Real estate purchase in Serbia for foreigners

If you have decided to invest in real estate in Serbia, first of all you need to check whether citizens of your country can acquire real estate in the Republic of Serbia, under what conditions and what does buying real estate for foreigners in Serbia entail.

Under what conditions can foreign citizens acquire real estate in the Republic of Serbia

Foreign citizens can acquire real estate in the Republic of Serbia if there is a standing bilateral agreement between the Republic of Serbia and a foreign country in question, that regulates the issue of acquisition of real estate by citizens of one country in another, which represents agreed reciprocity. If there is no bilateral agreement, it is necessary to check whether there’s a factual reciprocity between the countries, that is, whether this reciprocity has been achieved in practice.

With which countries does Serbia have reciprocity?

The Republic of Serbia has an agreed reciprocity agreement with a very few countries regarding the acquisition of property rights on immovable property, in addition, reciprocity also exists with some countries through the application of the „most-favored-nation“ clause. These are the following countries: Great Britain, the United States of America, the Kingdom of the Netherlands and Japan.

With regard to other countries with which reciprocity has not been agreed, the Ministry of Justice has established the existence of factual reciprocity with many countries.

List of countries whose citizens can buy real estate in the Republic of Serbia

Regarding the countries that are not listed, the procedure for determining reciprocity is ongoing, therefore it is necessary to consult with the Ministry of Justice.

Acquiring ownership rights on agricultural land

Acquiring ownership rights on agricultural land is reserved exclusively for domestic citizens, with the exception that EU citizens can acquire that right under very restrictive conditions. The conditions for an EU citizen to acquire ownership rights on agricultural land are:

• to have at least 10 years of permanent residence in Serbia, i.e. the local self-government unit where agricultural land is sold,
• to cultivate the the property in question for at least 3 years with or without compensation,
• to have a registered agricultural farm in an active status as the owner of the farm and
• to own machinery and equipment for agricultural production,
• provided that it is agricultural land up to 2ha at most.

Is it possible for a foreigner to buy real estate in the Republic of Serbia if there is no reciprocity with his country

If you are not from a country with which there’s a reciprocity in terms of the right to purchase real estate in the Republic of Serbia, you can overcome this obstacle by establishing (for example) an LLC company that will act as a formal buyer of real estate. We wrote about the establishment of a company in our text Establishment of a company and general acts of the employer.

Real estate verification from the legal aspect

After you have determined that you can buy real estate in the Republic of Serbia, you shoudl carry out all the necessary checks on the real estate you plan to buy, which first of all means whether the real estate is encumbered f.i. with a mortgage, the right to usufruct (in rem right), a prohibition on disposal, etc. Also, it is necessary to check whether the current owners have paid any outstanding debts, fee’s, duties, on the subject real estate. These checks can be carried out by real estate lawyers.

Real estate purchase agreement

Drafting the purchase agreement and it’s solemnization by a public notary are the next steps, we wrote about this in detail in our text „Real estate purchase agreement„.

It is good to know that, in addition to drawing up a sales contract, a real estate lawyer will organize the entire procedure and schedule a certification before a notary public, making sure everything is already set and checked before signing the agreement.

In order for a real estate lawyer to draw up a real estate purchase agreement, you need to attach a copy of your personal document (passport, or extract from the competent register of business entities if the buyer is a legal entity). From the data, it is also relevant whether the buyer, who is a natural person, is married in order to decide whether he acquires the real estate as separate property or marital property. The seller will have to prepare a document that shows the legal basis of his ownership acquisition, i.e. attach a document on how he acquired the real estate, which can be an earlier purchase agreement, a gift contract, an inheritance decision, a life support contract, a court decision, etc.

Registration of property rights

After the notarization of the purchase agreement, the ownership rights will be registered before the Republic Geodetic Institute, i.e. the cadastral register, which will issue a decision by which the new owner is entered in the real estate register.

Which expenses (aside from the purchase price) a buyer can expect?

The expenses associated with the legal work related to the purchase are as follows:

• attorney’s fees for drawing up the sales contract
• the costs of notarization of the Purchase agreement
• tax on the transfer of absolute rights, which amounts to 2.5% of the agreed purchase price. If the real estate in question is being sold for the first time (for example: from the developers) there is no tax for the transfer of absolute rights, but VAT is paid instead, which is usually already included in the advertised price.
• fee for ownership registration in the Real Estate Cadastre, amounting to 5,310.00 RSD.