A 3-storey house was converted into 6 apartments, sold to investors and buyers. When the works were finished, the municipality refused an occupancy permit.
The permit required parking spaces. The agent did not tell the developer about the requirement, and neither did the architect.
Economic feasibility, a planning and physical check, and a legal check. You move to the next stage only if the deal passed the previous one.
Parking is a planning condition. The planning check, not the legal check of the property, is what would have found it.
Read the permit's conditions, ask what occupancy requires, close any deal with neighbours in advance, and choose professionals who work only for you.
The episode in brief
An experienced developer bought a three-storey house to convert it into six apartments. The apartments were sold to investors and buyers, and the works were completed. Then it turned out that the municipality would not issue an occupancy permit, because the parking spaces required by the building permit had not been provided. Nobody on the team had told him about the requirement at the start.
Put simply: the problem was not the construction. It sat in the permit from day one, and nobody read it.
This is the first episode of the series "Deals that failed". In each episode we take a real deal from the weekly column of attorney Ilan Leibovitch, "Two international real estate stories a week", and ask three questions: what happened, at what moment it went wrong, and which check would have caught it. The names in the column are initials or pseudonyms, and the original does not say which country this happened in.
What happened
From the column of attorney Ilan Leibovitch (20.4.2024), in brief:
The developer, A., moved from investor to developer after buying more than ten apartments in several countries. Some he renovated and sold, others he kept. Now he arrived with a three-storey house that he wanted to buy and turn into six apartments. The business plan looked impressive, and so did the photos of the house. Ilan tried to explain that converting a house into a residential building is anything but simple, and that surprises should be expected. A. insisted.
The following week they flew out together. The property looked in reasonable condition, but abandoned and unfinished inside. They began meeting local professionals, and the office's local partner started the legal due diligence. The real estate agent, whom A. introduced as his partner in the project, came to every meeting. She insisted on working with professionals she knew, and rejected every candidate put forward. Against the advice he was given, A. chose her professionals, who were also cheaper.
The works were finished, and then came the municipality's answer: no occupancy permit, because the parking spaces required by the building permit had not been provided. The agent had not told A. about the requirement at the start, and neither had the architect. It later emerged that she had tried to buy part of a neighbour's plot to turn into parking, without success.
The result: a house converted into six apartments, sold to investors and buyers, and a building that stands "like a white elephant", in Ilan's words, with no occupancy permit until the parking is sorted out.
The moment it went wrong
It is easy to think it went wrong on the day the municipality said no. It did not. The parking requirement was written in the permit all along. The deal went wrong much earlier: on the day the team was chosen.
Three things happened at that moment:
The problem was not the construction. It sat in the permit from day one, and nobody read it.
- The person choosing the professionals had a stake. The agent was also a partner in the project, and she decided who would work on it.
- The professionals were chosen on price. They were cheaper than the ones recommended.
- Nobody read the permit to the end. Neither the agent nor the architect told A. that the permit required parking.
Ilan's lesson from the same column: the professional "hive" around a developer matters, but knowing the local regulation and the authorities' requirements matters just as much. "What comes cheap ends up costing dear."
Which filter would have caught it
Three months after this story, in a column of 27.7.2024, Ilan set out the method he recommends to every developer: before any deal, an initial screening in three stages. You only move to the next stage if the deal has passed the previous one.
| The filter | What it checks | Would it have caught this? |
|---|---|---|
| A. Economic feasibility | A business plan with all costs and all income, on conservative assumptions and from several sources, including tax, flights and stays | Partly. Had the requirement been known, the cost of parking would have gone into the plan, and might have changed the decision |
| B. Planning and physical check | A site visit, meetings with architects and builders, building rights, comparable sales in the area, and real timelines for the permit | Yes. This is the filter. The parking requirement is a planning condition, and it is written in the permit |
| C. Legal check | The property's history and current status: charges, debts, registration, and the agreements | Not necessarily. A legal check of the property finds charges and debts. The permit's conditions are a matter for the architect and the planning check |
The conclusion is not that the legal check is unnecessary. It was done here, and that is good. The conclusion is that each filter catches a different kind of problem, so none of them can be skipped.
