The couple bought in a presale when there was no permit, with handover expected within 3 years. After 5 years, nothing had been built on site.
Up to 3 years for the permit, 24 months for handover, and a further 18 months before the right to cancel. Each term sounded reasonable alone; together they made a long wait.
The couple relied on the explanations of the developer's lawyer. He also held the trust money.
Under Law 169/2026, a preliminary contract for a future unit is signed only before a notary, and only after the building permit is registered in the land book.
Permit, joined-up dates, a handover date, a penalty for delay, a duty to report, who holds the money, an independent lawyer, and a site visit.
The episode in brief
A couple bought an apartment in a presale from an Israeli developer building a project abroad. There was no building permit yet, and handover was promised within three years. They did not have a lawyer of their own check the contract, and relied on the explanations of the developer's lawyer. After five years construction had not started. Only after pressure did the developer agree to return the money and compensate them.
Put simply: the contract told the truth about the permit. What it did not say out loud was how long they would wait before they had a right to leave.
This is the second 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: what happened, at what moment it went wrong, and which check would have caught it. Names have been removed, and the original says only that the project was "in a country where our office operates".
What happened
From the column of attorney Ilan Leibovitch (25.5.2024), in brief:
The couple came to the meeting with a binder full of documents. A few years earlier they had bought an apartment in a presale from an Israeli developer who was to build a project abroad. They had attended a sales event in a Tel Aviv restaurant, seen a glossy presentation and been offered a very attractive price.
They were told there was no building permit yet, and that handover was expected within three years of signing. They paid a substantial sum, deposited in a trust account held by a lawyer acting for the developer. They did not have a lawyer of their own review the contract, even though there are lawyers in the family. They settled for the explanations of the developer's lawyer, and did not read the contract closely either.
Five years went by. On a site visit a few weeks before the meeting, they saw that construction had not started.
Ilan read the contract. The developer had stated in it explicitly, several times, that the project had no building permit at signing and that the buyers knew this. He undertook to obtain a permit within a year, with an option to extend by a year each time, up to three years in total. The buyers had a right to cancel in two cases: if the permit changed the apartment as described in the contract, or if 18 months had passed since the latest handover date without handover. The latest handover date was set at 24 months from receipt of the permit.
The developer explained that Covid had delayed everything, and that lockdowns had kept him from travelling and moving the project forward. He gave no date for completion. Checks through the local office showed that the plan he had submitted was at first not approved by the local authority. He submitted new plans twice before they were approved, and obtained the permit with a considerable delay, without telling the buyers.
The developer at first refused to cancel, and claimed he would meet the timeline. When shown photos of the site taken a few weeks earlier, he began to soften. After a little more pressure, and for fear of a lawsuit, he agreed to return the money and even to compensate the couple.
The contract told the truth about the permit. What it did not say out loud was how long they would wait before they had a right to leave.
The moment it went wrong
Not after five years, and not on the day the authority rejected the plan. This deal went wrong on the day it was signed, for two reasons:
- Nobody acting for the buyers read the contract. The explanations came from the developer's lawyer, who represents the developer. The trust money was held by him as well.
- Nobody joined up the dates. Each term in the contract sounded reasonable on its own. Together they produced a very long wait.
Do the arithmetic using the terms in the contract: up to three years for the permit, plus 24 months for handover, makes five years to the latest handover date. Only 18 months after that did the right to cancel arise. In other words, on paper, the buyers could wait six and a half years before they had a clear right to leave. That is why, after five years, "an argument developed" rather than a simple cancellation.
