Buying Real Estate in Montenegro: Legal Procedures, Notary Processes, and Taxes

Purchasing real estate in Montenegro is a straightforward process, but understanding the legal framework, notary involvement, and applicable taxes is essential to ensure a smooth transaction. This article provides an overview of the key steps and requirements for buying property in Montenegro, catering to both local and foreign buyers.

Step 1: Property Selection and Verification

1. Property Search

   • Begin by identifying a suitable property through real estate agencies, online platforms, or local listings.
   • Ensure the property aligns with your investment goals, whether it’s for residential use, rental income, or long-term appreciation.

2. Land Registry Check

   • Verify the property’s ownership status and any encumbrances (e.g., mortgages or disputes) through Montenegro’s Real Estate Cadastre.
   • This step ensures you’re dealing with a legitimate seller and the property is free of legal issues.

Step 2: Sales Agreement Preparation

1. Drafting the Contract

   • A preliminary sales agreement is prepared, detailing the property’s price, payment terms, and transaction timeline.
   • It’s highly recommended to involve a local lawyer to review or draft the agreement to ensure compliance with Montenegrin laws.

2. Reservation Deposit

   • A deposit, usually around 10% of the purchase price, is paid to secure the property.
   • This deposit is refundable only if stipulated in the agreement or if the seller breaches the contract.

Step 3: Notary Processes

1. Notary’s Role

   • In Montenegro, all real estate transactions must be formalized through a public notary.
   • The notary ensures the transaction complies with legal standards, confirms the identities of the buyer and seller, and authenticates the sales agreement.

2. Signing the Contract

   • Both parties sign the final sales agreement in the presence of the notary.
   • The notary then registers the signed contract with the Land Registry to initiate the ownership transfer process.

3. Notary Fees

   • Notary fees in Montenegro are based on the property’s value and typically range between 0.2% and 0.5% of the purchase price.

Step 4: Payment and Ownership Transfer

1. Final Payment

   • The buyer transfers the remaining balance of the purchase price to the seller’s account.
   • Payments are usually made through bank transfers, ensuring a transparent transaction record.

2. Ownership Registration

   • Once the payment is complete, the notary submits the necessary documents to the Real Estate Cadastre to update the property’s ownership records.
   • This process takes approximately 7–15 days, after which the buyer receives the official ownership certificate.

Taxes and Fees

1. Property Transfer Tax

   • A 3% property transfer tax applies to all real estate transactions, calculated based on the property’s market value or purchase price, whichever is higher.
   • This tax is paid by the buyer and is due within 15 days of signing the sales agreement.

2. Value Added Tax (VAT)

   • For newly constructed properties sold by developers, a 21% VAT is applicable instead of the property transfer tax.

3. Additional Costs

   • Legal Fees: Lawyer fees typically range from €500 to €1,500, depending on the complexity of the transaction.
   • Real Estate Agent Commission: If using an agent, the commission is usually 2–5% of the property’s price, paid by the buyer.

Key Considerations for Foreign Buyers

1. Restrictions on Land Ownership

   • Foreign nationals cannot directly own agricultural land or properties in border zones.
   • To purchase such properties, buyers can establish a Montenegrin company.

2. Residency Benefits

   • Property ownership in Montenegro can be used to support a temporary residence permit application, making it attractive for foreign investors.

3. Currency and Banking

   • Transactions are conducted in euros (€). Buyers must have a Montenegrin bank account for legal and financial clarity.

Conclusion

Montenegro’s clear and investor-friendly property laws make it an excellent choice for real estate investment. By following the outlined steps, understanding the legal and financial requirements, and working with reliable professionals such as lawyers, notaries, and real estate agents, buyers can ensure a secure and seamless purchase process.

For expert guidance and access to the best property listings in Montenegro, visit Realty in Montenegro. Let us assist you in making your dream investment a reality.