Debt to asset (Datio in Solutum)

The purpose of the communication is to clarify the procedure and the implications of Debt to asset.

Who can apply for Debt to asset?

You can apply from the Debt to asset Law if you cumulatively meet the following conditions:

  1. You must be considered a consumer = Consumer is “any individual or group of individuals forming associations and acting for purposes outside their commercial, industrial, manufacturing, craft or liberal activity" (Consumption Code, OG 21/1992, Law 193/2000). Therefore, companies, freelancers, practitioners of liberal professions (lawyers, notaries, enforcement officers, etc.) are not covered by the concept of consumer, even if some of them are not traders.
  2. You must have a loan agreement signed with BCR in order to acquire, build, extend, modernize, equip, rehabilitate a building that is used as a residence or, regardless of the  purpose for which it was contracted, is guaranteed with at least one real estate property used as a residence;
  3. The maximum amount of the loan, at the time of signing the loan agreement, should not exceed the equivalent in RON of EUR 250,000 (included), as determined from the exchange rate published by the National Bank of Romania on the signing date of the loan agreement;
  4. The loan should not have been granted through the “First House” program, as approved by EGO no. 60/2009;
  5. The property offered in payment should be a real estate property mortgaged in favor of BCR to secure the loan agreement. If the credit agreement is secured by multiple properties, all such properties will be offered to the bank in payment;
  6. You have a current debt to BCR; your debt should not have been extinguished or transferred to third parties;
  7. You haven’t been convicted by final judgment for offenses in connection with the loan for which Debt to asset is requested.

Debt to asset of certain real estate properties with the aim of ceasing the obligations you committed to comply with when being granted a loan from BCR may be made by yourself, as a borrower, but also by co-payers or guarantors.

Procedure

1. Notice

The notice to BCR on Debt to asset can only be sent through a notary public, lawyer or enforcement officer. Your notice will be sent through a lawyer only together with the original power of attorney, such document proving the capacity of the lawyer to represent the individual on whose behalf the notice was made.

In order to determine the moment when the transfer of ownership act is to be signed, you will choose a notary public and will determine meeting dates by written notice sent to BCR. Under the law, such notice must contain two different calendar dates (two different business days and the time range for each day) when such meeting can take place. The first suggested date cannot be scheduled earlier than 30 free days (free days are days for which, when calculating term, the first day to start such period and the last day completing the term are not computed. For example, a procedural term of 3 free days starting on Monday shall end on Friday (the same week). If the deadline expires in a non-business day (weekend, holiday), the last day of the period is the first business day from notice date.)

The Bank will communicate the date of signing based on the two dates suggested by you.

2. Analyzing the eligibility conditions of your notice

After receiving the notice, BCR will analyze the compliance with the conditions of admissibility and eligibility governed by the applicable law (including the legal status of the real estate mortgaged and offered in payment), and if not, you will be informed by registered letter with acknowledgment of receipt sent to your home or mailing address, as found in our records or, if applicable, to the mailing address indicated in the notice.

If there are such conditions of admissibility and eligibility not complied with, including any limitations on the transfer of real estate ownership or there is any discrepancy between the notice received and the legal provisions, BCR reserves the right to challenge the notice under Art. 7 of the Law and other applicable legal provisions.

3. Suspension of the bank’s right after receiving the notice

With the receipt of a notice meeting the conditions of admissibility and eligibility, BCR will suspend any payments under the loan agreement affected by the notice and any judicial or extrajudicial procedure against you as borrower (debtor) pending final settlement of the challenge brought by BCR. The right of BCR to pursue remedies against co-debtors and personal or mortgage guarantor (if any) shall also be suspended.

BCR has the legal right to challenge the notice of Debt to asset within 10 days of its receipt. Pending settlement of the challenge, BCR will suspend any loan-related payments.

In the event of a favorable ruling for BCR (i.e. if the competent courts allowed the appeal filed), the parties will be restored to their initial contractual situation. Thus, from the admission of the appeal, you have a term of 30 days to pay all amounts that were not paid during the suspension, including trial costs. The remaining amounts will be due under the applicable amortization schedule.

Moreover, BCR has the right to pursue any legal proceedings after the admission of the appeal so that any enforcement or debt recovery proceedings will resume their course.

Therefore, pending settlement of the procedure, we recommend that you consider saving the amounts due under the amortization schedule for the period of payment suspension.

In case of a ruling in favor of the consumer, BCR will duly observe the provisions of the court resolutions.

