How Due Diligence Works in Real Estate Transactions
A practical guide for buyers and investors — what a complete real estate due diligence involves, from legal title analysis to encumbrances and urban planning verification.
Cătălin Gaina
Founding Partner · Corporate & M&A, Energy, Real Estate
Key takeaways
- Verify title and chain of ownership before paying any deposit
- Encumbrances (mortgages, seizures) are in the land registry — request an up-to-date extract
- Urban planning status determines what you can do with the property — essential for land
- Undisclosed litigation is the most common risk in Romanian real estate transactions
- Professional due diligence costs less than a defective transaction
What is real estate due diligence?
Real estate due diligence is the process of legal, technical and financial investigation of a property before completing a transaction. The purpose is straightforward: the buyer or investor needs to know exactly what they are purchasing — not just what they are told they are purchasing.
In Romania, real estate due diligence is particularly important because the land registry system does not provide an absolute guarantee of a property's status, and sellers are not always obliged to voluntarily disclose all relevant aspects of the property.
Components of a comprehensive due diligence
A thorough real estate due diligence covers several layers. The first component is title analysis — verifying that the seller is the legal owner and that the title is not affected by disputes, claims or irregularities in the chain of title.
The second component covers encumbrances and charges: mortgages, judicial seizures, enforcement notices, inalienability clauses or contractor privileges. All of these are registered in the land registry, but not all are visible without specialist legal assistance.
Urban planning verification is often overlooked by unassisted buyers. The General Urban Plan, Zonal Urban Plan and urbanism certificate reveal what can be built on a plot, what restrictions exist and whether the property is affected by expropriation projects or protected area designations.
Administrative documents complete the picture: building permits for constructed properties, completion certificates, utility connections, and the seller's tax compliance status.
Risks frequently identified in practice
The most common risk is undisclosed litigation — ongoing court cases in which the property is the subject of a dispute, or where the seller faces claims that could affect ownership. A lawyer checks the judicial databases (portal.just.ro, ECRIS) to identify these risks.
Another common risk involves properties with uncertain legal status — partially restituted land, properties with unidentified co-heirs, or buildings constructed without a valid building permit.
Land registry notations of transfer prohibitions or prior sale promises also constitute serious impediments to completing a transaction.
How long does it take and how much does it cost?
A standard real estate due diligence for a simple property (apartment or plot) takes 3–5 business days and involves moderate costs relative to the transaction value. For complex properties or real estate portfolios, the process can take 2–4 weeks.
The cost of professional due diligence is always less than the cost of discovering a title defect after the transaction has been completed. In practice, defects discovered too late have led to the complete loss of the investment.
Conclusion
Real estate due diligence is not a formality — it is real protection for your investment. The more complex the transaction and the higher the value, the more rigorous the investigation needs to be. A lawyer specialised in real estate transactions can identify and negotiate the elimination of risks before they become problems.
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