Montenegro: Guide to Buying Costs and Procedures

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Last Updated: Apr 30, 2008

Buying costs are low in Montenegro

How high are realtors’ and lawyers’ fees in Montenegro? What about other property purchase costs?

Transaction Costs
		Who Pays?
Transfer Tax	3%	buyer
Registration and Notary Fees	0.01% - 0.25%	buyer
Lawyer's Fee	0.01% - 0.50%	buyer
Agent’s Fee	3% - 5%	seller
Costs paid by buyer	3.02% - 3.75%
Costs paid by seller	3% - 5%
ROUNDTRIP TRANSACTION COSTS	6.02% - 8.75%
See Footnotes Source: Global Property Guide

How difficult is the property purchase process in Montenegro?

The Foundations of Property Law Relations of 1996 states that the reciprocity principle is the general rule that governs property and property rights acquisition in Montenegro.

Foreign individuals and legal entities can easily acquire property if the said property is necessary to their business. Foreigners can also easily acquire houses and apartments even if they are not performing business operations. However, it is necessary to register a company if one wishes to purchase land in Montenegro. Ownership can then be transferred to an individual by a simple procedure.

There are two conditions necessary to complete the purchase of a property and confirm ownership. These conditions are: “justus titulus” (legal entitlement to the property), and “modus aquirendi” (the registration of the property with the Area Property Registry).

Once a property has been chosen, a purchase contract is drawn and signed by both parties, or by their authorized representatives. All signatures must be certified by a court in Montenegro. When legal ownership is confirmed, a department within the Local Council Offices determines the value of the property. The buyer then pays the property transfer tax of 3% of the agreed valuation. Once this tax is paid, the purchase contract is confirmed by an official stamp and can now be registered with the local Area Property Registry. The purchase is complete upon payment of the purchase price.

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Transfer Tax:
Transfer (Purchase) tax is set at 3% of the valuation given by the Inland Revenue Office. Transfer of newly built properties is not subject to transfer tax, however, it is VAT liable.

VAT:
17% VAT is charged on transfer of newly constructed real estate.

Guidebook to the Tax System of Montenegro pp.6 , 13. Tree/Europe/Montenegro/d tax issues/Tax issues-Montenegro.

Registration and Notary Fees:
Notarization is mandatory for sale-purchase agreements. Notary fee costs €30 for any agreement over €5,000, plus 0.25% of the amount exceeding €5,000, but the additional amount should not exceed €300. Therefore, the maximum amount for notary fees is €330.

Additional funds should be set aside for translation and other registration-related costs.

Lawyer's Fee:
According to common practice, lawyers are hired to prepare the sale-purchase agreement. Although negotiable, legal fees range from €100 to €300 per transaction.

Agent's Fee:
Commission for the real estate agent ranges from 3% to 5% of purchase price, typically paid by the seller.

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