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General Requirements for Land Acquisitions by Foreigners in Moldova

General Requirements for Land Acquisitions by Foreigners in Moldova

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Generally, foreigners in Moldova have the same rights and freedoms as Moldovan citizens. This general rule applies, inter alia, to acquisitions by foreigners of immovable assets. In other words, Moldovan legislation does not require that foreign individuals or legal entities obtain any permits to acquire land plots in the country beyond those required for Moldovan citizens. However, certain exceptions and requirements apply when it comes to land acquisition.

Moldovan Act No. 200 dated 16 July 2010 “On the Regime of Foreigners in Moldova” guarantees the right of foreigners to privately own assets, including immovable assets (structures, land plots, etc.) on the territory of the country. Furthermore, Moldovan legislation grants foreigners the right to buy, hold in their private property, and freely sell land plots with any designation. However, Act No. 1308 dated 25 July 1997 on the “Normative Price of Land and Sale – Purchase Operations with Land Plots” imposes certain restrictions on the freedom of acquisition of land plots by foreigners. In particular, the law prohibits foreign legal or natural persons (including stateless persons) from acquiring ownership rights over agricultural and/or forest plots. In addition, Moldovan companies with share capital including foreign investments are prohibited from purchasing agricultural land plots in Moldova. Agricultural and/or forest plots can only be traded by and between Moldovan natural persons (individuals) and companies with no foreign capital.

The most common instrument for the transfer of ownership title over a plot of land in Moldova is the sale-purchase agreement. Moldovan law does not provide particular regulations vis-à-vis land sale-purchase agreements. In this respect, the general rule is that the passing of risks is considered to have occurred upon the seller’s execution of its obligation to put the asset or good at the purchaser’s full disposal, unless otherwise provided by the concluded agreement (Art.759 Civil Code of Moldova). As a formal requirement, authentication of the purchase agreement by a notary is generally required under Moldovan law, including as a condition for the registration of the transaction in the land register.

Under Moldovan law, rights in rem over immovable assets are subject to registration in the land register (Registrul bunurilor imobile), which is part of the cadaster of immovable assets (cadastrul bunurilor imobile), and they only become effective and opposable towards third parties upon registration. All records in the land registers are presumed to be authentic and complete unless proven otherwise. Any person has the right to obtain information from land registers, and any person who relies on such information is protected from claims of third parties.

Failure to comply with the rule to register immovable assets in the land register does not automatically make the sale-purchase agreement invalid. However, the new owner will be precluded from concluding valid agreements with immovable assets or exercising his/her ownership right prior to registration in the land register.

Another important aspect of acquisition of land in Moldova relates to fees and taxes, which are payable in connection with the acquisition. These include the income tax payable by the seller (7%, 12%, or 18% depending on the amount of income and the status of the seller (i.e., whether it is a natural person or a legal entity)); the state fee authenticating the acquisition agreement (0.5% of the purchase price); the notary fee (between 0.1% - 1.3% of the purchase price); and the registration fee (which depends on how fast the new owner needs to make the registration and usually does not exceed MDL 1,000 (approximately EUR 50)).

All in all, acquisition of land by foreigners in Moldova is not a mission impossible (if the acquisition does not involve agricultural and/or forest plots). However, the legal requirements generally indicated above need to be taken into consideration in order to ensure a cost-and-time efficient transfer of the ownership title, on one side, and an effective exercise of the ownership rights, on the other.

By Vladimir Iurkovski, Partner, Andrian Guzun, Associate, Schoenherr Moldova

This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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