On 11 September 2020, Law no. 196/2020 (the “New Legislation”) amending and supplementing Law no. 297/2018 on the National Register for Publicity in Movable Property (the “Publicity Register”) entered into force. The New Legislation imposes an additional procedural step prior to proceeding to enforcement of writs of execution. Since certain credit agreements constitute writs of execution under Romanian law (as detailed in Emergency Ordinance 99/2006 for credit institutions and capital adequacy) this provision will apply as set out below. This Note focuses on credit agreements, but other writs of execution fall under the scope of the New Legislation. Please contact the Bucharest Banking Team should you have questions in this regard.
2. Writs of execution - new registration requirements
Among the changes introduced by the New Legislation is the requirement that agreements validly concluded under private signature, which under the law constitute writs of execution, may only be enforced if registered with the Publicity Register prior to commencement of enforcement.
In contrast, the previous legal provisions provided that such agreements are to be registered with the Publicity Register only for publicity purposes or if otherwise required under the law. As such, credit agreements could have been registered at the parties’ discretion for publicity purposes, but no such practice existed in the market as this was not a legal condition for commencement of enforcement.
With effect form 11 September 2020, under the New Legislation credit agreements that are writs of execution must be registered with the Publicity Register as a condition for creditors to start enforcement proceedings.
It is important to mention that this new requirement does not render a registered agreement valid or otherwise enforceable, nor does it grant any priority in enforcement.
3. Practical aspects – When? Who? How? Costs?
Since the New Legislation does not indicate when the registration should be performed, enforcement officers and other practitioners on the market take the view that such registration may be performed by creditors at any time after concluding the agreement, but no later than the start of legal enforcement proceedings.
No consent from or action of the borrower is necessary to perform such registration.
As at the date of this Note, no application norms are in place - for example the New Legislation does not include a specific registration notice for this purpose. Until the legal framework is further developed, Publicity Register operators suggest to use existent registration notice forms (such as the specific registration notice – aviz specific).
The costs of this registration are nominal (currently around €30). To avoid confidentiality issues, registration details may be limited to the name of the parties, the date and the principal amount of the loan agreement and, if the relevant credit is secured, aligned with the registration details of movable mortgages disclosed in the Publicity Register.
Official clarifications are awaited and welcomed in this context to set forth a clear framework for this type of registration.