastral authority.

The improper or abusive use of provisional measures, such as provisional attachment, may result in the loss of the guarantee. In accordance with the applicable legal provisions, the security shall be returned to the party that deposited it only if the entitled party has not filed a claim for compensation for the damage caused by the granting of the measure within 30 days from the date on which the court’s decision becomes final.

In other cases, abusive or bad-faith use of provisional measures exposes the applicant to civil liability for all damages suffered by the opposing party, including loss of use, lost business opportunities or damage to reputation. If the court finds that the measure was requested without legal justification or in bad faith, it may order the applicant to compensate all proven damages in full. In addition, such abusive behaviour may give rise to procedural sanctions and the obligation to pay court costs, as Romanian law prohibits the exercise of rights contrary to the principle of good faith.

However, it is often difficult to quantify such damages in court, and the claims can lead to lengthy litigation with highly interpretative and disputed valuations.

Romanian courts issue temporary injunctions in real estate cases when legal requirements are met. The procedure that is more commonly applied in such situations is the interim injunction. In the case of presidential ordinances, courts act to preserve the situation and prevent immediate harm. They have reasonable power that can be exercised to stop construction, block property transfers or pause enforcement actions that are deemed irreparable or otherwise very difficult to remedy.

Courts review applications carefully when deciding whether or not to issue a presidential ordinance. Applicants must show urgency, temporary relief and an appearance of right. Courts do not decide the dispute in advance through this procedure, and they avoid measures that would permanently block a transaction.

Success depends largely on the evidence proposed by the applicants. They must show urgency and proportionality, and are required to thoroughly demonstrate the necessity of such measures. Courts balance the relief against property rights and ongoing business, and interim measures protect interests when justified.

In real estate disputes, courts generally consider harm to be irreparable when it cannot be adequately remedied through ordinary legal remedies, such as damages or restoring the parties to their prior situation. In the case of immovable property, it is often difficult or sometimes impossible to restore once a disputed action – such as an unauthorised sale, transfer, construction or alteration – has taken place.

Applicants typically must demonstrate that restoring the property to its original condition would be extremely difficult, costly or impossible once ownership changes or modifications occur. Courts assess whether the disputed actions could alter the property’s legal status, compromise title or expose it to third-party claims – for example, through unauthorised construction, improper entries in the land registry, or loss of control during enforcement.

To satisfy this element, applicants must provide clear and concrete evidence, such as records of ongoing construction, pending registrations or potential claims by third parties. Even seemingly minor changes may be considered irreparable if they cannot be undone. Ultimately, courts evaluate the practical impact of the threatened action on the specific property and the applicant’s rights.

In Romania, contractors or vendors who perform work on a property benefit from statutory rights designed to secure payment. A primary instrument in this regard is the legal mortgage, which arises automatically by operation of law in respect of the value of works that enhance the property. The existence of such a mortgage does not require a court order; however, it must be duly registered in the Land Book to be enforceable against third parties.

The enforcement of the mortgage is carried out by a court-appointed bailiff, who is empowered to sell the property and distribute the proceeds in accordance with the priority of registered mortgages.

In summary, while a legal mortgage can be created and registered without recourse to the courts, realisation of the mortgage into actual payment necessarily requires adherence to the judicial enforcement procedure.

In Romania, private equity involvement in residential real estate is primarily governed by corporate, investment fund, real estate and financial legislation. Unlike the US or some EU jurisdictions, Romania lacks a fully developed domestic REIT framework, so most investments occur through corporate entities or private funds rather than publicly listed trusts. Regulatory scrutiny typically focuses on sector-specific rules, including consumer protection, anti-money laundering, corporate governance, planning and construction regulations, landlord–tenant law, and tax obligations, with oversight distributed among multiple authorities.

However, at the national level, a draft REIT law (PL x 433/2024) has been proposed, reflecting the growing importance of indirect real estate ownership. Although still pending adoption, if enacted the legislation would establish REIT-like structures with tax incentives, potentially redirecting investor behaviour toward acquiring and managing property through regulated vehicles rather than direct ownership.

In Romania, public interest considerations in real estate – such as urban planning, environmental protection, social impact and opportunity – can influence how investors and developers approach projects and transactions. Generally, real estate developers must conduct a thorough analysis of all legislation related to such areas, to ensure compliance with all applicable regulatory standards before starting development activities.

For example, projects that may affect historical areas, protected zones or community resources often face closer scrutiny, longer approval timelines and more extensive disclosure requirements. If these factors are not considered early in the project, developers may encounter legal issues, some of which could be severe or even project-ending.

Proactively integrating public interest considerations into project planning not only reduces legal and regulatory risks but also enhances a project’s credibility. By addressing potential concerns early on in the process, developers and investors can mitigate delays, avoid costly disputes and align their projects with both legal requirements and community expectations, ultimately supporting smoother execution and long-term success.