General Overview of Real Estate Transactions in Serbia
A real estate transaction represents the legal transfer of ownership rights over immovable property, most commonly through sale, gift, distribution of property inter vivos, or exchange. Such legal transactions imply a high degree of formality and complexity. It is particularly important to note that, in the Serbian legal system, ownership of real estate based on a legal transaction is acquired only upon registration in the public records – the Real Estate Cadastre. Therefore, the mere existence of, for example, a contract without its registration in the cadastre is not a sufficient basis for the acquisition of ownership.
Types of Legal Grounds for the Acquisition of Ownership Rights
Legal Transaction as a Basis (Sale, Gift, Exchange, etc.)
When real estate is acquired on the basis of a legal transaction, registration in the Real Estate Cadastre represents a mandatory – constitutive – condition for acquiring ownership rights. Without registration, the buyer or other acquirer does not become the owner of the property. In court practice, the concept of off-the-record ownership (“vanknjižno vlasništvo”) often appears, referring to persons who have a valid legal transaction but have not registered their rights in the public records.
Law, Inheritance, or Decision of a Competent Authority
In other cases, such as:
- acquisition by law (e.g., adverse possession),
- inheritance,
- decision of a court or other competent authority,
registration is not necessary for acquiring ownership rights and has only declaratory effect. Nevertheless, registration is recommended in order to:
- strengthen legal certainty,
- prevent potential disputes, and
- enable unobstructed future disposition of the real estate.
Contracts in Real Estate Transactions
Form of Contract
Contracts concerning the transfer of real estate must be solemnized by a public notary. Otherwise, the contract produces no legal effect.
Lack of Proper Form
A contract for the transfer of real estate concluded without the prescribed form (e.g., without notarial solemnization) has no legal effect and cannot serve as a basis for registration of ownership in the cadastre. The lack of proper form constitutes an absolute impediment to the legal validity of the contract. Certain exceptions exist in cases involving contracts concluded under the laws that were in force in the former Yugoslavia.
Contract Conclusion Procedure
The process of concluding a real estate contract is highly complex and may vary depending on the circumstances. Therefore, additional information on the procedure can be found in a separate text.
Voidable and Null Contracts
A contract may be:
- Voidable (rušljiv) – if concluded under:
- duress,
- fraud, or
- mistake.
- Void (ništav) – if it is:
- contrary to mandatory provisions,
- against public order, or
- contrary to good morals.
Voidable contracts may be validated through subsequent consent of the parties or by expiration of statutory time limits for contesting. Null contracts produce no legal effect whatsoever.
Competence of the Public Notary
Competence for contract solemnization lies with the notary whose jurisdiction covers the location of the real estate. If the real estate extends over several jurisdictions, all competent notaries share competence.
Duties of the Notary
The notary is obliged to:
- verify whether the legal transaction is lawful and refuse to solemnize an unlawful one,
- determine whether the contracting parties are entitled to dispose of the property in question,
- inform the parties about the legal consequences of the specific legal transaction,
- check whether the contract concerning the same real estate has already been certified, and
- deliver the certified copy of the contract to:
- the Real Estate Cadastre – for registration purposes, and
- the Tax Administration – for the determination of tax obligations.
It should be emphasized that the notary’s role is limited to ensuring the legality of the transaction; the notary does not protect the interests of the parties. If a contracting party wishes to protect their legal interests, they must engage an attorney or another qualified legal professional.
Transactions Involving Illegal Structures
Structures Eligible for Legalization
Buildings visible on the official satellite image of GEO Serbia from 2015 are deemed eligible for legalization and may be subject to transaction. In such cases, the buyer assumes all risk and responsibility related to the legalization process.
Structures Built After 2015
Structures constructed after 2015 without the required permits are not eligible for legal transaction, as they are considered outside legal commerce.
Role of the Notary
The notary is required to:
- inform the parties if the property is illegal, and
- warn them of the risk of demolition should legalization fail.
Risks of Purchasing Illegal Properties
Buying illegal structures entails numerous risks:
- potential demolition of the structure,
- impossibility of registration in the cadastre,
- potential liability for the obligations of the previous investor,
- inability to connect to utility infrastructure, and
- legal uncertainty and limited ability to dispose of the property.
Right of Pre-emption
In transactions involving onerous legal contracts (e.g., sale), certain restrictions exist in favor of other persons. The seller must offer the property to the holder of the pre-emptive right before selling it to a third party under the same conditions. These restrictions do not apply to gratuitous contracts (e.g., gifts).
Pre-emption Right of Co-owners
A co-owner wishing to sell their share must first offer it to the other co-owners. Priority belongs to the co-owner with the larger share.
Pre-emption in the Sale of Agricultural Land
In the sale of agricultural land:
- Priority is first given to co-owners.
- Next, to owners of neighboring parcels – with priority for those whose land borders the seller’s parcel predominantly.
Pre-emption in the Sale of Cultural Monuments and Forest Land
For properties designated as cultural monuments, the right of pre-emption belongs to the competent institution for cultural heritage protection. For forest land, this right belongs to the forestry enterprise managing forests in public ownership.
Procedure for Offering
The offer must be:
- in written form,
- containing all essential elements of the contract and offered under identical terms, and
- delivered by registered mail.
If the holder of the pre-emptive right fails to respond within the statutory period, the sale to a third party is permissible, but not under more favorable terms. If the offer was not properly submitted, the holder may file a lawsuit requesting that the property be sold to them, with an obligation to deposit the market value of the property in court. Failure to observe this right may, in certain cases, lead to the nullity of the legal transaction (for example, in the sale of forest land).
Foreign Nationals and Acquisition of Real Estate in Serbia
Natural Persons
Foreign nationals may acquire ownership rights over real estate:
- through inter vivos legal transactions (e.g., sale, gift), provided reciprocity exists with their country of origin, and
- through mortis causa legal transactions (e.g., inheritance), also subject to reciprocity.
Legal Entities
Foreign legal entities may acquire ownership of real estate necessary for conducting business activities within the Republic of Serbia.
Agricultural Land
Acquisition of agricultural land by foreign persons is specifically regulated by law and subject to additional restrictions.
Conclusion
Real estate transactions represent a complex legal process requiring a comprehensive approach and careful consideration of every aspect. From analyzing the legal continuity and determining the legal status of the property, through precisely defining the mutual rights and obligations of the parties, to ensuring overall legal security. Therefore, professional legal assistance is not only recommended but essential, in order to provide full protection of the parties’ interests and ensure the legality of the entire process.
The cover image is for illustrative purposes only, generated via https://leonardo.ai/.
