Romania: Urban Planning & Real Estate Development - Formality Or Deal Breaker?

06.04.2016

The free market that came together with the new democratic regime in 1989 found Romania with a legislative void in terms of urban planning that led until recently to a more or less generalised impression that urban planning does not constitute more than a mere formality, with little attention directed towards the actually imposed building limitations (in the fortunate cases where such regulations even existed).

The state of things has evolved a great deal with the promulgation of the Law on urban planning in 2001 which is constantly being refined and amended.

Despite the fact that (i) local authorities in larger cities have started allocating more of the required attention to urban planning in the building permitting process, whilst (ii) smaller communities generally remain foreign of the evolution of urbanism regulations due to lack of qualified public servants, both larger and smaller localities – in most cases – still remain behind in terms of knowledge and observance of urban planning legislation and procedures pertaining thereto.

Under these circumstances, common misunderstandings of regulations and procedures may occur in the process of drafting and approving urban planning documentation. Consequently, greater care should be given to the following aspects:

  • the limitations imposed by the existence of a historical monument in the vicinity of the project or the situation of the project in the protection area of a historical monument. The establishment of some types of projects (e.g. large retail projects) may even be prohibited in some cases;
  • the procedures pertaining to drafting and authorising a local zoning plan (Rom. PUZ) or a detailed zoning plan (Rom. PUD). Such urban planning documentations are often requested by local authorities (and sometimes are legally mandatory) for the amendment of urban planning regulations and indicators in force (such as maximum building height, floor-space index, site occupancy index or building use). In this context, great attention must be given to:
    • the approvals that must be obtained (additional endorsements may be legally required alongside those formally requested in the urban planning certificate);
    • the existing general zoning plan applicable to the entire locality or the higher ranking PUZ (which can restrict the possibility of amending some urban planning regulations);
    • the procedure for informing the general public on the creation and enactment of a PUZ or a PUD;
    • the correct type of urban planning documentation requested by the local public authority (because drafting and enacting the wrong type of urban planning documentation may entail the invalidation of such documentation).

And the above list may be continued.

To sum up, an urban planning documentation under Romanian law is basically a miniature law, which regulates the building conditions applicable to the land in a certain area, and – similarly to a law – the entire procedure for drafting and approving such urban planning documentation entails contact with a large number of public authorities and the observance of a multitude of procedural regulations, which in turn multiply the likelihood of legal errors, errors which interested third parties (i.e. persons that might be affected by the establishment of a new project) may exploit in a court of law. Furthermore, it remains debatable at this time whether action brought by third parties against a PUZ is or not time barred. This is due to the fact that regulations and jurisprudence have not reached a unitary vision on the following questions:

  • Will a PUZ for a determined number of sites belonging to a determined number of land owners be considered an individual administrative deed due to the unitary character of the final project? Such an interpretation would render the court action against the PUZ time barred which, in turn, would grant more predictability and stability to the legal validity of the building permit to be obtained for that project.
  • Or will the legislative character of the PUZ (meaning the fact that the PUZ institutes construction rules applicable to a determined number of sites, irrespective of present or future owners) prevail and qualify the PUZ a normative administrative deed which can form the object of judicial control without time barring? This, in turn, would grant interested parties the possibility to further contest (under certain circumstances) the building permit obtained based on such urban planning documentation.

We can conclude that urban planning in Romania has gone from a mere formality in the past to a necessity that is to be taken seriously in order for the construction projects to be viable in the long run. This, in turn, makes legal assistance in this field an element of great importance, in order to minimize potential risks than can hinder or bring the development of a project to a standstill.