The Chamber of Deputies has adopted, as a decision-making body, a draft law, informally known as the “Nordis Law”, which introduces strict rules for real estate developers on the collection of down payments for future housing. The law, which is to be sent for promulgation, aims to protect buyers by limiting down payments according to the stage of construction and putting in place mechanisms to control the use of funds.
The new legislation, which amends Law No 10/1995 on Quality in Construction and Law No 7/1996 on Cadastral Act, establishes a system of installment payments for buyers. Initially, a reservation agreement can be concluded for a maximum period of 60 days, for which a maximum of 5% of the price of the real estate is charged. Subsequently, as part of the bilateral sale and purchase agreement, the developer may also charge advances of up to 25% of the price on completion of the structural work and a further 20% on completion of the installation work. Thus, the total amount of advances paid before completion of the property may not exceed 50% of the total price. If the sales contract is not finalized within 60 days due to the sole fault of the developer, the developer is obliged to repay the full reservation amount within 30 days.
Another essential provision is the obligation that all sums received as advance payments must be deposited in a bank account dedicated exclusively to the real estate project in question. The funds in this account can only be spent for the development of that project and only with the “good for payment” approval of the site manager, creating a double check and preventing other projects from being financed with clients’ money. According to PNL MEP Florin Roman, one of the initiators, this measure eliminates the practice whereby developers used advances from one project to finance another.
The law also introduces new cadastral and notarial obligations. It introduces the concept of “pre-apartment”, an operation whereby, on the basis of the building permit, individual land registers are opened for each future housing unit. Promises of sale can only be concluded in notarized form, after the building permit has been entered in the land register and after the pre-apartment has been completed. The notary is obliged to have the promise recorded in the land register on the same day or at the latest on the next working day. These measures are designed to prevent developers from selling more apartments than those provided for in the building permit, by rezoning or other methods. The legislative initiative comes in the wake of the Nordis real estate scandal, in which the developer is accused of having cashed in large sums for projects that were not realized and of having sold some apartments several times.