Published on 02 February 2006 at 04:58 pm
Filed under: Europe:- Montenegro Property Guides » Montenegro Investment Property Buying Process
The property sector in Montenegro perfect embodies the true concept of an emerging market – there’s potential, risk and opportunity in equal measures and the investment property buying process in Montenegro is far from being set in stone.
Those who can see the undeniable potential in this stunningly beautiful and diverse country and who are not put off by the risks associated with Montenegro’s unstable past, it’s high current levels of poverty and the fact that it is as yet relatively inaccessible particularly from the UK and Western Europe must ensure that they are well versed in all the potential issues that can arise with the real estate buying process in Montenegro before they commit to the market.
Firstly, although there is a formal land registry in Montenegro it is not yet a legal requirement for all property and land transactions to be logged therein which can result in land disputes and difficulty in determining whether a vendor is legally entitled to sell their real estate.
Secondly, because Tito claimed a great deal of privately owned real estate during his reign there are ongoing cases with families trying to sue the government to get their land back - this further adds to the potential for land disputes arising on investment property purchased by foreign buyers in Montenegro.
Thirdly, there are some restrictions on certain parcels of land or property that prevent foreigners from buying them – the restrictions usually have something to do with the real estate being of national or historic importance and yet the restrictions are not necessarily obvious to either the vendor or potential purchaser and can only be determined by detailed searches of local council documentation relating to the real estate in question.
Fourthly, while it is possible for foreigners to buy property freehold in Montenegro it is often the case that the land on which the property sits can only be owned leasehold and this can make any investment less attractive and also restrict development options for an investor.
Finally there is no national guideline for the value of property, land or real estate in Montenegro which means real estate agents and vendors can price a property at a rate they choose. The price chosen may have nothing whatsoever to do with the true worth of the particular property but more to do with the amount of money the vendor is trying to get.
Because of these issues it is fundamentally essential that an investor employs an experienced, independent conveyancing lawyer in Montenegro and has the title deeds of any property or parcel of land searched before the initial contract to purchase is signed or before any money is handed over in the form of a deposit to secure the property. It is also a wise undertaking to ensure a complete survey is conducted on any resale property being considered by a property investor – while it is not common practice in Montenegro it is a sensible activity to carry out. At the moment there are very few off plan and new build properties on the market in Montenegro and the majority of properties being purchased by overseas investors are resale, renovation properties. While these may well offer the greatest scope for profit and be the best potential property types for future letting to the tourism market they can also bring with them a whole host of issues that a survey should uncover.
Once land or property in Montenegro has been identified by an investor as meeting all his investment objectives it is usually the case that an offer to purchase at a given price is submitted to the vendor. At the same time the investor’s lawyers should begin their thorough appraisal of the property, its title deeds and also the vendor to ensure all is in order and that the sale can proceed.
Once an offer has been accepted and preliminary checks completed satisfactorily the conditional pre-contract agreement will be drawn up and a deposit of 10% will be due. This deposit is non-refundable if the buyer withdraws; if the vendor withdraws they have to pay double the deposit back – these two conditions should be included in the contract as well as the selling price and proposed completion date.
Any further searches should be then be completed before the final contract is signed by buyer and seller in front of a public notary. Once the final contract is signed the balance of the purchase price is due and the property investor’s solicitors can officially inform the land registry of the need to transfer deeds into the name of the buyer.
Finally, in terms of additional costs associated with the investment property buying process in Montenegro the investor is responsible for the lawyer and public notary fees, survey costs and a property tax which is 2% of the Montenegrin Inland Revenue’s valuation of the property for resale real estate or 17% of the valuation if the property is brand new.
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