The giving-in-payment procedure

The law on giving in payment applies both to loan agreements in progress when it came into force and to agreements concluded afterwards.

The steps the borrower must follow are:

(I) The consumer sends the lender, through a bailiff, lawyer or notary, a notice of the decision to transfer ownership of the property to discharge the mortgage debt, setting out how the conditions of admissibility are met.

The notice also sets a time slot, on two different days, for the lender’s representative to attend a notary’s office chosen by the borrower to authenticate the giving-in-payment deed, which discharges all the borrower’s debt — principal, interest and penalties — under the mortgage loan.

The first appointment at the notary must be at least 30 clear days away; during that time all payments to the lender, and any judicial or extrajudicial proceedings by the lender or its successors against the consumer or the consumer’s property, are suspended. At least three clear days before the first appointment, the parties send the notary the information and documents needed for the deed. All notary’s, bailiff’s or lawyer’s costs are borne by the borrower.

These steps may also be taken by co-borrowers and by personal or mortgage guarantors of the main consumer, with the consent of the consumer or the consumer’s successors.

From the date of the notice, the lender’s right to pursue co-borrowers and personal or mortgage guarantors is suspended. If the lender’s challenge to the conditions of admissibility is finally upheld, the lender may start or resume any proceedings against the borrower and the other guarantors. Recourse against the main borrower is admissible only after the loan debt has been fully paid.

(II) The lender may challenge whether the conditions of admissibility are met within 10 days of receiving the notice. The challenge is heard urgently, with the parties summoned, by the district court where the consumer lives. An appeal may be lodged within 15 working days of communication and is heard promptly. Until the challenge is finally resolved, all payments and all proceedings against the borrower remain suspended. If the lender’s challenge is upheld, the parties are returned to the position before the procedure.

(III) Within 10 days of the challenge being finally dismissed, the lender must attend the notary named in the borrower’s notice. At least three clear days before the first appointment, the parties send the notary the information and documents needed, and the exact date for signing the deed.

(IV) If the lender does not comply, the borrower can ask the court for a judgment declaring the mortgage loan obligations discharged and transferring ownership to the lender. The claim is heard promptly, with the parties summoned, by the district court where the borrower lives. Until it is finally resolved, all payments and proceedings against the borrower remain suspended. The judgment may be appealed within seven days of communication.

The right to ask the court to declare the debts discharged also belongs to a consumer whose mortgaged property has already been enforced against, whoever holds the claim, at whatever stage and whatever form of enforcement continues against the borrower.

(V) When the deed transferring ownership is signed, or from the date of the final court judgment, all the borrower’s debt to the lender is discharged and the lender cannot claim any further sums. Co-borrowers and sureties of the main borrower may also benefit from the law.

Documents needed to authenticate the giving-in-payment deed:

• the parties’ identity documents;
• the title deeds for the property;
• a tax certificate in the owner’s name from the competent tax office;
• the cadastral documentation for the property (property sheet and location plan, and floor plan), prepared by an authorised cadastral expert;
• the land book extract — obtained through the notary’s office.

Giving in payment

Giving in payment (datio in solutum) is a way of discharging an obligation where the creditor accepts a different performance instead of the one owed. The creditor’s consent must be given at the moment of performance; if it was given in advance, there is a novation by change of object.

Giving in payment is a form of payment and has the same effects: it discharges the obligation together with all its accessories. Where the original obligation was to pay money and the creditor accepts the transfer of property instead, the transaction amounts to a sale and the rules on sale apply — capacity, formalities and prior authorisations, and warranties against eviction and defects. For example, the law requires a giving-in-payment deed concerning real estate to be authenticated by a notary.

In the Civil Code

Before the new Civil Code came into force on 1 October 2011, giving in payment was discussed only in legal writing, without being regulated by statute.

Conditions

Under Law 77/2016, four conditions must be met together to discharge a bank loan by giving in payment:

(1) the loan agreement was concluded between a consumer (an individual or a group of individuals*) and a lender, which may be:

a credit institution (bank), a non-bank financial institution (a company lending professionally), or an assignee of the claim (a debt-collection company);

(2) the amount borrowed did not exceed, when the loan was granted, the RON equivalent of €250,000, at the National Bank of Romania exchange rate on the date the loan agreement was signed;

(3) the consumer took the loan to buy, build, extend, modernise, fit out or renovate a home or, whatever the purpose, the loan is secured by at least one residential property;

(4) the consumer has not been convicted by a final judgment of offences connected with the loan.

* A group of individuals organised in an association, acting for purposes outside their trade, business, craft or profession.