REALWorld Law

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Where the lease agreement is entered into for a definite period of time, the agreement terminates at the expiry of the lease term and there is no obligation for the landlord to give any prior notice or to renew the lease agreement.

Nevertheless, where the tenant continues to use the premises and fulfil its obligations after the expiry of the contractual or legal term, with no resistance of the landlord, a new lease agreement, subject to the same terms, including the guarantees, but for an indefinite period of time is deemed to have been concluded between the parties. However, the parties may expressly provide in the lease agreement that it will not be deemed to have been renewed and will automatically be terminated at its expiry date.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Where the lease agreement is entered into for a definite period of time, the agreement terminates at the expiry of the lease term and there is no obligation for the landlord to give any prior notice or to renew the lease agreement.

Lease agreements entered into for an undefined term may be unilaterally terminated by either party by serving a termination notice to the other party specifying a reasonable period of time for the arrangement to come to an end. Except in respect of leases of dwellings and leases involving a professional, Romanian statutory provisions do not impose any particular legal notice period to be given by the parties in a unilateral termination of the lease agreement. However, it is market practice for the parties to include in the lease agreement the length of the relevant notice period (eg standard practice would be for a lease agreement with a duration of 10 years to require any termination notice delivered to the other party at least six months prior to the termination date).

Lease agreements (except for those relating to dwellings) entered into for a definite period of time, concluded by way of a notarial deed or a private deed registered with the competent tax authority, constitute enforceable titles once the term of the lease has expired, meaning that no court order is necessary for the eviction of the tenant. These rules also apply to lease agreements concluded for an indefinite period of time, but such lease agreements can be enforced in regard to eviction only when the period of time specified in the termination notice has passed. In addition, lease agreements concluded by way of private deed registered with the competent tax authorities or by way of notarial deed constitute a writ of execution against the tenant regarding its obligations to pay the rent in accordance with the relevant agreement.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Where the tenant is in default in paying rent or does not use the premises properly and in accordance with their designated use, the landlord generally has the right to ask the competent court to have the lease agreement terminated and for the leased premises to be vacated and handed back. A landlord may also claim compensation for the damages resulting from the tenant’s default.

The parties can expressly agree in the lease agreement that the lease may be terminated without any interference by the competent court. The vacation of the premises can only be requested on the basis of a court order and the tenant will be liable for the payment of the rent due for the period up to the moment of the court's decision is properly served, or the effective vacation of the premises.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

In specific circumstances, public authorities can terminate lease agreements in the course of expropriation procedures for reasons of overriding public interest. The process can be rather drawn out, the exact length depending on the scope of the works. Compensation is paid in advance by the public authority doing the expropriation.

In addition, a lease agreement which is not registered in the Land Book, but which relates to a property which is registered, is not enforceable against any subsequent owner of the leased property and, therefore, can be terminated at the latter’s request. If the lease agreement concerns property not registered in the Land Book, it is enforceable against subsequent owners only if it has a certified date prior to that of the transfer.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The parties to the lease agreement are free to choose an appropriate form of rent security. Currently, rent deposits, parent company guarantees and bank guarantees are among the most common forms used in the market. The lease agreement will generally provide for the conditions and circumstances in which the landlord is entitled to claim the deposit or to call on the bank guarantee.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Under Romanian legislation, the tenant is obliged to use the leased property prudently and diligently and only in compliance with the intended use provided in the lease agreement. If the intended use is not expressly provided for, the tenant must use the property for the use intended as presumed from the applicable circumstances (eg a dwelling cannot be used for commercial activities).

In buildings consisting of multiple apartments, any change in the intended use of the dwellings must be approved by the neighbouring owners who are directly affected by the change.

The parties can, however, agree on specific contractual rules in the lease agreement regarding the use of the real estate by the tenant.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The tenant can improve or alter the real estate as long as its designated use is not affected. If such improvements are made without the consent or the landlord, the landlord can opt either to keep the improvements, without any compensation being due to the tenant, or to ask the tenant to remove them and be responsible for any damage caused.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Under Romanian law, total or partial subletting or assignment of the lease agreement is allowed unless the main lease agreement expressly forbids it.

Unless the parties have expressly agreed otherwise, the tenant has the right to assign the lease agreement to any third party.

The prohibition on subletting includes the prohibition on assigning the lease agreement. The prohibition on assigning the lease does not include the prohibition on subletting.

The prohibition on subletting applies to both total and partial subletting. The prohibition on assigning the lease applies to both total and partial assignment.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

There are no mandatory legal provisions governing lease agreements as regards indexation of the rent. However, clauses expressly providing for indexation are a common in longer lease agreements. Normally the rent will be linked to the increase in the Harmonized Consumer Price Index.

