Buying and registering property in Montenegro

Registering property ownership in Montenegro takes 1-2 months on average. To close the transaction, the buyer needs to have a passport on hand. If buying through a legal entity, its incorporation documents and a power of attorney issued to a representative during the transaction are needed. If the seller is an individual, he or she must also have a property ownership certificate (list nepokretnosti). A legal entity that is selling property also submits a company seal and a proof of the company’s registration with Montenegro’s Central Registry of Business Entities. All the documents are to be translated by a certified court translator.

In Montenegro, the information on property transactions is stored in the Land Registry and Property Registry. The information allows checking whether the property was built in accordance with construction permits as well as to verify the existence of property ownership. It is also possible to learn about the property encumbrances (if any).

Buying property in Montenegro involves several stages:

1. Property selection. The buyer informs the realtor of his or her preferences (the part of the country and the city where the property should be located, distance from the sea, total property area, the number of bedrooms and the purchase budget). The realtor selects suitable options and answers all the questions the buyer may have. The buyer comes to Montenegro, views the properties and chooses whichever he or she likes best. It is the seller who pays the real estate agent’s fee in Montenegro (usually 1.5% of the property value). 

2. Negotiations between the buyer and the seller. The parties clarify the details and negotiate the terms of the future transaction.

3. Deposit placement. The buyer places a deposit (kapara) which amounts to 10% of the property value. The buyer receives no deposit refund if refusing to close the transaction. If the transaction is cancelled because of the seller, the latter must refund the deposit in double. 

4. Execution of the main sales agreement (glavni ugovor). The sales agreement and other transaction documents are drawn up and certified by a notary. The seller’s right of property ownership is checked on the Land Registry’s website. A court (osnovni sud) seals the signatures on the document. The realtor books an appointment with a notary several days in advance. Legal Due Diligence takes one or two days. It takes no more than three days to sign the agreement after all the documents are submitted to the notary.

The notary fee amount depends on the property value.

If the property contract value exceeds €5,000, a 21% VAT is applied to the notary fee.

5. Full purchase price payment. The payment is made following the terms of the agreement upon the signature and certification of the latter. The agreement may provide for a one-off payment or payment by instalments, including for several months.

6. Payment confirmation (clausula intabulandi) obtainment. Having transferred the necessary amount to the seller’s account, the buyer gets a receipt proving the placement of funds. The confirmation of payment and the sales agreement are the two documents on the basis of which the property ownership is re-registered (in two to four days).

7. Property purchase tax payment. Upon the notary registration of the sales agreement, the transaction must be reported to the tax office. The tax office expert assesses the property on the basis of the agreement and the prices in the market. After that, the tax office delivers a tax judgement for the buyer to pay a 3% property purchase tax. It must be paid within 14 days after the tax judgement is delivered. It is not necessary to pay VAT when buying property from a development company which is a VAT payer. If the new build has been constructed by an individual, the tax has to be paid.

8. Title deed obtainment. The new property owner appeals to the municipality, which issues a title deed (list nepokretnosti) to his or her name.