The Bank He Used to Have

For ten years, buyers were his cheapest source of financing. The law didn't forbid taking money from them. It only decided where that money goes.

"Look at row 14."

Yoav shared his screen. A cash-flow spreadsheet I've known in various versions for several years, for a small residential project in Ilfov County, near Bucharest. Row 14 was called "Buyer down payments." In every previous version it had been the green row in the spreadsheet, the one everything else leaned on. Now, in the first months of the project, it was almost empty.

"In the old model," he said, "I'd start selling before I even had the permit in hand. A nice discount for whoever comes in first, the down payments come in, and with them I pour the frame. What's left goes toward the down payment on the next plot. I built three projects that way."

He said it without any apology, and rightly so. All the apartments were handed over, some late, none sold twice. Yoav is a civil engineer, ten years in Romania, one of the most careful developers I know. But his model, just like that of many other developers there, was built on one assumption: the buyers' money in one project is the capital that drives the next one.

Since December 11, 2025, that doesn't work.

He didn't come to me with a question about the model. He came with a question about the contract. "Tell me what to change in the preliminary agreement so it fits the new law."

So we went through the changes. A preliminary agreement only before a notary, and only after the permit is registered in the land registry. From March 2026, also advance registration of the future apartments, each with its own registry page. Down payments into a separate project account, every expense approved by the site supervisor, up to 25% of the price for the frame and up to 20% for the building systems. And not a single shekel goes out to another project.

We fixed the contract in a week. That was the easy part.

Because when we finished, Yoav opened the spreadsheet again and understood by himself what it meant. The "pre-sale" stage was gone, because you can't sign before the permit is registered. The down payments that do come in can't finance the next plot. And the gap between the moment you have to pay the contractor and the moment the buyers' money is available, the gap that for ten years the buyers closed for him, was now open.

"The law didn't change my contract," he said. "It changed my bank."

For three months he rebuilt the project, this time from the financial side. He brought in an equity partner, a private investor from Israel, who came in with forty percent of the equity in exchange for a third of the profit. He opened a construction credit line with a Romanian bank, and the bank required to see the equity in place before its first shekel. And he split the project into two phases, so that the capital that has to be raised up front would be of a size it's actually possible to raise.

The negotiation with the partner was the hard part. Not because of the amount, because of the questions. The partner wanted to know what happens if sales in the first phase are delayed, who puts in more money if the bank reduces the credit line, and what he gets if Yoav decides to postpone the second phase. Those are questions no apartment buyer had ever asked Yoav. A buyer pays a down payment and waits for the key. An equity partner wants to know how he gets out.

"All these years I thought the buyers were customers," Yoav told me at one of our meetings. "Now I understand they were also my investors. Only none of us called it that."

We drafted a partnership agreement with an exit mechanism, a schedule of capital injections by phase, and a clause setting out what happens to each side if the second phase doesn't get off the ground.

There were good surprises too. Yoav was sure that without the big discount for the first buyers, Israelis wouldn't buy. In practice, some of the first buyers asked about exactly this: "Does the money go into the project account? Who approves the payments?" What used to be a footnote in the contract became a question buyers ask at the first meeting. And a developer who can answer it with confidence sells better.

But the price was real. The start of construction moved by seven months, between registering the permit, the advance registration and the bank. A third of the profit went to the partner. And the plot in Otopeni, the one already marked in the spreadsheet as "the next project," was sold to someone else. There was nothing to finance the down payment with.

"For the first time in ten years," he told me on our last call, "my project is financed like a project. And not like a house of cards."

What interests me in this story isn't the law. The law is written, and you can read it. What interests me is how many developers still ask how to word the contract, when the real question is who finances the frame. A developer who built his model on buyers' money doesn't need a lawyer to fix a clause for him. He needs a new source of financing.