Romanian authorities have been busy this year putting forward several pieces of legislation affecting the construction field, including, most importantly: (i) a draft of a new law on authorizing construction; (ii) a draft proposal for amending the current application norms for the existing Construction Law; and (iii) preliminary theses for a long-awaited Urban Planning and Construction Code. These proposals were all designed to further the ambitious aim of unifying all the regulations on town planning and construction.
The situation created by such projects all being debated in parallel is somewhat puzzling, as it is not clear why the legislator would continue to work on an old piece of legislation (i.e., the application norms of the current Construction Law), while at the same time a new Construction Law is in public debate together with a unified Urban Planning and Construction Code (which already covers the area to be regulated by the new construction law).
The core Romanian regulation on building permitting, which dates back to 1991, has seen many amendments over the years. The law was twice republished in the Official Gazette and has been modified no less than 31 times, in an attempt to keep construction norms updated with the ever-evolving requirements of modern construction. But patching up an old cloth can never equal getting a new one. The same could be said about the new construction law currently in public debate, which has been heavily criticized for not being new and modern, made from scratch, but instead representing essentially a facelift of an old piece of legislation.
Among the positive amendments envisaged by the draft law is the “one stop shop” desk (committee) for gathering (almost) all the required preliminary endorsements and approvals for a building permit. The current rules require applicants to go “door to door” to the authorities to obtain all needed endorsements, only to return at the end with the complete package to the issuing authority. In addition, the much-needed conversion to online communications within the permitting process is also envisaged.
The draft law also sets out to resolve the issue of permitting construction on and within the protected areas of historical monuments, representing another hot point in the permitting process. This has generated ample debate and even hilarious situations in the past (for instance, conducting a specific type of physical intervention onto a landmark was allowed without any special permitting requirements, but painting the inside of a building with landmark protection status was deemed a criminal offense).
Other contentious points are also being debated, including: (i) the moment when plots pertaining to a real estate project must be merged (experts are lobbying to require that this moment be set prior to actual registration of the erected building in the land book, and not prior to the issuing of the building permit); and (ii) the impact that ongoing litigation should have on a project (in the past, some local authorities have refused to issue building permits for land plots affected by litigation, even though the investors were willing to take the risk and go forward with the project). The rules for this second issue are set to change, so that permits can be issued even under ongoing litigation, if the applicant declares a willingness to accept the risk that the outcome of the litigation may impose new burdens on authorized construction.
However, the new draft comes with a few drawbacks as well, which experts hope will be resolved before the law is passed and comes into force. For example, the current Construction Law contains the only remaining legal ground for concession rights on land plots belonging to the private domain of the state and local administrative units. The new draft law, which is set to completely replace the existing law, does not provide (either itself or in any another regulation or legal text) the grounds for such concession rights. Therefore, concession rights would cease to exist as a type of title to real estate owned by public entities, leaving a legislative void in this area and adding to the debate about whether the concession of such real estate is still possible.
Experts and investors alike are happy to see the government’s commitment to working on construction legislation. They can only hope that the proposals to update the law that are currently under debate will provide more clarity and predictability in the permitting procedure, ultimately helping to create a more attractive investment environment in Romania.
By Roxana Dudau, Associated Partner, Alexandru Dan, Senior Associate, Noerr Romania
This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.