Legislation

NECESSARY PAPERS FOR A REAL ESTATE TRANSACTION IN ROMANIA

INFORMATION REGARDING THE REAL ESTATE TRANSACTIONS IN THE SERBIAN REPUBLIC

BUYING REAL ESTATE BY FOREIGN CITIZENS IN HUNGARY

INFORMATION REGARDING THE REAL ESTATE TRANSACTIONS IN THE SERBIAN REPUBLIC

In the Serbian Republic the sales contracts are not signed in standard form (there are not any public nottaries in Serbia). They are written by a lawyer and are legalised at the Court House. The written form and the legalisation at the Court House are obligatory though.
Foreign citizens are not allowed to own arable land in the Serbian Republic.

A short description of the necessary steps needed to be taken in the case of purchasing an estate:

Precontract
Signing a precontract is a common practise that requires an advance payment to be made. These precontracts are not obligatory; if all the terms are met one can proceed with the signing of the main contract.

Verifying the legal status of the estate
Because in the postwar period (up to the present cadastre Act, a recent Act, that conditions the obtaining of the ownership right by the registration at the land survey office), there were many estates that were left unregistered, the ownership of an estate can be proven by the seller or by means of a cadastral registry statment to date (if the estate is registered in the cadastral registry), or by means of an statment issued by the land survey office ( if the estate is registered with the land survey office), or with the complete set of documents by means of which owenership is proven in the case of unregistered estates (all previous original sales contracts, inheritance documents etc. beginning with the first owner, legalised by the proper court of law and bearing the stamp of the local financial administration, in regard to the payment of the tax for transfer of full ownership rights), documents that must fulfill all the conditions for the registration of the estate by the buyer in his name after the transaction is final.

The sales contract
The sales contract is signed in the presence of a lawyer, compulsory in written form, and includes the same elements as the Romanian and Hungarian sales contract. The contract is then legalised at the court house.
In the sales of a quota of an estate, the part owners have a pre-emption right, but in common practice, in such cases a proof certifying the pre-emption rights of the part owners, signed by them, is requested in order for the contract to be legalised.
Before legalising the contract the seller must pay all his dues (phone bill, electricity bill, household expenses) as well as the propriety tax and must prove their payment by showing all the receipts and invoices.
The buyer is of course obliged to pay the due sum before or at the dates mentioned in the precontract and respectively in the contract. Common practise is that the payment should be made by bank transfer in foreign currency (permitted by the law as well as payment in dinars), at the contract signing date.
The buyer also pays the intermediary comission, the legal fees necessary for legalising the precontract and respectively the contract, bank transfer comissions, taxes for transferring the telephone contract, the electricity contract, etc, as well as the taxes for registering the estate in his name.
The taxes for issuing the cadastral registry statments, the statments issued by the land survey office, the registration taxes for the cadastral registry and the sales contract legalisation fees are usually paid by the buyer. The legalisation fee is calculated depending on the selling price.

Taxes
Real estate transactions are bound by the tax on the transfer of full ownership rights (the so-called circulation tax) and by the tax on income.

The tax on the the transfer of full ownership rights is 5% of the real estate value as assessed by the local financial authority – tax department of the City Hall on the territory of which the real estate is situated.
The law states that this tax should be payed by the seller but in practise it is payed by the buyer in the name of the seller.
The law also gives a 10 day period from the legalisation of the contract in which the transaction must be communicated to the local financial administration so that the amount of the tax can be calculated.
Besides the legalised sales contract, the document by means of which the seller received the ownership right of the estate must be presented before the local financial administration. The document must bear the stamp which proves the payment of the tax at the due time.
After receiving the tax calculation, within 15 days the taxpayer must pay the tax and communicate the proof of payment to the local financial administration, so that all the copies of the sales contract can be stamped, which certifies the payment of the tax on the transfer of the full ownership rights.
The income tax represents the tax on the positive difference between the selling price and the aquisition price of the estate; the tax level is 20%.
If the selling price is lower, we are speaking of a loss, so this tax will not be owed.
Income taxpayers are just the sellers that bought the estate after 24.01.1994.
The transactions between spouses or relatives in direct blood line, the transactions between former spouses that directly regard the divorce process and the people that within 60 days form the sale use the price in order to buy a house that they also move into, are exempt form the payment of this tax. As well as this, the paid tax is restored to those whom within 10 months from the sale use the aquired financial means with the same purpose (to buy an estate in order to live in it).

Registering the estate in the name of the buyer
A written request is necessary for the registration. The request must be accompanied by obligatory appendices and proof of payment of the registering tax. The legalised sales contract that will be presented must bear the stamp of the local financial administration certifying the fact that all the due taxes have been payed. In the case that the seller is not registered as the owner, the whole documentation proving ownership is required. This documentation must also bear the stamp of the local financial administration.

Transferring the telephone contract, electricity contract and communal household services in the name of the buyer
The telephone contract can be transferred by the seller together with the buyer at the telephone company’s client service by presenting a photocopy of the estate sales contract and photocopies of the identity cards of the seller and buyer.
The electricity contract transfer is done by the buyer at the local office of the electricity company by presenting a photocopy of the sales contract and the latest receipt proving the payment of the telephone bill.
The communal household services contract transfer is done by the buyer, for each service by presenting a photocopy of the sales contract.

Conclusions Due to the fact that in Serbia the legislation changes have been frequent frequent and important Acts have not yet been passed (for example in the field of the restituition of estates taken over by the State there is an Act regarding the announcing and registering these estates; the retrocession Act is still under development), and because the information presented here cannot be exhaustive, the experts in the field reccomend hiring an attorney to aid in the real estate transaction, this being in fact a usual practice in The Serbian Republic.

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