What it means when you buy in Romania
The story did not necessarily happen in Romania. But the question that would have saved the deal is the same in every country: what exactly does the permit require, and what has to happen before people may live in the building.
In Romania, the document that sets out the planning requirements for a plot is the urban planning certificate (certificat de urbanism), and the permit itself is the autorizație de construire. How to check them, and the zoning plan that applies to the plot, is covered in our guide to checking a building permit and the PUZ.
And if you are buying a unit in a project rather than building yourself: in Romania, when you buy off-plan, the developer may hand over the home only after the works have been formally accepted and with permanent utility connections working (Law 169/2026, Art. 422(5)(k)). In other words, as in the story, the occupancy question is part of your deal, not only the developer's.
Checklist: before you buy a property to convert or build
- Read the whole permit, including its conditions. Parking, green space, height, number of units. Ask the architect for a written list of every condition in the permit.
- Ask what is needed for occupancy, not only for the permit. These are two different questions, with different answers.
- If the solution depends on a neighbour, close it before you buy. A verbal agreement is not enough. If the parking needs part of someone else's plot, you need a signed agreement, not a negotiation after the works are done.
- Choose professionals who work only for you. An agent who is also a partner in the project should not be the one choosing the architect.
- Do not choose professionals on price alone. Compare experience with the local authority, not only quotes.
- Put the cost of the conditions into the business plan. Parking, infrastructure or public space required by the permit is a cost, not a footnote.
- Do not sell units before the path to occupancy is clear. In the story the apartments were already sold, so the developer's problem became the buyers' problem too.
Frequently asked questions
What is the difference between a building permit and an occupancy permit?
A building permit allows you to build according to a plan and under certain conditions. An occupancy permit, or the formal acceptance of the works, confirms that what was built meets those conditions and that people may live in it. In the story the permit existed, but occupancy stalled because one condition in the permit, parking, had not been met.
Shouldn't the legal due diligence have found this?
Not necessarily. A legal check of a property focuses on ownership, charges, debts and agreements. Planning conditions such as parking are usually a matter for the architect and the planning check. That is why Ilan's method has three separate filters.
I bought an apartment in a converted building. What should I ask the developer?
Ask whether the building has an occupancy permit or a formal acceptance of the works, and if not, what is missing and who is responsible for it. Ask to see the permit and its conditions. An independent lawyer acting for you can check the answers.
Why does the choice of professionals matter so much?
Because they are the ones who should know what the local authority requires. In the story, the professionals were chosen by someone who was also a partner in the project, and on price. None of them told the developer about the parking requirement.
The bottom line
This deal did not fail because of poor construction or fraud. It stalled because of one line in the permit that nobody read, and a team chosen on price by someone with a stake.
The check that would have caught it is the planning check, and it costs far less than a building nobody can live in.
If you are looking at a property in Romania, to invest or to build, book a half-hour call with me. We will go through the planning documents together, and the questions to ask before you sign.
Moti Azulay, Compass Group Romania
Sources: The column "Two international real estate stories a week" by attorney Ilan Leibovitch, 20.4.2024 ("A white elephant") and 27.7.2024 ("Go/No Go feasibility check") · Law 169/2026, the Planning and Construction Code, Art. 422 (Monitorul Oficial no. 661, 10.8.2026)
This article is general information only and is not legal, planning or financial advice. The story is based on the column of attorney Ilan Leibovitch, with identifying details removed. Attorney Ilan Leibovitch is a partner in Compass Group Romania, and in the company's transactions he represents the company only. We recommend that every buyer hires an independent lawyer. The rules are correct as of 17 October 2026.
Now you know more.
This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.
