CEELM10 Interview: A Decade of Real Estate In Romania

December 19, 2023

Albota Law Firm Partner Oana Albota talks about the evolution of the real estate sector and her role as legal advisors in Romania over the last 10 years.

CEELM: Over the last 10 years, what types of real estate projects have kept your team the busiest?

Albota: In terms of what we do in general, we’ve been involved in a diverse range of real estate projects, adapting our services to each project’s nature. Our assistance spans from the initial stages of a project until the exit. We tend to act for foreign developers and we assist them in every stage of a real estate project. At the acquisition stage, we perform extensive due diligence in share deals and asset deals, title and permitting verification for land and buildings, title insurance, and offer transaction assistance. During project development, we assist with design and construction agreements, settlements of disputes in construction contracts, construction litigations and arbitrations, lease agreements, financing agreements, including security packages, disputes with the authorities deriving from their delays in issuing various construction permits and certificates, etc. Lastly, during exits, again, we provide assistance with the transactional aspects and mitigation of due diligence issues identified by purchasers’ consultants.

Looking at the past 10 years, there have been interesting trends that we’ve been able to spot. The pandemic shifted market priorities toward residential projects due to the surge in remote working, which adversely affected office space demand. Consequently, this led to more complex leasing agreements with substantial tenant incentives. Despite these market challenges, some clients chose to sell their office assets, adopting innovative strategies involving staggered payment plans and rental guarantees, a significant deviation from pre-pandemic practices.

CEELM: Looking back at the last 10 years, what have been your and your team’s most intense periods?

Albota: Recent few years were marked by an uptick in litigation related to construction agreements – a byproduct of the pandemic and geopolitical tensions. Delays in material delivery and increased construction costs led to disputes over lump-sum price construction contracts. We navigated through two principal scenarios: renegotiating contracts through addendums or dealing with contractor insolvencies. The industry’s response to these challenges has been a shift away from lump-sum contracts toward more intricate agreements. Post-pandemic, our focus shifted from high-profile transactions to renegotiating existing contracts that better reflect the market’s evolving needs or replacing them with more complicated agreements that provide parties with securities for uncertain situations . Economic pressures have been a constant, requiring us to adapt and find innovative legal solutions.