Which filter would have caught it
In a column of 27.7.2024 Ilan set out a method of initial screening in three stages. He wrote it for developers, but it works for a buyer too:
| The filter | What it checks | Would it have caught this? |
|---|---|---|
| A. Economic feasibility | All costs and all income, on conservative assumptions | Partly. An "attractive price" is exactly the place to ask what else you are paying with: in this case, time |
| B. Planning and physical check | A site visit, building rights, and real timelines for the permit, construction and sale | Partly, yes. Checking the plan's status with the authority in advance would have shown there was no permit and the timeline was uncertain |
| C. Legal check | The agreements, the property's history and status, with the supervising lawyer and a local lawyer | Yes. This is the filter. A lawyer acting for the buyers would have joined up the dates, and asked for an earlier right to cancel and a penalty for delay |
What it means when you buy in Romania
The story did not necessarily happen in Romania. But in today's Romania a deal like this would look different, because the law has changed.
Under Article 422 of the Romanian Planning and Construction Code (Law 169/2026, in force since 25 August 2026), when you buy a unit that has not yet been built:
- A preliminary contract can be signed only before a notary, and only after the building permit has been registered in the land book and there is a land book extract for the future unit (Art. 422(7)).
- A reservation agreement for a future unit is valid for up to 60 days, and the reservation fee may not exceed 5% of the price (Art. 422(9)).
- Advance payments go into a separate developer account dedicated to the project only, and are released as construction progresses (Art. 422(10)).
So the document that would have stopped this deal in Romania is the building permit registered in the land book. No registered permit, no preliminary contract; no preliminary contract, no large advances. What to check in the preliminary contract itself is covered in our guide to the preliminary contract in Romania. Your rights when a developer is late are covered in our guide to late handover.
We are developers too. The company's lawyer represents the company only, which is why we recommend that every buyer hires an independent lawyer. That is exactly what this couple was missing.
Checklist: before you sign a presale
- Check whether there is a building permit, and ask to see it. In Romania, check that it is registered in the land book.
- Join all the dates into one calculation. When the permit, when handover, and exactly when the right to cancel arises. Write down the latest possible date.
- Insist on an explicit handover date. Not "within X months of receiving the permit", but a date, or a clear cap.
- Insist on a penalty for delay. Daily compensation or an earlier right to cancel, written into the contract.
- Ask for a duty to report. The developer in the story received the permit very late and told no one. A contract can require periodic reports on the status of the permit and construction.
- Check who holds the money. A trust account with a lawyer acting for the developer is not the same as an independent trustee. In Romania, check that advances go into the project's separate account.
- Hire an independent lawyer, and read the contract yourselves. Explanations from the developer's lawyer are not advice to you.
- Visit the site. In the story, photos from the site are what changed the developer's position.
Frequently asked questions
Can I buy an apartment in Romania before there is a building permit?
Under Law 169/2026, for a unit not yet built, a preliminary contract can be signed only before a notary and only after the building permit has been registered in the land book. A reservation agreement for a future unit is valid for up to 60 days, and the reservation fee may not exceed 5% of the price.
The contract said explicitly there was no permit. So the buyers simply got it wrong?
The contract did not hide the fact that there was no permit. The problem was the combination of dates: up to three years for the permit, 24 months for handover, and a further 18 months before the right to cancel. A lawyer acting for the buyers would have joined them up and asked for different terms before signing.
What finally got the money back?
According to the column: recent photos from the site showing that construction had not started, pressure, and the developer's fear of a lawsuit. The developer agreed to return the money and compensate the buyers. The exact rights depend on the law of the country where the property is and on the contract.
Can't the developer's lawyer act for me as well?
The developer's lawyer represents the developer. His explanations may be correct, but they are not advice to you. An independent lawyer checks the contract from your side, including dates, rights to cancel and penalties.
The bottom line
This couple was not brought down by a lie. The contract told the truth, but nobody on their side read it and joined up the dates.
The check that would have caught it is the legal check, with a lawyer who works only for you. In today's Romania, the law itself also requires a registered permit before a preliminary contract.
If you are thinking of buying off-plan in Romania, with us or anywhere else, book a half-hour call with me. We will go through what you need to see before you sign.
Moti Azulay, Compass Group Romania
Sources: The column "Two international real estate stories a week" by attorney Ilan Leibovitch, 25.5.2024 ("Late handover and cancelling the contract") 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 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.
