Real Estate Purchase Agreement in Republic of Serbia

What should a real estate purchase agreement contain?

If you have agreed to sell or buy real estate with a certain natural or legal person, you need to conclude a contract on the sale of real estate. It is important to be informed what elements the contract must contain, as well as to know the details of its validity.

Anyone who starts this type of legal business, immediately thinks that there is a "typical" contract that is easily available on the Internet or in a bookstore - just add or change the data and it is ready for verification. However, in such cases, the most common mistakes are made in practice, and they can sometimes lead to far-reaching bad consequences.

What do I need to know before I start drafting a contract?

The contract of sale is notarized. You can draft this contract yourself, however, it is recommended that it be drafted by a lawyer. Notaries do not draw up sales contracts except in special cases. Verification of the sales contract must be done by a notary public in the form of a notarized (solemnized) document, because only then does the contract have validity in legal transactions.

Note: With an uncertified and self-signed sales contract (but also a pre-contract or a down payment contract) you will not adequately protect your rights and establish obligations.

What are the elements of a sales contract?

First of all, it is necessary to state which parties conclude the contract, with all their data from a valid ID card or passport (if they are natural persons): name, surname, name of one of the parents, registration number and document number. If the contract is concluded by a legal entity (company), then we suggest that you check all the data of the legal entity on the always available website of the Business Registers Agency (www.apr.gov.rs): name, identification number, tax identification number (PIB), headquarters adress as well as the name of the person authorized to represent and sign the contract.

1. SUBJECT OF SALE - The subject of sale is actual real estate (apartment, house, land, garage…) whose generals you can check at any time on the website of the Republic Geodetic Authority - Real Estate Cadastre Service (www.katastar.rgz.gov.rs). We suggest that you acquire the transcript / copy of the Real Estate List from the competent Cadastre. It is necessary to precisely describe the real estate in the contract, which includes: cadastral municipality, parcel and number of real estate lists, area and type of building and land (eg family residential building; apartment; garage; agricultural land; urban construction land, etc.), enter the number of storeys object, address and place where it is located. You should especially pay attention to the "G list" - "list of encumbrances" List of real estate that indicates whether the subject of sale is encumbered by any encumbrances (pawn/ mortgage, usufruct, etc.).

2. PURCHASE AND SALE PRICE - The agreed price of the buyer and seller at which the real estate is sold. Apart from the dinar amount, according to the Law on Foreign Exchange Operations, it can also be expressed in euros. Also, you must take into account that the Law on Prevention of Money Laundering and Terrorist Financing stipulates that any transaction in real estate transactions in the amount of EUR 10,000 and more should be paid through a bank account. Of course, this does not limit you from paying or receiving the purchase price in cash, but if any kind of control occurs by the competent authorities (eg the Tax Administration) you will have to prove the origin of your money.

3. CLAUSULA INTABULANDI - The registration permit or clause intaublandi represents the consent of the seller that the buyer can, without any further question, register as the owner of real estate in the competent Cadastre. Of course, this contractual clause may be unconditional (eg if the purchase price was paid by the buyer in full prices). However, if you conclude a contract, and the purchase price is not paid immediately or not paid in full, clause like this will be needed to secure seller’s rights.

Note: The buyer does not become the owner of the real estate at the moment of concluding the contract, but at the moment of registration in the cadastre!

4. TRANSFER OF PROPERTY PROPERTY - It is always necessary to specify by when the seller is obliged to hand over the property (eg on the day of payment of the full price; within a maximum of 10/15/30 days from the day of payment of the full price, etc.). It happens that the seller sells real estate with things, which you should also emphasize with the contract: e.g. apartment with fitted kitchen and all closets. This only strengthens the buyer's confidence that in the event that the seller leaves the apartment or house, he does not take some of the things that you actually paid when you defined the price of the property. Also, you can determine the sellers duty to pay all the costs that have so far been originated by using the real estate - electricity, water with utilities, heating and other.

5. PROTECTION OF THE BUYER - When buying a property, the buyer must be familiar with all its legal features. Meaning, the seller is the one who guarantees to the buyer that the real estate is sold without any encumbrances (pledge rights - mortgages, usufruct rights, etc.) or that no other persons have any rights to the real estate that is the subject of sale or that the real estate is not a subject of a litigation regarding the ownership of the property. Of course, it is possible to trade encumbered real estate if the parties have an interest in it, but it is recommended to always enter what kind of encumbrance it is.

6. COSTS OF THE PROCEDURE - It is an unwritten rule, which is also represented in our practice, that the buyer bears all costs related to the realization of the legal transaction. The costs of the procedure includes notarization of the contract, administration fees, tax on the transfer of absolute rights (or VAT), as well as any capital gains tax. Due to the fact that the contract represents the consent of the will of two or more parties, all these elements can be contracted differently.

7. OTHER PROVISIONS - As we have stated, no contract is the same. Every differs in their own way. Everything that is not prohibited under the positive legislation can be contracted among the parties.

If you have any questions, feel free to contact us.