Recovery of the constructor’s debts: register the legal mortgage in the land book
Construction companies can recover the value of construction works in Romania carried out and unpaid by the developer by initiating legal proceedings against the beneficiary. The law firm Pavel, Margarit and Associates recommends the registration of the legal mortgage of the constructor in the land book of the beneficiary. A lawyer specialized in real estate and constructions can make all the steps to recover the debts from construction works performed in Romania by blocking the Land Book of the beneficiary of the investment.
Recovery of the constructor’s debts: Applicable legal framework for the constructor’s legal mortgage
Construction companies have the legal option to institute a legal mortgage on the building on which they performed works, in order to guarantee their equivalent value.
The subcontractors do not benefit from this legal mortgage either, as they do not contract directly with the owners. However, subcontractors benefit from a direct action against the developer, the so-called direct action of the workers, provided by art. 1856 Civil Code. Thus, the existing legal framework also gives subcontractors the opportunity to recover the debts from construction works performed in Romania.
Registration of the legal mortgage of the constructor in the land book
A first step that should be performed in recovering debts from construction works performed in Romania is the registration of the legal mortgage of the construction in the land book.
According to Law no. 71/2011 for the implementation of Law no. 287/2009 on the Civil Code, architects and contractors will be able to request, based on the original document proving the contract concluded with the holder registered in the land book, the registration of a legal mortgage on the building that is the object of the works they were obliged to do, to guarantee the price these works. The act based on which the registration of the legal mortgage is made is the Enterprise Contract (execution of works) concluded with the beneficiary of the investment, in original. A lawyer specialized in real estate and construction can assist you in recovering the value of construction works in Romania and blocking the beneficiary’s land book until the recovery of the investment. The amount for which the legal mortgage is registered is the maximum amount shown in the application.
The effects of registration
By registering the mortgage in the land book:
- Its opposability to third parties is ensured.
- If the owner sells the property to a third party, the mortgage on the property will be maintained.
In conclusion, by regulating the legal mortgage right of the constructor, Romanian law provides protection to contractors for the construction works in Romania, in case the beneficiary of the works refuses to pay the price for these works. However, in order to benefit from this protection, to make the mortgage enforceable against third parties, it is necessary to carry out the steps of registering the mortgage in the land register by a lawyer specialized in real estate and construction.
Pavel, Margarit & Associates Romanian Law Firm is one of the top law firms in Romania, offering top legal advice. The Romanian law firm clients are foreign and top local companies and high worth individuals. In 2021, the success stories of the Romanian Law Firm have brought recognition from the most prestigious international guides and publications. The firm was ranked second place in Romania by the Legal 500 publication. The Romanian law firm is also recognized by IFLR 1000 Financial and Corporate Guide 2021. Pavel, Margarit & Associates Romanian Law Firm is also the only law firm in Romania recommended by the Global Law Experts Director in London in the Dispute Resolution area of Practice.