Real Estate

Zakon o Nepokretnosti u Srbiji

Almost everyone in life encounters a segment of law related to real estate. Whether you are renting an apartment, you have a pending sale of real estate or purchase of a real estate in Serbia (apartment, house, plot, etc.), concluding a construction contract or you need help obtaining a building permit, all of this represents this broad area of ​​law related to real estate, which in the legal theory includes property law, contract law and other branches of law. A real estate lawyer in Serbia can help you in all of these situations.

With higher foreign direct investment inflows and growing GDP year on year, the real estate market and construction industry have become very attractive investments. Pekić Law Office provides a wide range of legal assistance to buyers, sellers, investors as well as contractors and subcontractors. Comprehensive legal assistance includes drafting construction contracts, sale and purchase contracts, resolving the unsettled legal matter on cadastral parcels, as well as representing parties in administrative proceedings related to building permits, inspections, and public land registers - real estate cadastre.

The most common form of the many situations is the purchase or sale of real estate, in which a sale and purchase agreement is concluded and which is certified by a competent notary public in the territory where the real estate is located. The moment of the sale of real estate is very important for private parties because the stakes are high, it is a considerable amount of funds and both parties want to ensure that they are not being deceived.

When it comes to concluding contracts for the sale and purchase of a real estate in Serbia, each contracting party wonders how to protect its rights.

Sale of real estate in Serbia

When it comes to concluding contracts for the sale and purchase of a real estate in Serbia, each contracting party wonders how to protect its rights.
You can protect this type of interest:

  • by withholding with issuing consent for registration of property rights in the real estate cadastre before the payment of the entire purchase price;
  • by conditioning transferring possession (use) to the buyer with prior payment of the price;
  • otherwise depending on the specific circumstances of the case and the interests of the contracting parties.

It is common practice for the buyer to pay all costs of concluding and executing the sales contract, which includes the fee charged by the real estate attorney at law in Serbia, the costs of notarization, the tax on the transfer of property rights, the fee for registering property rights in the real estate cadastre and other potential costs. It is also important to agree in writing that the buyer bears all these costs because the unwritten is not necessarily implied. Therefore, proper legal advice can save you a lot of money.

Purchase of real estate in Serbia

If you wish to buy real estate in Serbia, such action requires prior comprehensive legal due diligence regarding real estate in the cadastre and verification of the seller.

Real estate due diligence in Serbia requires a thorough check of existing entries in the real estate cadastre. This means checking whether the seller is really the registered owner of the real estate, whether there are registered encumbrances on that real estate, i.e. mortgages, lifelong usufruct, contracts on lifelong support, etc. All these encumbrances make it impossible or nearly impossible for the buyer to use the purchased real estate and in fact, greatly reduces the value of the real estate. An attorney at law interprets these data from the real estate certificate, which means that one of the activities of a real estate lawyer is obtaining excerpts from the real estate public registry.

When an investor purchases real estate, it is important to check the permitted construction on the subject plot, before signing the real estate purchase agreement. Permitted construction scope (number of floors and square footage) according to the local regulations determines the profitability of the purchase, because the investor buys real estate for construction.

When it comes to buying real estate in Serbia, individual buyers are subconsciously petrified of fraud with double sales of the same apartment, which was occurring ten or more years ago, in which case the buyers were left without money and an apartment. That is why it is important to protect your interests and hire a real estate attorney in Serbia to check up on your investor, real estate developer, or seller.

Such due diligence of the seller or investor implies liquidity verification of the seller as a company - legal entity. Information on liquidity is publicly available as to whether the bank account of a legal entity has been blocked due to outstanding debts. If the company’s bank account is frozen, it represents an additional risk for the buyer to deposit the funds to the seller, since the seller (real estate investor) will not be able to complete the construction due to its outstanding debts and frozen assets. Due diligence on the seller includes other verifications to determine the seller's intentions.

Many buyers who purchase real estate from investors face a problem - the deadlines for the completion of works. Many real estate developers do not fulfill their obligation to finish construction on time.

The way for the buyer, who buys new construction from the investor, is to implement the liquidated damages in the sales contract, by obliging the seller to pay the buyer a certain amount of money for each month of delay.

All of these inputs that a layman might not recognize as relevant in fact are relevant, and a real estate lawyer recognizes them as common and usual.

Construction permits in Serbia (Obtaining construction and other real estate permits)

An important segment of real estate is the commercial side, which includes investments in real estate - the activity of construction companies, developers, and investors. This area has always been interesting activity in Serbia - Belgrade and Novi Sad stand out in particular as suitable areas for construction companies and thus for real estate lawyers.

