Between 1945 and 1989, much private property in Romania was nationalized by the communist state. After the fall of communism, there was a desire to redress this injustice, which consisted of restitution or compensation. In this article, we will briefly present the evolution of the way in which the former owners were compensated and the current state of play.

Initially, the Land Law no. 18/1991 regulated the reconstitution or constitution of property rights within certain limits.

Subsequently, Law No. 1/2000 on the reconstitution of property rights over agricultural and forest land regulated the granting of reparation measures for some categories of land taken abusively from their owners.

Further, Law No 112/1995 regulating the legal status of certain housing properties transferred to State ownership enshrined the principle of restitution of nationalized properties and (capped) compensation in cases where restitution was no longer possible.

Law No. 10/2001 on the legal regime of real estate wrongfully seized between 6 March 1945 and 22 December 1989 provided for restitution by equivalent (compensation with other goods or services offered in equivalent by the owner, shares in companies traded on the capital market, securities of nominal value used exclusively in the privatization process or monetary compensation) for land and buildings that cannot be returned in kind.

According to the law in its original form, the assessment of monetary compensation awarded to entitled persons was carried out by a commission composed of representatives of several ministries.

In 2005, the National Authority for the Restitution of Property (ANRP) was set up to monitor the uniform application of Law 10/2001, and Law 247/2005 on property and justice reform and some adjacent measures unified the administrative procedures for the restitution of property covered by the above-mentioned laws.

Law No 247/2005 provided that, in the absence of restitution, the beneficiaries of reparation measures could choose between offsetting their claim with goods and services or paying compensation calculated in accordance with domestic and international practice and standards on compensation for real estate and houses wrongfully taken over by the State.

In order to pay the compensation determined by the Central Commission, a collective investment undertaking called the Property Fund was established.

As this compensation mechanism proved to be ineffective, following Romania's repeated condemnations at the European Court of Human Rights (ECHR) on the issue of nationalized properties, culminating in the pilot judgment Maria Atanasiu and others v. Romania, Law no. 165/2013 on measures to finalize the process of restitution, in kind or in equivalent, of real estate unlawfully seized during the communist regime in Romania, which established that in the situation in which restitution in kind of real estate unlawfully seized during the communist regime is no longer possible, the only reparation measure in equivalent that can be granted is compensation in points.

According to Art. 21 paragraph (6) of Law no. 165/2013, in its initial form, the valuation of the real estate subject to the decision was made by applying the notarial grid valid on 20.05.2013 (the date of entry into force of Law no. 165/2013).

If the location or the technical specifications of the requested real estate could not be established with certainty on the basis of the documents submitted in the compensation file, the valuation took into account the minimum values set out in the notarial grid for the area in question and for the similar type of construction.

If the total area of the building could not be established with certainty, the assessment shall take into account the minimum values referred to, applied to an area of 21 square meters.

As of 2017, paragraph (6) of Article 21(6) of Law No 165/2013 provided that the valuation shall be made taking into account the technical characteristics of the building and the category of use at the date of its takeover.

Although Law no. 165/2013 provided for firm deadlines for the completion of the restitution process, these have been greatly exceeded in many cases, which has led to further condemnations of Romania at the ECHR, for example in the case of Văleanu and Others v. Romania, which, with regard to the amount of compensation awarded, established that persistent delays in the assessment of claims for compensation reduced the amount of compensation, established by law to be assessed in relation to the transaction value of the property on May 20, 2013.

Accordingly, as of 2021, paragraph (6) of Article 21 of Law no. 165/2013 provided that the valuation of real estate for which compensation is awarded shall be expressed in points and shall be made by applying the notarial grid valid for the year preceding the issuance of the compensation decision, taking into account the technical characteristics of the real estate and the category of use at the date of its takeover.

Most recently, by a decision of the Constitutional Court of Romania (CCR) of February 18, 2025, not yet published, an exception of unconstitutionality of Article 21 paragraph (6) of Law no. 165/2013 was admitted and the phrase "in consideration of the technical characteristics of the real estate and the category of use at the date of its takeover" was found unconstitutional.

According to the press release of the CCR, "the Court held that, by referring the method of calculating the compensation due by the State for the buildings in question to the technical characteristics and category of use that they had at the date of the abusive taking over, the provisions of art. 44 paras. (1) and (2) of the Constitution relating to the guarantee and equal protection of private property rights. In this regard, the Court held, in accordance with the recent case law of the European Court of Human Rights, represented by the judgments of 8 November 2022 and 7 January 2025, handed down in the case of Văleanu and Others v. Romania, that the phrase contained in the criticized legal provisions generates inequalities between the beneficiaries of the law, since, on the one hand, it may raise difficult and controversial issues in practice, owing to the sometimes insufficiently relevant information as to the exact description of the immovable property at the time of the abusive taking over and, on the other hand, as a result of the inherent urban developments which have occurred in the meantime. If the compensation awarded is to remain equivalent to the value of the immovable property in kind, it cannot ignore such developments."

In conclusion, after 1989, it was decided that nationalized property should be returned in kind and, if this was not possible, that compensation should be paid. These compensations were initially calculated at circulation value, which resulted in a financial burden that was not anticipated at the time the reparation laws were adopted. Consequently, since 2013, these indemnities have been successively limited to the 2013 notarial grid value and to the technical characteristics at the date of the abusive takeover. From 2021 onwards, the amount of compensation started to increase again, by reference to the notarial grid of the year prior to the compensation decision and, most recently, by reference to the current technical characteristics and category of use.

An article signed by Marius Chelaru, Managing Associate (mchelaru@stoica-asociatii.ro), STOICA & ASOCIAȚII.