By: Oana Badarau & Mirabela Maria
It has been almost two years since the UK citizens voted in the referendum for the UK to leave the EU. Currently, exit is scheduled for 29 March 2019.
Now, with less than one year left, it is becoming increasingly clear that there are a multitude of areas to be impacted, and the effects of the exit are expected to reverberate over all EU member states. The outcome remains almost as unpredictable as before negotiations began. Although some key points have been largely agreed, the overriding principle is that “nothing is agreed until all is agreed”.
One of the real estate legal areas that may be impacted is the possibility of UK nationals (whether individuals or legal entities) to hold ownership right over land in the remaining EU member states, including Romania. This may affect not only land owners per se, but also owners of buildings or apartments in Romania, if the ownership right includes a corresponding quota of land, as is most often the case.
Romanian legislation currently in force allows foreign citizens/entities to acquire land in Romania only in certain conditions. The acquirer must be either: (i) a national of a member state of the EU or of the European Economic Area (EEA) or (ii) a national of a state having concluded a bilateral treaty with Romania, regulating the mutual possibility for their nationals to acquire ownership right over land, or (iii) a natural person having acquired such ownership right by means of legal inheritance, irrespective of his/her home state.
If the UK also leaves the EEA, UK nationals will no longer be able to acquire land in Romania, unless and until a bilateral treaty is concluded between the UK and Romania specifically.
The question is what happens to the ownership rights acquired by UK nationals before the exit, otherwise than by legal inheritance. The legal framework is focused on the possibility of foreign nationals to acquire ownership over Romanian land, but in this case, the acquisition would have already occurred – UK nationals having acquired land ownership before the exit have done so in a legal and valid way and their right should benefit from full legal protection. However, it may also be argued that the purpose of the legal and constitutional provisions is to avoid situations where ownership over land belongs to nationals of non-member states, especially if there is no mutual advantage to be derived therefrom (like in the case of a bilateral treaty).
The outcome of this particular scenario may very well (hopefully!) be treated under the exit negotiations.
For the time being, it is not clear if any changes in national legislation will be needed, as the result is mainly dependent on whether the UK will continue to be part of the EEA after exiting the EU.
One of the main ideas embraced by the “leave” supporters was the complete exit of the UK from the EU single market, which initially the UK Government had incorporated in its proposals for the European Union Withdrawal Bill (i.e., the deed which will regulate internally the Brexit and post-Brexit procedures). However, on 8 May 2018, the House of Lords voted an amendment to the EU Withdrawal Bill which provides that the UK will remain in the EEA after exit. Nonetheless, the EU Withdrawal Bill still has a long way to go until reaching its final form. The House of Commons may still reject this amendment. Furthermore, remaining in the EEA requires alignment of current EEA members. Some of them (such as Norway) have already expressed their view that EEA membership expires automatically when the UK leaves the EU.
*About the authors:
Oana Badarau is Partner at PeliFilip Law Firm
Mirabela Maria is Associate at PeliFilip Law Firm