How Does Buying Property in Montenegro Work?

In my view, this is the most important part of the whole purchase.

I would choose the location first and only then the specific property. With a seaside apartment, I would look beyond the apartment itself and pay particular attention to:

• the actual route to the beach,
• the terrain,
• the view,
• parking,
• surrounding and planned development,
• the price compared with similar properties in the area.

Once an interesting property is found, the next step is to confirm that it is still available, check the purchase terms and, where appropriate, arrange a viewing.

Before buying, it is important to check who owns the property, what is recorded in the land registry and whether there are any encumbrances or other legal issues.

It is also important to verify that the legal and construction status of the property matches what is actually being purchased. With a new-build property, the project and developer documentation should also be checked.

The estate agency can arrange this together with its lawyer. The buyer can also appoint their own independent lawyer, who reviews the documentation and the entire transaction solely from the buyer’s perspective.

Personally, I think this option makes particular sense for a more expensive or more complicated purchase.

Once the property has been selected and the buyer decides to proceed, the usual next step is a reservation and payment of a reservation fee or deposit.

The amount and the terms can vary from one property to another.

Before paying, I would want the following points to be clearly stated:

• when the deposit is refundable or non-refundable,
• what happens if the legal review identifies a problem,
• the deadline for signing the sale and purchase agreement,
• how and when the purchase price will be paid.

Once the documentation has been checked, the sale and purchase agreement is prepared. A property transfer in Montenegro must be completed in the appropriate notarial form, after which the ownership right is registered in the land registry.

If the buyer does not speak the language, an interpreter is used where necessary for the notarial act.

Depending on the particular purchase, payment may be made in one amount or in several instalments. Instalment schedules are common especially for projects that are still under construction.

One option for making the payment process safer is a notarial deposit (escrow). In that case, all or part of the money can be held by the notary and released only once the pre-agreed conditions have been met.

This is not an automatic part of every purchase, however, and the payment structure should be set according to the specific transaction.

I consider a combination of several safeguards important:

• checking ownership and encumbrances in the land registry,
• checking the legal and physical condition of the property,
• legal review of the documentation and sale and purchase agreement,
• the required notarial form of the transfer,
• using your own independent lawyer,
• clearly defined reservation and payment terms,
• where appropriate, a notarial deposit (escrow).

It is important to distinguish between the role of a notary and a lawyer. The notary is neutral and oversees the legality and form of the legal act. The notary is not the buyer’s lawyer and does not represent only the buyer’s interests.

That is the role an independent lawyer can perform.

It is important here to distinguish between a secondary-market sale and a property on which VAT applies to the transfer.

For a standard secondary-market sale, the buyer pays property transfer tax. The current rates are progressive:

• up to €150,000 – 3%,
• over €150,000 – €4,500 + 5% of the amount above €150,000,
• over €500,000 – €22,000 + 6% of the amount above €500,000.

The buyer is the taxpayer and, for a standard transfer, the tax is declared and paid within 15 days of the tax liability arising.

It is also worth noting that if the price stated in the contract is lower than the market value of the property, the tax authority may use the market value when determining the tax base.

When acquiring a newly built property where VAT applies to the transfer, property transfer tax is not payable. For any particular developer offer, however, it is important to check whether the quoted price already includes VAT.

In addition, you should allow for costs such as the notary, an independent lawyer if you choose to use one, and other administration connected with the transfer.

Once the agreement has been signed, the agreed conditions have been met and the purchase price has been paid, the ownership right is registered in the land registry.

For a completed property, this effectively closes the purchase. For projects that are still under construction, the exact procedure and timing of final registration may differ depending on the stage of the project and the contractual terms.

After that come the practical matters, depending on how the property will be used – utilities, property management or, where relevant, rentals.

I personally see my role mainly in helping with the property selection before the transaction itself begins.

We go through the buyer’s budget, what they are looking for, how they plan to use the property and which locations may suit them, and then look at the options that I think make sense.

Once a specific property is found and the client wants to proceed, we connect them with a local estate agency that guides them through the next steps – from the viewing and communication with the owner or developer through to the purchase itself.

The legal side can be handled by the estate agency together with its lawyer, or the client can appoint their own independent lawyer to review the entire transaction.

In my view, you do not need to understand the entire Montenegrin legal system to buy an apartment there. What matters is choosing well and having people on the ground who know the process when the transaction itself takes place.