4. Other important information

For a smooth ownership transfer procedure, under the new Law, please note that all obligations to third parties in relation to the property must be paid up to date and in full (e.g. maintenance expenditure, electricity, other utilities, debts to local budget, insurance and so on).

After analyzing the ownership documents of the property and checking its current status/condition, the bank or the notary public you proposed in your notice may decide to refuse signing the act of Debt to asset. In this case, we inform you that you are obliged, within 30 days of the date notified by the bank for appearing before the notary, to pay all amounts that were not paid during the suspension and to also pay the remaining amounts due under the applicable amortization schedule. Any enforcement or debt recovery proceedings will resume immediately.

If, by fault of any property owner, the Debt to asset act is not signed, we inform you that you are obliged to make the payments not made during the suspension within 30 days of the date communicated by the bank for appearing before the notary, and if the bank had initiated any enforcement or debt recovery proceedings before the notice date, these will resume immediately, without granting any term.

5. Releasing the property

Upon signing the Debt to asset document, the property will be immediately transferred to the full ownership of the bank. The owner/tenant/any other occupier in any capacity will release the property on the same day. The property will be delivered in a condition suitable for its intended use, as outlined in cadastral documentation. The property must not be improper for use, partly or wholly damaged or destroyed. At the same time, keys and other means of access into the building will be handed over to the bank upon signing the Debt to asset act. The property must be delivered without any movable property belonging to the owner/tenant/any other occupier in any capacity whatsoever.

6. Reporting to the Credit Bureau

Please note that, after receiving a notice regarding the Debt to asset, the bank will suspend reporting this credit account to the Credit Bureau (Biroul de Credit S.A).

During the suspension period generated by procedures related to the Debt to asset, credit account information will not be updated until the final settlement of the application.

Also, upon completion of the ownership transfer and closing the credit account, or depending on the resolution of the consumer application (e.g. should the bank appeal be admitted) any information on the credit account will be appropriately updated.

Information on registration in the Credit Bureau of the credit account closing operation by Debt to asset is deemed as negative information as provided by Decision No. 105/2007 and is not in itself an eliminatory criterion for accessing new credit products.

We hereby inform you that records of Credit Bureau are stored for a period of 4 years from the reporting date.

Also, this information will be reported to the Central Credit Register, administered by the National Bank of Romania.

Costs

Moreover, in accordance with applicable legal provisions, all notary costs and, if applicable, enforcement or attorney costs will be borne by you as borrower or by the initiator of the Debt to asset process.

Contract

FAQs

1. When is a loan contract eligible for Debt to asset?

  • The loan agreement is signed with an individual (an individual that does not conduct any commercial activities)
  • The initial value of the loan is less than or equal to EUR 250,000 (amount calculated at the exchange rate published by NBR on the signing date of loan concession/loan agreement.
  • The property brought as collateral is a real estate intended for residence use or it was contracted for purchasing, building, extending, modernizing, equipping and rehabilitating a building used as residence. Loans with collateral mortgage on a future building are also included.
  • The loan is active, i.e. it has a current balance and/or arrears or is fully outstanding but was not transferred to any third parties.
  • The loan is NOT granted through the First House Program, approved by the EGO no. 60/2009.2.

2. What documents should I submit if I want to benefit from the Debt to asset program?

The intention of returning the property to extinguish the debt corresponding to the loan secured by the property in question is shown by submitting:

  • The notice issued by an enforcement officer, lawyer or notary (if such notice is submitted by a lawyer, it must be accompanied by a power of attorney).
  • Identity documents of those taking part in repaying and securing the loan affected by the Debt to asset (identity cards);

Subsequently, on the ownership transfer date, the real estate ownership documents and proof of paying all debts to the State (taxes and local fees)/other providers of services related to the property (maintenance expenses, utilities, etc.) shall be requested.

3. Are co-payers and guarantors entitled to file a Debt to asset notice?

Co-payers can submit notices for Debt to asset only if agreed by the Borrower, based on a power of attorney.

4. Can the Borrower who is not owner of the property pledged for the loan notify the Bank on Debt to asset?

Yes, the Borrower who is not the owner of the property pledged for the loan may notify the Bank on Debt to asset. The notice must be accompanied by a consent from the property owners.

5. The property is not yet entabulated (total or partial). Can I apply for Debt to asset?

In such situations, BCR will challenge the notification or where applicable, will deny signing of the transfer of ownership. After you will register the property to the Land Registry, the proceedings will be resumed.