Construction activity necessarily includes legal actions and procedures. For instance, these are:

  1. Conclusion of the purchase and sale contract concerning the land on which the building will be built.
  2. An application is submitted for the issuance of a construction permit, which is an administrative procedure.
  3. The construction itself implies cooperation with several contractors and subcontractors. The investor concludes a construction agreement with them. The construction contract with contractors and subcontractors is also important in the part related to the deadlines for the execution of services. The investor often provides a guarantee to the buyers that a certain deadline for the completion of works will be met, and the fulfillment of the deadline often depends on the contractor and subcontractor. Therefore, it is important to agree on deadlines with them, and possibly prescribe liquidated damages for failure to perform in accordance with such deadlines.
  4. When purchasing construction materials, the investor concludes a sales contract. Since the prices of construction materials are constantly rising, the investor must fix the price within the contract, so that he can make an accurate cost-effectiveness calculation.
  5. If the government inspection claims to have found irregularities with your construction, the real estate attorney at law can advise you, make objections to the findings of the inspection body, represent you at the hearing on the inspection, draft an appeal against the decision of the construction inspection, etc.
  6. When the building development is completed, it is necessary to obtain a use permit, register the building in the real estate cadastre, and more.
  7. During the construction, the investor regularly concludes a pre-agreement on the sale of real estate with buyers of future apartments, and when the apartments are built, the investor concludes a contract on the sale of real estate which finalizes such sale.

Many types of construction require a building permit, not only the construction of buildings, houses, and other facilities. The question is often asked whether a building permit is needed for a fence, partitioning the walls inside the apartment, making a different layout, etc. The answer to this question depends on the circumstances of the specific case, but very often the so-called small building permit is required for minor works within the facility as well.

All of these are legal actions, which is why a real estate lawyer in Serbia is necessary for every construction company, investor, contractor, and subcontractor in every city, even if it is not Belgrade or Novi Sad.

Real estate agents in Serbia (brokerage in the purchase and sale of real estate)

One of the most important activities related to real estate is a real estate agency. The Law on Real Estate Brokerage prescribes the conditions under which someone can engage in real estate brokerage, i.e. to be a real estate agent. Sometimes people conduct this activity without a license, but that is not in accordance with the law. Agents’ biggest issue is protection from "circumvention", which is the situation when the buyer and the seller conclude a sale and purchase contract without notifying the agent in order to avoid paying the commission for the agent. In addition, buyers and sellers, as well as real estate agents, have certain rights prescribed by the Law on Real Estate Brokerage, while the realization of such rights can be enabled by the Pekić Law Office.

Certification, taxes, and registration of property rights in the cadastre when buying and selling real estate in Serbia

The Law on Real Estate Transactions often referred to as the Law on Immovable Property Transactions or the Law on the Sale of Real Estate, prescribes the obligation to certify every sale and purchase contract regarding real estate, i.e. prescribes the mandatory form for this agreement - certified document, and that such certification is performed by a notary public in the area whose activity the real estate is located.

Taxes to pay attention to when concluding a contract for the sale of real estate are the tax on the transfer of property rights and the capital gains tax. The tax on the transfer of property rights is paid with respect to each real estate transaction, with certain rare exceptions, and the tax rate is 2.5% calculated concerning the contracted price or market value of the sold real estate. Capital gains tax is paid if the seller has owned real estate for less than 10 years. There is no long-term capital gains tax for assets held longer than 10 years. If a seller was the owner for less than 10 years, the seller realizes a capital gain through the sale in the form of the difference between the price for which he acquired real estate and the price for which he sells and is obliged to pay 15% tax on that difference. The capital gains tax is often overlooked when selling real estate in Serbia, so it surprises the buyer and seller when they receive the decision of the tax authority because no one calculated that obligation and did not agree on who will bear this tax. The yearly property tax becomes the obligation of the buyer - he becomes a taxpayer, and the seller stops paying this tax. The notary public submits the applications to the tax administrations so that the buyer and the seller do not have to submit the tax applications themselves.

The Law on the Procedure for Registration in the Real Estate Cadastre, abbreviated as the Law on Registration in the Real Estate Cadastre, prescribes, among other things, the procedure for registering property rights in the real estate cadastre. The notary has the obligation to submit every sales contract that he certifies to the competent cadastre for the purpose of registering property rights so that the buyer has no obligation to submit a request to the cadastre. The competent service for the real estate cadastre acts upon the request of the notary public and issues a decision that registers the ownership right in the real estate cadastre in the name of the buyer as the owner.

Real Estate attorney at law in Serbia

Our law office provides legal assistance in all these areas of law in the territory of our largest cities - Belgrade and Novi Sad, but also in municipalities and places near these cities.

If you are selling or buying real estate, engaged in construction or your business or personal life is otherwise related to real estate; you have a problem or need advice, or if you want to get an estimate of fees charged by our office, contact us on email pekic@attorney.rs or fill out the contact form on the website or write to us on Facebook Messenger or LinkedIn.