The purchase of an unregistered apartment in Serbia – 7 problems you could be faced with
Because of the lower price of unregistered apartments, the purchase of this type of property has become very popular in Serbia. What are the consequences that lie behind the purchase of an unregistered apartment and what’s the risk for the buyer? Is it possible at all to buy or sell such property legally?
What is an unregistered apartment – property?
Unregistered property in Serbia is the property which has not been registered in the Real Estate Cadaster. In case a property is not registered in the Cadaster, and the buyer still wants to purchase it, he/she should be informed that such decision could lead to severe consequences. The risk is there because the law stipulates that real estate ownership rights can be acquired exclusively by registering the property in the cadaster.
The reasons behind an unregistered house or apartment can be various, but the majority of these reasons can be easily solved, with a certain amount of time and some extra effort. You can register a property and ownership rights at the competent institution or the cadaster.
According to the law, a person holding the property rights is under the obligation to file an application for registering property and ownership rights. This can be done by the current property owner, as well as the person who purchased an unregistered property. However, before making a purchase, it is crucial to check whether the unregistered property is legal or illegal.
Legal and illegal unregistered properties
Legal unregistered property represents newly built apartments that have not been registered in the cadaster yet, but were built in accordance with the construction permits. Old apartments and other property with duly and complete documentation also fall into this category, and it is mostly relatively easy to register them.
The situation is much more complex when it comes to illegal unregistered property, and this concerns, for example, illegal buildings built after 2015 or state residential buildings built 30 or 40 years ago, for which no occupancy permit was ever issued. It is neither possible to register this type of property, nor to legally buy it or become its owner. Although according to the law it is theoretically possible to legalize illegal buildings provided that they meet at least the minimum legal requirements, in practice, the process of legalization is in significant stagnation.
Is it possible to purchase an unregistered apartment?
When it comes to the purchase and sale, according to the law, the status of registered and unregistered property is equal. This means that it is possible to buy or sell a property even when it is unregistered, but with a certain amount of risk. It is crucial to determine whether the property is simply unregistered or unregistered and illegal, since illegal property cannot be registered. When it comes to the legal property, which is solely not registered, the process of registration can be completed with no bigger issues.
How to register an apartment?
The first step is for the person who purchased an apartment in a building to file a petition for the registration of the building. Then, the ownership rights of the investor are transferred to the petitioner. The next step is gathering the documentation proving the owner or the occupier of the land on which the building was built. Usually, that is the investor, a municipality or a competent state authority, depending on the size of the building. Additionally, you will need a building permit and an occupancy permit for the registration.
When is a property illegal?
A property is illegal when no permit was issued for its construction or when the construction of a property was not executed in compliance with the permit issued, for example, when the square meters of a building are more that authorized. Even this type of property can be purchased, provided that the seller filed an application for its legalization, the process of which shall be completed by the buyer. In case you decide to buy this type of property, make sure to request a certificate confirming that the property is under the process of legalization.
What are the risks of buying unregistered property?
- In some cases, it may turn out that the apartment cannot be registered at all or at least not registered in due time. Thus, the new owner may not register the ownership in their name.
- If you wish to sell the property and you’re not its registered owner, or if you find yourself in the position where it’s necessary to prove that you are the owner, you won’t be able to do this. In these situations, you will have to rely on the other party’s understanding that you are the actual property owner.
- There is a risk that the government could change the terms and provisions for apartment registration.
- When buying an apartment which is under the process of legalization, the legalization application could end up being denied after its purchase.
- In the event of a failed legalization, the government may order for the demolition of the property, although this happens rarely.
- When it comes to buying a partially registered apartment, certain issues may also arise. For example, one room is unregistered and its area is extended at the expense of the joint building space, but without the consent of other building residents. The unregistered part of the apartment may be confiscated by the apartment owners’ association.
- It is not possible mortgage an unregistered property and, as such, that property cannot be used as security in case of loan debt. Unregistered property may discourage potential buyers who are looking to buy the property by means of a bank loan.
How to determine whether a property is registered or not?
The information on whether a property is registered in the Republic of Serbia is publicly available at the website ekatastar , where you can also check exactly how many square meters of the property is registered. The registered apartment search may be done based on the apartment address or the number of the cadastral plot where the house or the building is situated. You can also obtain information on whether there are any types of encumbrances, notes or pending requests, such as mortgages, restraints on disposal or any dispute.
The information obtained for a specific property is not final, but rather informative. For this information to become an official document, it has to be certified by a competent authority.
Conclusion: Should we avoid purchasing an unregistered property?
Although you can get by much cheaper if you decide to buy an unregistered property, real estate experts advise caution. Before making a final decision, you are advised to thoroughly check all the information and consult your lawyer or real estate agent.
It is possible that the current owner simply forgot to register the property in their name, and the previous owner remained registered as the property owner. If the current owner possesses complete documentation, there are no impediments for you to buy such property, and then register yourself as the owner. In addition, you may ask the seller to register their ownership before executing a purchase agreement, which would simplify and speed up your process.
As previously clarified, there are two types of unregistered property, the property for which the legalization procedure was initiated and the property where such procedure was not initiated, mostly because the legalization of such property is impossible. The later should not be purchased, since there is no valid ownership documentation for it.
The demand for property in Serbia is high, and one of the reasons behind it is the fact that you may obtain a temporary residence permit by purchasing a property, and you should thoroughly check the status of the property you’re looking to buy. For more information on the subject, feel free to contact our team Welcome to Serbia.