The Civil Code also allows the courts to alter the parties' rights and obligations if exceptional and unforeseen events, which occur after the agreement is entered into, make the execution of the agreement overtly burdensome and unjust for the debtor.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Rents are generally linked to the Consumer Price Index, and may also be linked to turnover. The parties may also agree on specific provisions governing changes in the rent and provide specific methods for calculation of the rent.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The landlord can choose to be registered as a VAT company or to have the property registered for VAT purposes. This will entitle it to recover VAT on its expenses, but the tenant must then pay VAT on the rent and on common expenses. The VAT rate is currently 19% (5% applicable in the hotel sector or sectors with a similar function, including the rental of land for camping).

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

There are several options available to the landlord depending upon the specific circumstances and what the landlord wants to achieve.

• Termination: The landlord has the right to terminate the lease if the tenant fails to fulfil its obligation to pay rent. The procedure for termination is outlined in the lease agreement. As such, termination can occur either through written notice or by right. In both cases, the tenant must be in default, which can be established by a notice of default or, if included in the contract, by the mere expiration of the payment deadline. If no such clause exists, the tenant can still be considered in default by right if it consistently fails to pay rent. To ensure the termination is effective and beneficial to the landlord, the parties typically include a penalty clause in the lease agreement in case of termination due to the tenant's failure to pay rent. For example, this penalty may amount to (i) the rent that would have been owed by the end of the lease term if it had not been terminated, (ii) the landlord's reasonable costs, including intermediary fees, cleaning, repairs, and renovation expenses to prepare the space for the next tenants, (iii) any other reasonable direct costs incurred by the landlord due to the lease agreement's termination, depending on the parties agreement thereto.
• Enforcement: Lease agreements registered with the tax authorities, as well as those concluded in authentic form constitute enforceable titles for the payment of rent under the terms and conditions laid in the lease agreement. This means that the landlord can enforce the lease agreement without going to court, which means a shorter and easier process. If the lease agreement does not constitute an enforceable title, then the landlord must go to court to enforce it, which is a longer process. Note that the lease agreements can be registered to the tax authorities at a later date, which makes it enforceable.
• Retention: The landlord may retain tenant's corporal assets located inside the premises and with the help of a bailiff, he may realise the assets up to the rent owed and due to him. This is not a legal right of the landlord, the right of retention must be expressly inserted in the lease agreement in order to be applicable.
• Insolvency proceedings: If the tenant has failed to pay rent or other sums due under the lease, the landlord may commence insolvency proceedings. For the insolvency proceedings to begin, the debt must be over RON 50,000 (approx. 10,000 EUR) and it must have been due and payable for over 60 days.
• Draw down on rent deposit: The landlord may be able to draw down from a rent deposit if one exists to recover rent arrears or other sums under the lease agreement. The rent deposit may constitute either a cash deposit or a letter of bank guarantee. A draw down on the rent deposit may waive the right to terminate so this will need to be taken into consideration.
• Exception of non-performance: In the case of a lease agreement where the rent was due to be paid in advance, the landlord may refuse to deliver the property before the tenant performs their obligations.
• Direct action against subtenant: In the case of a sublease, the landlord may pursue the subtenant up to the amount of rent due from the subtenant to the tenant. The landlord may also take direct action against the subtenant to compel them to perform other obligations under the sublease.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

As a rule, there are no additional costs to be paid by the tenant at the beginning of the lease term. The parties may agree under the lease agreement that certain costs to be paid by the tenant at the beginning of the lease, for example the fit-out works costs. However, in order for leases to be enforceable against subsequent owners, these must be registered in the Land Book and the registration taxes must be paid by the tenant.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The tenants will usually bear the costs of maintenance and repair of the common areas (eg gardens, car parks, stairways and elevators), in proportion to the surface area of the premises occupied by each tenant, as compared to the total area of the property. These communal expenses are usually divided according to a set formula applicable to the building.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The landlord has a general obligation to carry out any major and necessary repairs to the premises which are the subject of the lease agreement. Therefore, unless the lease provides to the contrary, the expenses related to major remedial works are to be paid by the landlord, while those generated by the day-to-day maintenance of the property are to be paid by the tenant (eg the removal of snow). It is also common for the parties to agree that the landlord will initially bear the cost of day-to-day expenses but then recharge them to the tenant.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The parties to the lease agreement are free to decide which party will pay operational expenses (eg electricity, water, gas and other utilities).

Generally, landlords enter into agreements with the suppliers of utilities, pay the related costs and recharge the expenses to the tenant according to consumption. As an alternative, the tenants sometimes enter into the agreements directly with the suppliers of utilities.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Usually the parties will maintain insurance to cover their interests. With regard to dwellings and residential units, the applicable legislation obliges owners to take out insurance against natural disasters (ie earthquakes, flooding and landslides).

The landlord usually insures the building, whilst the tenant takes out its own insurance of eg internal building features, machinery, data, goods, loss of profit/business interruption and liability under a combined public liability policy.

Last modified 13 Mar 2025