6. Whom should I contact for information about Debt to asset besides the Bank’s representatives?

Under the Law, the Borrower or the loan participants shall send a Notice for the „Debt to asset” to the Bank through an Enforcement Officer, Lawyer, Notary Public.

For more information and for representation, you may contact any such professionals: Enforcement Officer, Lawyer or Notary Public.

7. Do you collaborate with any preferred Notaries Public?

Yes, if you want, we can provide you with a list of Notaries Public preferred by BCR. Please contact any BCR unit for this query.

8. How long after the Bank has been notified in writing about the Debt to asset will I receive an answer from the Bank (transfer of property)?

The Bank will verify whether the notice is valid and will send a written reply to your legal representative. You will also receive written information even if the notice received by the Bank is not valid. If the notification is valid, the property transfer will take place in one of the two versions of dates set by you in the notification submitted to the bank. Day one proposed cannot be scheduled earlier than 30 days off (days off is the day when, in the calculation terms not calculated the first day, which begins to run nor the last day expiring term).

9. Who will incur the expenses for the property transfer?

By law, all charges, notary/lawyer/enforcement officer fees, real estate taxes, other charges required by the local administration, including the property maintenance costs and costs with utilities (until the completion of ownership transfer), any lawyer or enforcement officer fees, shall be borne by the customer/You. To find out the amount of such fees and charges, please contact the notary, lawyer or enforcement officer who will represent you.

10. Will you report the Debt to asset to the Credit Bureau and, if you report it, what kind of information will you send?

The Bank will report the situation of your account to the Credit Bureau.

Also, as at the date of completion of the ownership transfer and closing the credit account, or depending on the resolution of your application (e.g. if the appeal filed by the bank is admitted) the information on the credit account will be updated accordingly.

Information on registration in the Credit Bureau of the credit account closing operation by Debt to asset is deemed as negative information, as provided by Decision No. 105/2007, and is not in itself an eliminatory criterion for accessing new credit products.

We hereby inform you that the records of the Credit Bureau are stored for a period of 4 years from the reporting date.

11. Will co-payers and guarantors be reported to the Credit Bureau?

Updates reported to the Credit Bureau are made at credit account level, so, by default, they will be reflected to co-payers. Guarantors are not reported to the Credit Bureau.

12. Can I still contract another real estate/mortgage loan or unsecured personal loan from BCR after the Debt to asset of the property?

In case you want to contract another loan from BCR, we will analyse your application based on our internal lending rules, loan repayment history, your income, etc.

13. What will happen to the loan collateral property?

The property must be released on the day of signing the ownership transfer document.

The property should also be delivered free of all movable property belonging to you/to the former owner.

14. What if in the day of signing, I cannot be present and the transfer of ownership will not be performed?

Signing can be rescheduled given that there had been an extreme situation and you inform us of the time, at least 24 hours in advance. Otherwise, the parties shall be restored to the initial contractual situation and will resume payments on the loan in accordance with the amortization schedule applicable.

If, by fault of any property owner, the Debt to asset act is not signed, we inform you that you are obliged to make the payments not made during the suspension within 30 days of the date communicated by the bank for appearing before the notary, and if the bank had initiated any enforcement or debt recovery proceedings before the notice date, these will resume immediately, without granting any term.

15. How soon after signing the ownership transfer document before the Notary Public must I release the property?

The property will be released on the day of signing the ownership transfer document.

The property will be delivered in a condition suitable for its intended use as outlined in cadastral documentation. The property must not be improper for use, partly or wholly damaged or destroyed. At the same time, keys and other means of access into the building will be handed over to the bank upon signing the dation in payment act.

16. Can I remain for a while in the property as a tenant and pay rent to the Bank?

The property must be released on the signing date of the ownership transfer document. The property should also be delivered free of all movable property belonging to you/to the former owner.

17. The loan property collateral is currently rented. What will happen in this situation?

The property must be released on the signing date of the ownership transfer document, even if it is rented to a third party.

18. What happens if the loan was secured by two properties used as residences?

Both buildings will be put for payment.

19. Will the Bank issue a letter confirming the cessation of any obligations arising from the loan for which the provisions of Law 77/2016 – Debt to asset apply? When will the Bank issue such letter?

Pursuant to the Law, the consumer may exercise the right to put the loan collateral property for payment, while the cessation of the loan closing is to be set out in the property transfer document. If you request an additional document certifying the cessation of any obligations arising from the loan, the Bank representatives will be able to issue such a document.